o FAS P-3
SUPPLEMENT DATED AUGUST 1, 2000
TO THE PROSPECTUS OF
FRANKLIN TEMPLETON FUND
ALLOCATOR SERIES
DATED DECEMBER 1, 1999
The prospectus is amended as follows:
I. All references to Franklin Templeton Trust Company in this prospectus are
replaced with Franklin Templeton Bank & Trust.
II. The first portion of the "Management" section on page 15, before the
subsection "Investment Advisory and Asset Allocation Agreement", is replaced
with the following:
Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94404, is each fund's investment manager. Together, Advisers and its
affiliates manage over $229 billion in assets.
The lead portfolio manager responsible for each fund's management is:
T. ANTHONY COFFEY CFA, VICE PRESIDENT OF ADVISORS
Mr. Coffey has been a manager of each fund since February 2000. He joined the
Franklin Templeton Group in 1989.
III. The table beginning on page 16 in the "Investment Advisory and Asset
Allocation Agreement" subsection of the "Management" section is replaced with
the following:
UNDERLYING
FRANKLIN TEMPLETON FUND MANAGER FEE RATE
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Franklin Equity Franklin Advisers, Inc. 0.625%/1/
("Advisers")
Franklin Growth Advisers 0.625%/2/
Franklin Utilities Advisers 0.625%/2/
Franklin Small Cap I Advisers 0.625%/3/
Franklin Small Cap II Advisers 0.550%/10/
Franklin Technology Advisers 0.550%/10/
Franklin Value Franklin Advisory Services, 0.750%/4/
Inc.
("Advisory Services")
Franklin Real Estate Advisers 0.625%/3/
Mutual Shares Franklin Mutual Advisers, 0.60%
Inc.
("Franklin Mutual")
Mutual Discovery Franklin Mutual 0.80%
Mutual European Franklin Mutual 0.80%
Franklin Aggressive Advisers 0.50%/5/
Growth
Franklin Large Cap Advisers 0.50%/5/
Growth
Franklin Bond Fund Advisers; TICI (sub-adviser) 0.425%/6/,*
Franklin Advisers 0.625%/1/
Short-Intermediate
Franklin Government Advisers 0.625%/2/
Securities
Franklin AGE Advisers 0.625%/1/
UNDERLYING
FRANKLIN TEMPLETON FUND MANAGER FEE RATE
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Templeton Foreign Templeton Global Advisors 0.75%/7/
Limited
("TGAL")
Templeton Developing Templeton Asset Management 1.25%
Markets Ltd.
Hong Kong Branch
Templeton Smaller Templeton Investment 0.75%
Companies Counsel, Inc.
("TICI")
Templeton Foreign Advisers; TICI (sub-adviser) 1.00/8/,*
Smaller
Templeton International TGAL 0.75%
Templeton Pacific Growth Advisers; TICI (sub-adviser) 1.00%/8/,*
Templeton Latin America TGAL 1.25%
Franklin Templeton Hard Advisers; TICI (sub-adviser) 0.65%*
Currency
Templeton Global Bond TICI 0.50%/9/
Franklin Global Advisers; TICI (sub-adviser) 0.625%/1/,*
Government
Franklin Gold and Advisers 0.625%/1/
Precious Metals
Franklin Natural Advisers 0.625%/3/
Resources
Franklin Strategic Advisers; TICI (sub-adviser) 0.625%/1/,*
Income
1. .625% of the month end net assets of the fund up to $100 million, reduced
to .50% of such net assets in excess of $100 million up to $250 million, and
further reduced to .45% of such net assets in excess of $250 million.
2. .625% of the month end net assets of the fund up to $100 million, reduced
to .50% of such net assets in excess of $100 million up to $250 million, and
further reduced to .45% of such net assets in excess of $250 million up to
$10 billion, further reduced to .44% of such net assets in excess of $10
billion up to $12.5 billion, further reduced to .42% of such net assets in
excess of $12.5 billion up to $15 billion, further reduced to .40% of such
net assets in excess of $15 billion up to $17.5 billion, further reduced to
.38% of such net assets in excess of $17.5 billion up to $20 billion, and
further reduced to .36% in excess of $20 billion.
3. .625% of the average daily net assets of the fund up to $100 million, .50%
of the average daily net assets of the fund over $100 million up to $250
million, .45% of the average daily net assets of the fund over $250 million
up to $10 billion, .44% of the average daily net assets of the fund over $10
billion up to $12.5 billion, .42% of the average daily net assets of the fund
over $12.5 billion up to $15 billion, and .40% of the average daily net
assets of the fund over $15 billion.
4. .75% of average daily net assets up to $500 million, .625% of average
daily net assets over $500 million up to $1 billion, and .50% of average
daily net assets over $1 billion.
5. .40% of the value of net assets over $500 million up to and including $1
billion; .35% of the value of net assets over $1 billion up to and including
$1.5 billion; .30% of the value of net assets over $1.5 billion up to and
including $6.5 billion; .275% of the value of net assets over $6.5 billion up
to and including $11.5 billion; .25% of the value of net assets over $11.5
billion up to and including $16.5 billion; .24% of the value of net assets
over $16.5 billion up to and including $19 billion; .23% of the value of net
assets over $19 billion up to and including $21.5 billion; and .22% of the
value of net assets in excess of $21.5 billion.
6. .425% of the value of its average daily net assets up to and including
$500 million; .325% of the value of its average daily net assets over $500
million up to and including $1 billion; and .280% of the value of its average
daily net assets over $1 billion up to and including $1.5 billion; and .235%
of the value of its average daily net assets over $1.5 billion up to and
including $6.5 billion; .215% of the value of its average daily net assets
over $6.5 billion up to and including $11.5 billion; and .200% of the value
of its average daily net assets over $11.5 billion up to and including $16.5
billion; and .190% of the value of its average daily net assets over $16.5
billion up to and including $19 billion; .180% of the value of its average
daily net assets over $19 billion up to and including $21.5 billion; and
.170% of the value of its average daily net assets over $21.5 billion.
7. .75% of the average daily net assets of the fund up to the first $200
million, reduced to a fee of .675% of such average daily net assets in excess
of $200 million up to $1.3 billion, and further reduced to a fee of .60% of
such average daily net assets in excess of $1.3 billion.
8. 1% of daily net assets up to $100 million, .90% of daily net assets over
$100 million up to $250 million, .80% of daily net assets over $250 million
up to $500 million, and .75% of daily net assets over $500 million.
9. .50% of its average daily net assets, .45% of such net assets in excess of
$200 million and .40% of such net assets in excess of $1.3 billion.
10. 0.550% of the value of net assets up to and including $500 million; 0.450
of the value of net assets over $500 million up to and including $1 billion;
0.400 of the value of net assets over $1 billion up to and including $1.5
billion; 0.350 of the value of net assets over $1.5 billion up to and
including $6.5 billion; 0.325 of the value of net assets over $6.5 billion up
to and including $11.5 billion; 0.300 of the value of net assets over $11.5
billion up to and including $16.5 billion; 0.290 of the value of net assets
over $16.5 billion up to and including $19 billion; 0.280 of the value of net
assets over $19 billion up to and including $21.5 billion; 0.270 of the value
of net assets in excess of $21.5 billion.
*TICI is entitled to receive from Advisers a sub-advisory fee; the
sub-advisory fees payable by Advisers have no effect on the fees payable by
the underlying Franklin Templeton funds to Advisers. As to Foreign Smaller
and Pacific Growth, TICI receives from Advisers a fee equal to an annual rate
of the value of each fund's average daily net assets as follows: .50% of such
assets up to $100 million; .40% of such assets over $100 million up through
$250 million; .30% of such assets over $250 million up through $500 million;
and .25% of such assets over $500 million. As to Hard Currency, TICI receives
from Advisers a fee equal to an annual rate of .25% of the value of each
fund's average daily net assets. As to Global Government, TICI receives from
Advisers a fee equal to an annual rate of the value of the fund's assets as
follows: .35% of such assets up to $100 million; .25% of such assets over
$100 million up through $250 million; and .20% of such assets over $250
million. As to Bond Fund, TICI receives 25% of the investment advisory fee
paid to Advisers by the fund.
IV. The paragraph with the title "Franklin Small Cap Growth Fund" on page 24
under "Information About the Underlying Franklin Templeton Funds" is replaced
with the following:
FRANKLIN SMALL CAP GROWTH FUND I AND II - Each fund's investment goal is
long-term capital growth. Under normal market conditions, each fund will
invest at least 65% of its total assets in the equity securities of U.S.
small capitalization (small cap) companies. For these funds, small cap
companies are those companies with market cap values not exceeding: (i) $1.5
billion; or (ii) the highest market cap value in the Russell 2000 Index;
whichever is greater, at the time of purchase. That index consists of 2,000
small companies that have publicly traded securities. Market capitalization
is defined as share price multiplied by the number of common stock shares
outstanding. The manager may continue to hold an investment in either fund
for further capital growth opportunities even if the company is no longer
small cap. The Small Cap Growth Fund I generally expects that its median
market cap will significantly exceed the Index's median market cap. In
selecting growth companies, each fund may invest substantially in technology
sectors such as electronics, computer software and hardware,
telecommunications, internet-related services, and health-care technology.
FRANKLIN TECHNOLOGY FUND - The fund's investment goal is capital
appreciation. Under normal market conditions, the fund invests at least 65%
of its total assets in equity securities of companies expected to benefit
from the development, advancement, and use of technology. These may include,
for example, companies in the following areas:
o Technology services, including Internet services, data processing,
technology consulting and implementation, services and electronics
distributors;
o Computer software;
o Computing hardware, peripherals, and electronic components;
o Semiconductors, semiconductor fabrication equipment, and precision
instruments;
o Telecommunications, including communications equipment and services;
o Media and information services, including cable television,
broadcasting, satellite and media content;
o Health-care technology and biotechnology; and
o Aerospace and defense technologies.
The fund may invest in companies of any size, and may, from time to time,
invest a significant portion of its assets in smaller companies. The fund may
invest up to 35% of its total assets in foreign securities.
V. The following paragraph is added to "Risks of Investing in the Underlying
Franklin Templeton Funds" on page 30:
TECHNOLOGY COMPANIES Certain funds focus on technology industries and carry
much greater risks of adverse developments among such industries than funds
that invest in a wider variety of industries. Prices often change
collectively without regard to the merits of individual companies. Technology
company stocks can be subject to abrupt or erratic price movements and have
been volatile, especially over the short term, due to the rapid pace of
product change and development affecting such companies. Technology companies
are subject to significant competitive pressures, such as new market
entrants, aggressive pricing, and competition for market share, and the
potential for falling profit margins. These companies also face the risks
that new services, equipment or technologies will not be accepted by
consumers and businesses or will become rapidly obsolete. These factors can
affect the profitability of technology companies and, as a result, the value
of their securities. In addition, many internet-related companies are in the
emerging stage of development and are particularly vulnerable to the risks of
rapidly changing technologies. Prices of these companies' securities
historically have been more volatile than other securities, especially over
the short term.
VI. References to "Franklin Gold Fund" are replaced with
"Franklin Gold and Precious Metals Fund".
VII. The section "Sales charge waivers" on page 38 is replaced with the
following:
SALES CHARGE WAIVERS Class A shares may be purchased without an initial sales
charge or CDSC by various individuals, institutions and retirement plans or
by investors who reinvest certain distributions and proceeds within 365 days.
Certain investors also may buy Class C shares without an initial sales
charge. The CDSC for each class may be waived for certain redemptions and
distributions. If you would like information about available sales charge
waivers, call your investment representative or call Shareholder Services at
1-800/632-2301. For information about retirement plans, you may call
Retirement Services at 1-800/527-2020. A list of available sales charge
waivers also may be found in the Statement of Additional Information (SAI).
VIII. The section "Minimum investments" on page 39 is replaced with the
following:
MINIMUM INVESTMENTS
INITIAL ADDITIONAL
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Regular accounts $1,000 $50
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Automatic investment plans $50 ($25 for $50 ($25 for
an Education an Education
IRA) IRA)
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UGMA/UTMA accounts $100 $50
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Retirement accounts no minimum no minimum
(other than IRAs, IRA rollovers,
Education IRAs or Roth IRAs)
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IRAs, IRA rollovers, Education $250 $50
IRAs or Roth IRAs
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Broker-dealer sponsored wrap $250 $50
account programs
Full-time employees, officers, $100 $50
trustees and directors of Franklin
Templeton entities, and their
immediate family members
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PLEASE NOTE THAT YOU MAY ONLY BUY SHARES OF A FUND ELIGIBLE FOR SALE IN YOUR
STATE OR JURISDICTION.
IX. The section "Account Application" on page 40 is replaced with the
following:
ACCOUNT APPLICATION If you are opening a new account, please complete and
sign the enclosed account application. Make sure you indicate the share class
you have chosen. If you do not indicate a class, we will place your purchase
in Class A shares. To save time, you can sign up now for services you may
want on your account by completing the appropriate sections of the
application (see "Investor Services" on page 41). For example, if you would
like to link one of your bank accounts to your Fund account so that you may
use electronic fund transfers to and from your bank account to buy and sell
shares, please complete the bank information section of the application. We
will keep your bank information on file for future purchases and redemptions.
X. The following is added to the section "Buying shares" on page 40:
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[Insert graphic of If you have another Before requesting a
phone] Franklin Templeton telephone purchase,
BY PHONE account with your please make sure we
bank account have your bank
(Up to $100,000 per day) information on file, account information
1-800/632-2301 you may open a new on file. If we do not
account by phone. have this
information, you will
To make a same day need to send written
investment, please instructions with
call us by 1:00 p.m. your bank's name and
Pacific time or the address, a voided
close of the New check or savings
York Stock Exchange, account deposit slip,
whichever is earlier. and a signature
guarantee if the bank
and fund accounts do
not have at least one
common owner.
To make a same day
investment, please
call us by 1:00 p.m.
Pacific time or the
close of the New York
Stock Exchange,
whichever is earlier.
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XI. The section "Automatic Investment Plan" on page 41 is replaced with the
following:
AUTOMATIC INVESTMENT PLAN This plan offers a convenient way for you to invest
in the Fund by automatically transferring money from your checking or savings
account each month to buy shares. To sign up, complete the appropriate
section of your account application and mail it to Investor Services.
If you are opening a new account, please include the minimum initial
investment of $50 ($25 for an Education IRA) with your application.
XII. The section "Telephone Privileges" on page 42 is replaced with the
following:
TELEPHONE PRIVILEGES You will automatically receive telephone privileges when
you open your account, allowing you and your investment representative to
buy, sell or exchange your shares and make certain other changes to your
account by phone.
For accounts with more than one registered owner, telephone privileges also
allow the Fund to accept written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone. For
all other transactions and changes, all registered owners must sign the
instructions. In addition, our telephone exchange privilege allows you to
exchange shares by phone from a fund account requiring two or more signatures
into an identically registered money fund account requiring only one
signature for all transactions. This type of telephone exchange is available
as long as you have telephone exchange privileges on your account.
As long as we take certain measures to verify telephone requests, we will not
be responsible for any losses that may occur from unauthorized requests. Of
course, you can decline telephone purchase, exchange or redemption privileges
on your account application.
XIII. All references to the $5.00 exchange fee applicable to market timers
are no longer applicable.
XIV. The last paragraph of the "Exchange Privilege" section on page 42 is
replaced with the following:
Because excessive trading can hurt fund performance, operations and
shareholders, each fund, effective November 1, 2000, reserves the right to
revise or terminate the exchange privilege, limit the amount or number of
exchanges, reject any exchange, or restrict or refuse purchases if (i) the
fund or its manager believes the fund would be harmed or unable to invest
effectively, or (ii) the fund receives or anticipates simultaneous orders
that may significantly affect the fund (please see "Market Timers" on page
47).
XV. In the Selling Shares table on page 25 the section "By Electronic Funds
Transfer (ACH)" is replaced with the following:
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[Insert graphic of You can call or write to have redemption
three lightning proceeds sent to a bank account. See the
bolts] policies above for selling shares by mail or
BY ELECTRONIC phone.
FUNDS TRANSFER
(ACH) Before requesting to have redemption proceeds
sent to a bank account, please make sure we have
your bank account information on file. If we do
not have this information, you will need to send
written instructions with your bank's name and
address, a voided check or savings account
deposit slip, and a signature guarantee if the
bank and Fund accounts do not have at least one
common owner.
If we receive your request in proper form by
1:00 p.m. Pacific time, proceeds sent by ACH
generally will be available within two to three
business days.
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XVI. The section "Market Timers" on page 47 is replaced with the following:
MARKET TIMERS Each fund may restrict or refuse purchases or exchanges by
Market Timers. You may be considered a Market Timer if you have (i) requested
an exchange out of any of the Franklin Templeton funds within two weeks of an
earlier exchange request out of any fund, or (ii) exchanged shares out of any
of the Franklin Templeton funds more than twice within a rolling 90 day
period, or (iii) otherwise seem to follow a market timing pattern that may
adversely affect the fund. Accounts under common ownership or control with an
account that is covered by (i), (ii), or (iii) are also subject to these
limits.
Anyone, including the shareholder or the shareholder's agent, who is
considered to be a Market Timer by the funds, their manager or shareholder
services agent, will be issued a written notice of their status and the
funds' policies. Identified Market Timers will be required to register with
the market timing desk of Franklin Templeton Investor Services, Inc., and to
place all purchase and exchange trade requests through the desk. Some funds
do not allow investments by Market Timers.
XVII. The first category in the section "Additional Policies" on page 47 is
revised to read:
o The funds may restrict or refuse any order to buy shares, including any
purchase under the exchange privilege.
XVIII. The section "Dealer compensation" on page 48 is replaced with the
following:
DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and
service (12b-1) fees and its other resources.
CLASS A CLASS C
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COMMISSION (%) - 2.00
Investment under $50,000 5.00 -
$50,000 but under $100,000 3.75 -
$100,000 but under $250,000 2.80 -
$250,000 but under $500,000 2.00 -
$500,000 but under $1 million 1.60 -
$1 million or more up to 1.00/1/ -
12B-1 FEE TO DEALER 0.25 1.00/2/
A dealer commission of up to 1% may be paid on Class A NAV purchases by
certain retirement plans/1/ and on Class C NAV purchases. A dealer commission
of up to 0.25% may be paid on Class A NAV purchases by certain trust
companies and bank trust departments, eligible governmental authorities, and
broker-dealers or others on behalf of clients participating in comprehensive
fee programs.
MARKET TIMERS. Please note that for Class A NAV purchases by market timers,
including purchases of $1 million or more, dealers are not eligible to
receive the dealer commission. Dealers, however, may be eligible to receive
the 12b-1 fee from the date of purchase.
1. During the first year after purchase, dealers may not be eligible to
receive the 12b-1 fee.
2. Dealers may be eligible to receive up to 0.25% during the first year after
purchase and may be eligible to receive the full 12b-1 fee starting in the
13th month.
Please keep this supplement for future reference.
