SUPPLEMENT DATED MAY 1, 1997
TO THE PROSPECTUS OF
Franklin's AGE High Income Fund
dated October 1, 1996
The prospectus is amended as follows:
I. The section "Group Purchases - Class I Only" under "How Do I Buy Shares? -
Sales Charge Reductions and Waivers" is amended to replace the first paragraph
with the following:
Group Purchases - Class I Only. If you are a member of a qualified group, you
may buy Class I shares at a reduced sales charge that applies to the group as a
whole. The sales charge is based on the combined dollar value of the group
members' existing investments, plus the amount of the current purchase.
II. The section "Sales Charge Waivers" under "How Do I Buy Shares? - Sales
Charge Reductions and Waivers" is amended as follows:
A. Category 8 is replaced with:
8. Chilean retirement plans that meet the requirements described under
"Retirement Plans" below.
B. The following new category is added:
17. Members of the Assembly of Governmental Employees ("AGE"). If you are a
member, please complete the supplement to the shareholder application included
with this prospectus and return it to the Fund.
C. Effective June 1, 1997, category 5 is deleted in its entirety.
III. The following paragraph is added after the list of "Sales Charge Waivers"
under "How Do I Buy Shares?":
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 or SEPs, such as
403(b) or 457 plans, must also meet the requirements described under "Group
Purchases - Class I Only" above. For retirement plan accounts opened on or
after May 1, 1997, a Contingent Deferred Sales Charge may apply if the account
is closed 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.
IV. The section "How Do I Buy Shares? - Other Payments to Securities Dealers" is
replaced in its entirety with the following:
Other Payments to Securities Dealers
The payments described below may be made to Securities Dealers who initiate and
are responsible for Class II purchases and certain Class I purchases made
without a sales charge. The payments are subject to the sole discretion of
Distributors, and are paid by Distributors or one of its affiliates and not by
the Fund or its shareholders.
1. Class II purchases - up to 1% of the purchase price.
2. Class I purchases of $1 million or more - up to 0.75% of the
amount invested.
3. Class I purchases made without a front-end sales charge by certain
retirement plans described under "Sales Charge Reductions and Waivers -
Retirement Plans" above - up to 1% of the amount invested. For retirement plan
accounts opened on or after May 1, 1997, a Contingent Deferred Sales Charge
will not apply to the account if the Securities Dealer chooses to receive a
payment of 0.25% or less or if no payment is made.
4. Class I purchases by trust companies and bank trust departments, Eligible
Governmental Authorities, and broker-dealers or others on behalf of clients
participating in comprehensive fee programs - up to 0.25% of the amount
invested.
5. Class I purchases by Chilean retirement plans - up to 1% of the
amount invested.
A Securities Dealer may receive only one of these payments for each qualifying
purchase. Securities Dealers who receive payments in connection with
investments described in paragraphs 1, 2 or 5 above or a payment of up to 1%
for investments described in paragraph 3 will be eligible to receive the Rule
12b-1 fee associated with the purchase starting in the thirteenth calendar
month after the purchase.
For breakpoints that may apply, please see "How Do I Buy, Sell and Exchange
Shares? - Other Payments to Securities Dealers" in the SAI.
Distributors and/or its affiliates provide financial support to various
Securities Dealers that sell shares of the Franklin Templeton Group of Funds.
This support is based primarily on the amount of sales of fund shares. The
amount of support may be affected by: total sales; net sales; levels of
redemptions; the proportion of a Securities Dealer's sales and marketing
efforts in the Franklin Templeton Group of Funds; a Securities Dealer's support
of, and participation in, Distributors' marketing programs; a Securities
Dealer's compensation programs for its registered representatives; and the
extent of a Securities Dealer's marketing programs relating to the Franklin
Templeton Group of Funds. Financial support to Securities Dealers may be made
by payments from Distributors' resources, from Distributors' retention of
underwriting concessions and, in the case of funds that have Rule 12b-1 plans,
from payments to Distributors under such plans. In addition, certain Securities
Dealers may receive brokerage commissions generated by fund portfolio
transactions in accordance with the NASD's rules.
V. The following paragraph is added under "How Do I Sell Shares?":
Beginning on or about May 1, 1997, you will automatically be able to redeem
shares by telephone without completing a telephone redemption agreement. Please
notify us in writing if you do not want this option to be available on your
account. If you later decide you would like this option, send us written
instructions signed by all account owners, with a signature guarantee.
VI. The following is added 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 account is
closed within 365 days of the account's initial purchase in the Franklin
Templeton Funds.
VII. The section "Contingent Deferred Sales Charge - Waivers" under "How Do I
Sell Shares?" is replaced in its entirety with the following:
Waivers. We waive the Contingent Deferred Sales Charge for:
o Exchanges
o Account fees
o Sales of shares purchased pursuant to a sales charge waiver
o Sales of shares purchased without a front-end sales charge by certain
retirement plan accounts if (i) the account was opened before May 1,1997, or
(ii) the Securities Dealer of record received a payment from Distributors of
0.25% or less, or (iii) Distributors did not make any payment in connection
with the purchase, as described under "How Do I Buy Shares? - Other Payments to
Securities Dealers"
o Redemptions by the Fund when an account falls below the minimum
required account size
o Redemptions following the death of the shareholder or beneficial owner
o Redemptions through a systematic withdrawal plan set up before
February 1, 1995
o Redemptions through a systematic withdrawal plan set up on or after February
1, 1995, at a rate of up to 1% a month of an account's Net Asset Value. For
example, if you maintain an annual balance of $1 million in Class I shares, you
can redeem up to $120,000 annually through a systematic withdrawal plan free of
charge. Likewise, if you maintain an annual balance of $10,000 in Class II
shares, $1,200 may be redeemed annually free of charge.
o Distributions from individual retirement plan accounts due to death or
disability or upon periodic distributions based on life expectancy
o Tax-free returns of excess contributions from employee benefit plans
o Redemptions by Trust Company employee benefit plans or employee benefit
plans serviced by ValuSelect
o Participant initiated distributions from employee benefit plans or
participant initiated exchanges among investment choices in employee benefit
plans
