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SUPPLEMENT DATED JANUARY 11, 1999
TO THE PROSPECTUS OF
FRANKLIN INVESTORS SECURITIES TRUST - ADVISOR CLASS
(FIST1 - FRANKLIN GLOBAL GOVERNMENT INCOME FUND AND FRANKLIN
SHORT-INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND)
DATED MARCH 1, 1998
The prospectus is amended as follows:
I. The Global Government Income Fund offers three classes of shares: Class A,
Class C and Advisor Class. The Short-Intermediate U.S. Government Fund
offers two classes of shares: Class A and Advisor Class. Before January 1,
1999, Class A shares were designated Class I and Class C shares were
designated Class II. All references in the prospectus to Class I shares are
replaced with Class A, and all references to Class II shares are replaced
with Class C.
II. The following paragraphs are added under "What Are the Risks of Investing
in the Fund?" (the section "Euro Risk" does not apply to the
Short-Intermediate U.S. Government Fund):
YEAR 2000. When evaluating current and potential portfolio positions, Year
2000 is one of the factors Advisers considers.
Advisers will rely upon public filings and other statements made by issuers
about their Year 2000 readiness. Issuers in countries outside the U.S.,
particularly in emerging markets, may not be required to make the same
level of disclosure about Year 2000 readiness as is required in the U.S.
Advisers, of course, cannot audit each issuer and its major suppliers to
verify their Year 2000 readiness.
If an issuer in which the Fund is invested is adversely affected by Year
2000 problems, it is likely that the price of its security will also be
adversely affected. A decrease in the value of one or more of the Fund's
portfolio holdings will have a similar impact on the price of the Fund's
shares. Please see "Year 2000 Problem" under "Who Manages the Fund?" for
more information.
EURO RISK. On January 1, 1999, the European Monetary Union (EMU) introduced
a new single currency, the euro, which will replace the national currency
for participating member countries. If the Fund holds investments in
countries with currencies replaced by the euro, the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting will be impacted.
The process to establish the euro may result in market volatility. It is
not possible to predict the impact of the euro on the business or financial
condition of European issuers or on the Fund. The transition and the
elimination of currency risk among EMU countries may change the economic
environment and behavior of investors, particularly in European markets. To
the extent the Fund holds non-U.S. dollar (euro or other) denominated
securities, it will still be exposed to currency risk due to fluctuations
in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all euro-related
changes to enable the Franklin Templeton Funds to process transactions
accurately and completely with minimal disruption to business activities.
While there can be no assurance that the Fund will not be adversely
affected, Advisers and its affiliated service providers are taking steps
that they believe are reasonably designed to address the euro issue.
III. In the section "Who Manages the Fund?",
(a) the following replaces the second paragraph under "Investment Manager"
in the section "Who Manages the Fund?":
Under an agreement with Advisers, Investment Counsel, through its Templeton
Global Bond Managers division ("Global Bond Managers"), is the sub-advisor
of the Global Fund. A team from Global Bond Managers provides Advisers with
investment management advice and assistance.
(b) the first sentence of the section "Management Team" is replaced with
the following:
(b) the following is added after the "Administrative Services" section:
YEAR 2000 PROBLEM. The Fund's business operations depend on a worldwide
network of computer systems that contain date fields, including securities
trading systems, securities transfer agent operations and stock market
links. Many of the systems currently use a two digit date field to
represent the date, and unless these systems are changed or modified, they
may not be able to distinguish the Year 1900 from the Year 2000 (commonly
referred to as the Year 2000 problem). In addition, the fact that the Year
2000 is a non-standard leap year may create difficulties for some systems.
When the Year 2000 arrives, the Fund's operations could be adversely
affected if the computer systems used by Advisers, its service providers
and other third parties it does business with are not Year 2000 ready. For
example, the Fund's portfolio and operational areas could be impacted,
including securities trade processing, interest and dividend payments,
securities pricing, shareholder account services, reporting, custody
functions and others. The Fund could experience difficulties in effecting
transactions if any of its foreign subcustodians, or if foreign
broker-dealers or foreign markets are not ready for Year 2000.
Advisers and its affiliated service providers are making a concerted effort
to take steps they believe are reasonably designed to address their Year
2000 problems. Of course, the Fund's ability to reduce the effects of the
Year 2000 problem is also very much dependent upon the efforts of third
parties over which the Fund and Advisers may have no control.
IV. In step 2 under "How Do I Buy Shares? - Opening Your Account," the minimum
investment to add to your account is changed from $25 to $50.
V. The section "How Do I Buy Shares in Connection with Retirement Plans?",
found under "How Do I Buy Shares?", is replaced with the following:
HOW DO I BUY SHARES IN CONNECTION WITH RETIREMENT PLANS?
Your individual or employer-sponsored retirement plan may invest in the
Fund. Plan documents are required for all retirement plans. Trust
Company can provide the plan documents for you and serve as custodian or
trustee.
Trust Company can provide you with brochures containing important
information about its plans. These plans require separate applications
and their policies and procedures may be different than those described
in this prospectus. For more information, including a free retirement
plan brochure or application, please call Retirement Plan Services.
Please consult your legal, tax or retirement plan specialist before
choosing a retirement plan. Your investment representative or advisor
can help you make investment decisions within your plan.
VI. In the section "Exchange Restrictions," found under "May I Exchange
Shares for Shares of Another Fund?",
(a) the second item is replaced with the following:
o Generally exchanges may only be made between identically registered
accounts, unless you send written instructions with a signature
guarantee. You may, however, exchange shares from a fund account
requiring two or more signatures into an identically registered money
fund account requiring only one signature for all transactions. PLEASE
NOTIFY US IN WRITING IF YOU DO NOT WANT THIS OPTION TO BE AVAILABLE ON
YOUR ACCOUNT. Additional procedures may apply. Please see "Transaction
Procedures and Special Requirements."
(b) and the following new item is added:
o You must meet the applicable minimum investment amount of the fund
your are exchanging into, or exchange 100% of your Fund shares.
VII. In the "By Phone" section of the chart under "How Do I Sell Shares?",
(a) the first bulleted item is replaced with the following:
o If the request is $100,000 or less. Institutional accounts may exceed
$100,000 by completing a separate agreement. Call Institutional
Services to receive a copy.
(b) and the third bulleted item is deleted.
VIII.Distribution option 3 in the section "What Distributions Might I Receive
From the Fund? - Distribution Options" is replaced with the following:
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive dividends, or both
dividend and capital gain distributions in cash. If you have the money
sent to another person or to a checking or savings account, you may need
a signature guarantee. If you send the money to a checking or savings
account, please see "Electronic Fund Transfers" under "Services to Help
You Manage Your Account."
IX. Under "Transaction Procedures and Special Requirements,"
(a) the section "Joint Accounts" is replaced with the following:
JOINT ACCOUNTS. For accounts with more than one registered owner, the
fund accepts 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.
Please keep in mind that if you have previously told us that you do not
want telephone exchange or redemption privileges on your account, then
we can only accept written instructions to exchange or redeem shares if
they are signed by all registered owners on the account.
(b) the reference to $50,000 in the section "Signature Guarantees" is
replaced with $100,000.
(c) the section "Trust Company Retirement Plan Accounts," found under
"Telephone Transactions," is deleted.
(d) and the section "Keeping Your Account Open" is replaced with the
following:
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may
close your account if the value of your shares is less than $250, or less
than $50 for employee accounts. We will only do this if the value of your
account fell below this amount because you voluntarily sold your shares and
your account has been inactive (except for the reinvestment of
distributions) for at least six months. Before we close your account, we
will notify you and give you 30 days to increase the value of your account
to $1,000, or $100 for employee accounts. These minimums do not apply to
IRAs, accounts managed by the Franklin Templeton Group, the Franklin
Templeton Profit Sharing 401(k) Plan, the series of Franklin Templeton Fund
Allocator Series, or certain defined contribution plans that qualify to buy
shares with no minimum initial investment requirement.
X. In the section "Services to Help You Manage Your Account":
(a) the second sentence under "Automatic Investment Plan" is replaced
with the following:
Under the plan, you can have money transferred automatically from your
checking or savings account to the Fund each month to buy additional
shares.
(b) the second paragraph under "Systematic Withdrawal Plan" is replaced
with the following:
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the account
application included with this prospectus and indicate how you would
like to receive your payments. You may choose to direct your payments to
buy the same class of shares of another Franklin Templeton Fund or have
the money sent directly to you, to another person, or to a checking or
savings account. If you choose to have the money sent to a checking or
savings account, please see "Electronic Fund Transfers" below. Once your
plan is established, any distributions paid by the Fund will be
automatically reinvested in your account.
(c) and the following new section is added after the section "Systematic
Withdrawal Plan":
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or
payments under a systematic withdrawal plan sent directly to a checking
or savings account. If the account is with a bank that is a member of
the Automated Clearing House, the payments may be made automatically by
electronic funds transfer. If you choose this option, please allow at
least fifteen days for initial processing. We will send any payments
made during that time to the address of record on your account.
XI. In the "Useful Terms and Definitions" section, the definition of "Class I,
Class II and Advisor Class" is replaced with the following:
CLASS A, CLASS C AND ADVISOR CLASS - The Global Government Income Fund
offers three classes of shares, designated "Class A," "Class C" and
"Advisor Class." The Short-Intermediate U.S. Government Fund offers two
classes of shares, designated "Class A" and "Advisor Class." The classes
have proportionate interests in the Fund's portfolio. They differ,
however, primarily in their sales charge and expense structures.
Please keep this supplement for future reference.
