File No. 33-31084
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
POST-EFFECTIVE
AMENDMENT NO. 5
TO
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
(Exact Name of Trust)
NIKE SECURITIES L.P.
(Exact Name of Depositor)
1001 Warrenville Road
Lisle, Illinois 60532
(Complete address of Depositor's principal executive offices)
NIKE SECURITIES L.P. CHAPMAN AND CUTLER
Attn: James A. Bowen Attn: Eric F. Fess
1001 Warrenville Road 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and complete address of agents for service)
It is proposed that this filing will become effective (check
appropriate box)
: : immediately upon filing pursuant to paragraph (b)
: x : March 1, 1996
: : 60 days after filing pursuant to paragraph (a)
: : on (date) pursuant to paragraph (a) of rule (485 or 486)
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
the issuer has registered an indefinite amount of securities. A
24f-2 Notice for the offering was last filed on October 24, 1995.
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
40,513,792 UNITS
PROSPECTUS
Part One
Dated December 20, 1995
Note: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
The Trust
The Templeton Growth and Treasury Trust (the "Trust") is a unit investment
trust consisting of a portfolio of "zero coupon" U.S. Treasury bonds (Treasury
Obligations) and shares of Templeton Growth Fund, Inc. ("Templeton").
Templeton is an open-end diversified management investment company, commonly
known as a mutual fund. At November 16, 1995, each Unit represented a
1/40,513,792 undivided interest in the principal and net income of the Trust
(see "The Trust" in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
Public Offering Price
The Public Offering Price per 1,000 Units is equal to the aggregate value of
the Securities in the Portfolio of the Trust divided by the number of Units
outstanding, multiplied by 1,000, plus a sales charge of 5.8% of the Public
Offering Price (6.157% of the amount invested). At November 16, 1995, the
Public Offering Price per 1,000 Units was $1,334.76 (see "Public Offering" in
Part Two).
Please retain both parts of this Prospectus for future reference.
_____________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_____________________________________________________________________________
NIKE SECURITIES L.P.
Sponsor
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF NOVEMBER 16, 1995
Sponsor: Nike Securities L.P.
Evaluator: Securities Evaluation Service, Inc.
Trustee: The Chase Manhattan Bank (National Association)
<TABLE>
<CAPTION>
GENERAL INFORMATION
<S> <C>
Aggregate Maturity Value of Treasury Obligations in the Trust $40,515,000
Aggregate Number of Shares of Templeton in the Trust 1,155,311.036
Number of Units 40,513,792
Fractional Undivided Interest in the Trust per Unit 1/40,513,792
Public Offering Price per 1,000 Units:
Aggregate Value of Securities in the Portfolio $50,939,633
Aggregate Value of Securities per 1,000 Units $1,257.34
Sales Charge 6.157% (5.8% of Public Offering Price) $77.42
Public Offering Price per 1,000 Units $1,334.76
Redemption Price and Sponsor's Repurchase Price per 1,000
Units ($77.42 less than the Public Offering Price per
1,000 Units) $1,257.34
</TABLE>
Date Trust Established March 22, 1990
Mandatory Termination Date September 1, 2000
Evaluator's Annual Fee: $.10 per $1,000 principal amount of Treasury
Obligations outstanding. Evaluations for purposes of sale, purchase or
redemption of Units are made as of the close of trading (4:00 p.m. Eastern
time) on the New York Stock Exchange on each day on which it is open.
Supervisory fee payable to an affiliate Maximum of $.15 per 1,000
of the Sponsor Units outstanding annually
Trustee's Annual Fee: $.85 per 1,000 Units outstanding.
Record Date: The same business day as Templeton's ex-dividend date.
Distribution Date: The same business day as Templeton's distribution date.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Unit Holders of Templeton Growth and
Treasury Trust, Series 1
We have audited the accompanying statement of assets and liabilities,
including the portfolio, of Templeton Growth and Treasury Trust, Series 1 as
of August 31, 1995, and the related statements of operations and changes in
net assets for each of the three years in the period then ended. These
financial statements are the responsibility of the Trust's Sponsor. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of August 31, 1995, by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Templeton Growth and Treasury
Trust, Series 1 at August 31, 1995, and the results of its operations and
changes in its net assets for each of the three years in the period then ended
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 10, 1995
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Securities, at market value (cost, including accretion
on the treasury obligations, $46,140,748)
(Note 1) $53,886,242
Receivable from investment transaction 43,413
___________
53,929,655
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C> <C>
Accrued liabilities 1,062
Unit redemptions payable 80,507
Cash overdraft 212,540
___________
294,109
___________
Net assets, applicable to 42,000,718 outstanding
units of fractional undivided interest:
Cost of Trust assets, including accretion
on the treasury obligations (Note 1) $46,140,748
Net unrealized appreciation (Note 2) 7,745,494
Distributable funds (deficit) (250,696)
___________
$53,635,546
===========
Net asset value per 1,000 units $1,277.01
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
PORTFOLIO
August 31, 1995
<TABLE>
<CAPTION>
Maturity Market
value Name of Issuer and Title of Security (1) value
<C> <S> <C>
Corpus of a U.S. Treasury Note
(stripped of its interest-paying coupons)
$42,002,000 maturing August 15, 2000 $31,158,605
=============
</TABLE>
<TABLE>
<CAPTION>
Shares
<C> <S> <C>
1,198,715.074 Templeton Growth Fund, Inc. 22,727,637
============= ___________
Total investments $53,886,242
===========
</TABLE>
(1) The treasury obligations have been purchased at a discount from their
par value because there is no stated interest income thereon (such
securities are often referred to as U.S. Treasury zero coupon bonds).
Over the life of the treasury obligations the value increases, so that
upon maturity the holders will receive 100% of the principal amount
thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended Aug. 31,
1995 1994 1993
<S> <C> <C> <C>
Interest income $2,382,261 2,360,122 2,358,680
Dividends:
Ordinary income 655,973 603,381 560,315
Capital gain 1,224,089 1,397,096 1,954,605
___________________________________
Total investment income 4,262,323 ,360,599 4,873,600
Expenses:
Trustee's fees and related expenses (48,645) (52,150) (67,610)
Evaluator's fees (4,435) (4,983) (5,247)
Supervisory fees (6,432) (7,140) (7,822)
__________________________________
Total expenses (59,512) (64,273) (80,679)
__________________________________
Investment income - net 4,202,811 4,296,326 4,792,921
Net gain (loss) on investments:
Net realized gain (loss) 450,990 740,004 345,879
Change in unrealized appreciation
or depreciation 369,014 (2,673,186) 5,198,646
__________________________________
820,004 (1,933,182) 5,544,525
__________________________________
Net increase (decrease) in net
assets resulting from operations $5,022,815 2,363,144 10,337,446
==================================
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Aug. 31,
1995 1994 1993
<S> <C> <C> <C>
Net increase (decrease) in net assets
resulting from operations:
Investment income - net $4,202,811 4,296,326 4,792,921
Net realized gain (loss)
on investments 450,990 740,004 345,879
Change in unrealized appreciation
or depreciation on investments 369,014 (2,673,186) 5,198,646
__________________________________
5,022,815 2,363,144 10,337,446
Units redeemed (3,967,756, 4,324,526
and 3,885,000 in 1995, 1994 and
1993, respectively) (4,720,377) (5,138,008) (4,123,581)
Distributions to unit holders:
Investment income - net (2,035,726) (1,913,160) (2,417,030)
___________________________________
Total increase (decrease) in net
assets (1,733,288) (4,688,024) 3,796,835
Net assets:
At the beginning of the year 55,368,834 60,056,858 56,260,023
___________________________________
At the end of the year (including
distributable funds (deficit)
applicable to Trust units of
$(250,696), $(14,173) and $(37,002)
at August 31, 1995, 1994 and
1993, respectively) $53,635,546 55,368,834 60,056,858
===================================
Trust units outstanding at the end
of the year 42,000,718 45,968,474 50,293,000
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies
Security valuation -
The treasury obligations are stated at values as determined by Securities
Evaluation Service, Inc. (the Evaluator), certain shareholders of which are
officers of the Sponsor. The values are based on (1) current bid prices for
the securities obtained from dealers or brokers who customarily deal in
securities comparable to those held by the Trust, (2) current bid prices for
comparable securities, (3) appraisal or (4) any combination of the above.
Shares of Templeton Growth Fund, Inc. (Templeton) are stated at Templeton's
published net asset value as reported by the Evaluator. Net asset value is
determined by dividing the value of Templeton's securities plus any cash and
other assets (including accrued interest and dividends receivable) less all
liabilities (including accrued expenses) by the number of shares outstanding,
adjusted to the nearest whole cent.
Investment income -
Dividends from the Templeton shares are recorded on Templeton's ex-dividend
date. Interest income consists of amortization of original issue discount and
market discount or premium on the treasury obligations. Such amortization is
included in the cost of the treasury obligations rather than in distributable
funds because it is not currently available for distribution to unit holders.
Security cost -
Cost of the Trust's treasury obligations is based on the offering price of the
treasury obligations on the dates the treasury obligations were deposited in
the Trust, plus amortization of original issue discount and amortization of
market discount or premium. Cost of the Templeton shares is based on the net
asset value of such shares on the dates the shares were deposited in the
Trust. The cost of securities sold is determined on the average cost method.
Sales of securities are recorded on the trade date.
Federal income taxes -
The Trust is not taxable for Federal income tax purposes. Each unit holder is
considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
Expenses of the Trust -
The Trust pays a fee for Trustee services to United States Trust Company of
New York, which is based on $.85 per annum per 1,000 units outstanding based
on the largest aggregate number of units outstanding during the calendar year.
Effective September 1, 1995, The Chase Manhattan Bank (National Association)
will succeed United States Trust Company of New York as Trustee; the Trustee
fees will not be affected by the change. The Evaluator receives an annual fee
based on $.10 per $1,000 principal amount of treasury obligations outstanding.
Additionally, the Trust pays recurring financial reporting costs and an annual
supervisory fee payable to an affiliate of the Sponsor.
<PAGE>
2. Unrealized appreciation and depreciation
An analysis of net unrealized appreciation at August 31, 1995 follows:
<TABLE>
<CAPTION>
Treasury Templeton
obligations shares Total
<S> <C> <C> <C>
Unrealized appreciation $3,785,251 3,960,243 7,745,494
Unrealized depreciation - - -
_____________________________________
$3,785,251 3,960,243 7,745,494
=====================================
</TABLE>
3. Other information
Cost to investors -
The cost to initial investors of units of the Trust was based on the aggregate
offering price of the treasury obligations and the net asset value of the
Templeton shares on the date of an investor's purchase, plus a sales charge of
5.5% of the public offering price which is equivalent to approximately 5.820%
of the net amount invested.
Distributions to unit holders -
Distributions to unit holders are made on Templeton's distribution date.
During the years ended August 31, 1995, 1994 and 1993, the Trust made
distributions totaling $44.64, $38.69 and $44.87 per 1,000 units,
respectively, as described below.
Selected data per 1,000 units of the Trust outstanding
throughout each year -
<TABLE>
<CAPTION>
Year ended Aug. 31,
1995 1994 1993
<S> <C> <C> <C>
Investment income - interest and dividends $96.39 91.27 93.56
Expenses (1.35) (1.35) (1.55)
_____________________________
Investment income - net 95.04 89.92 92.01
Distributions to unit holders:
Investment income - net (44.64) (38.69) (44.87)
Net gain (loss) on investments 22.11 (40.87) 108.57
_____________________________
Total increase (decrease) in net assets 72.51 10.36 155.71
Net assets:
Beginning of the year 1,204.50 1,194.14 1,038.43
_____________________________
End of the year $1,277.01 1,204.50 1,194.14
=============================
</TABLE>
<PAGE>
Investment income - interest and dividends, expenses and investment income -
net per 1,000 units have been calculated based on the weighted average number
of units outstanding during each year (44,220,800, 47,776,938 and 52,092,896
units during the years ended August 31, 1995, 1994 and 1993, respectively).
Distributions to unit holders of investment income - net per 1,000 units
reflects the Trust's cash distributions of $40.22 per 1,000 units to
45,657,747 units on November 4, 1994, $4.42 per 1,000 units to 45,106,585
units on December 30, 1994, $31.22 per 1,000 units to 49,628,000 units on
October28, 1993, $7.47 per 1,000 units to 48,698,000 units on December 31,
1993, $41.94 per 1,000 units to 53,918,000 units on October23, 1992 and $2.93
per 1,000 units to 53,143,000 units on December31, 1992.
<PAGE>
TEMPLETON GROWTH AND TREASURY TRUST, SERIES 1
PART ONE
Must be Accompanied by Part Two
___________________
P R O S P E C T U S
___________________
SPONSOR: Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
(800) 621-1675
TRUSTEE: The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
LEGAL COUNSEL Chapman and Cutler
TO SPONSOR: 111 West Monroe Street
Chicago, Illinois 60603
LEGAL COUNSEL Carter, Ledyard & Milburn
TO TRUSTEE: 2 Wall Street
New York, New York 10005
INDEPENDENT Ernst & Young, LLP
AUDITORS: Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, securities in any jurisdiction to any person to whom it is not
lawful to make such offer in such jurisdiction.
This Prospectus does not contain all the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
Templeton Growth and Treasury Trust
Templeton Foreign Fund & U.S. Treasury Securities Trust
PROSPECTUS NOTE: THIS PART TWO PROSPECTUS MAY
Part Two ONLY BE USED WITH PART ONE
Dated January 31, 1996
The Trust. Templeton Growth and Treasury Trust and Templeton Foreign
Fund & U.S. Treasury Securities Trust (each a "Trust" and collectively,
the "Fund") are unit investment trusts each consisting of a portfolio
of "zero coupon" U.S. Treasury bonds and shares of Templeton Growth
Fund, Inc. or Templeton Foreign Fund, respectively ("Templeton").
Templeton is an open-end diversified management investment company,
commonly known as a mutual fund.
The objective of the Fund is to protect Unit holders' capital
and provide for potential capital appreciation by investing a
portion of its portfolio in "zero coupon" U.S. Treasury bonds,
such securities being referred to herein as "Treasury Obligations"
and the remainder of the Trust's portfolio in shares of Templeton.
Collectively the Treasury Obligations and the Templeton shares
are referred to herein as the "Securities" (See "Portfolio").
Templeton's objective is to obtain long-term capital growth through
a flexible policy of investing in stocks and debt obligations
of companies and governments of any nation (in the case of Templeton
Growth Fund, Inc.) or companies and governments outside the United
States (in the case of Templeton Foreign Fund). Templeton Growth
and Treasury Trust has a termination date of September 1, 2000
and Templeton Foreign Fund & U.S. Treasury Securities Trust has
a termination date of February 15, 2001. The Treasury Obligations
evidence the right to receive a fixed payment at a future date
from the U.S. Government and are backed by the full faith and
credit of the U.S. Government. The guarantee of the U.S. Government
does not apply to the market value of the Treasury Obligations
or the Units of the Trust, whose net asset value will fluctuate
and, prior to maturity, may be worth more or less than a purchaser's
acquisition cost. There is, of course, no guarantee that the objective
of the Trust will be achieved.
Each Unit of a Trust represents an undivided fractional interest
in all the Securities deposited in the Trust. Each Trust has been
organized so that purchasers of Units should receive, at the termination
of the Trust, an amount per Unit at least equal to $1.00 (which
is equal to the per Unit value upon maturity of the Treasury Obligations),
even if the Trust never paid a dividend and the value of the Templeton
shares were to decrease to zero, which the Sponsor considers highly
unlikely. This feature of each Trust provides Unit holders who
purchase Units at a price of $1.00 or less per Unit with total
principal protection, including any sales charges paid, although
they might forego any earnings on the amount invested. To the
extent that Units are purchased at a price less than $1.00 per
Unit, this feature may also provide a potential for capital appreciation.
The Templeton shares deposited in each Trust's portfolio have
no fixed maturity date and the net asset value of the shares will
fluctuate. The Portfolio, essential information based thereon
and financial statements, including a report of independent auditors
relating to the Trusts offered hereby, are contained in Part One
for each Trust to which reference should be made for such information.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1
Public Offering Price. The Public Offering Price per Unit will
be based upon a pro rata share of the bid prices of the Treasury
Obligations and the net asset value of the Templeton shares in
each Trust plus or minus a pro rata share of cash, if any, in
the Principal Account of the Trust plus a maximum sales charge
of 5.8% (equivalent to 6.157% of the net amount invested). The
minimum purchase is $1,000. The sales charge is reduced on a graduated
scale for sales involving at least $100,000. See "How is the Public
Offering Price Determined?"
Dividend and Capital Distributions. Distributions, if any, of
net income, other than amortized discount, will be made at least
annually. Distributions of realized capital gains, if any, received
by the Trusts, will be made whenever Templeton makes such a distribution.
Any distribution of income and/or capital will be net of the expenses
of the Trusts. INCOME WITH RESPECT TO THE ACCRUAL OF ORIGINAL
ISSUE DISCOUNT ON THE TREASURY OBLIGATIONS WILL NOT BE DISTRIBUTED
CURRENTLY, ALTHOUGH UNIT HOLDERS WILL BE SUBJECT TO INCOME TAX
AT ORDINARY INCOME RATES AS IF A DISTRIBUTION HAD OCCURRED. SEE
"WHAT IS THE FEDERAL TAX STATUS OF UNIT HOLDERS?" Additionally,
upon termination of each Trust, the Trustee will distribute, upon
surrender of Units for redemption, to each Unit holder his pro
rata share of the Trust's assets, less expenses, in the manner
set forth under "Rights of Unit Holders-How are Income and Principal
Distributed?"
Reinvestment. Each Unit holder will, unless he elects to receive
cash payments, have distributions of principal (including the
proceeds received upon the maturity of the Treasury Obligations
in the Trust at termination), capital gains, if any, and income
earned by a Trust, automatically invested in shares of Templeton
(if Units are properly registered) in the name of the Unit holder.
Such distributions will be reinvested without a sales charge to
the participant on each applicable distribution date. See "Rights
of Unit Holders-How Can Distributions to Unit Holders be Reinvested?"
Market for Units. While under no obligation to do so, the Sponsor
intends to maintain a market for Units of the Trust and offer
to repurchase such Units at prices which are based on the aggregate
bid side evaluation of the Treasury Obligations and the aggregate
net asset value of Templeton shares in each Trust plus or minus
a pro rata share of cash, if any, in the Principal Account of
the Trust. In the absence of such a market, a Unit holder may
redeem Units through redemption at prices based upon the aggregate
bid price of the Treasury Obligations plus the aggregate net asset
value of the Templeton shares in the Trust plus or minus a pro
rata share of cash, if any, in the Principal Account of the Trust.
See "Rights of Unit Holders-How May Units be Redeemed?"
Page 2
Templeton Growth and Treasury Trust
Templeton Foreign Fund & U.S. Treasury Securities Trust
What are Templeton Growth and Treasury Trust and Templeton Foreign
Fund & U.S. Treasury Securities Trust?
The Fund is a series of trusts of either Templeton Growth and
Treasury Trust or Templeton Foreign Fund & U.S. Treasury Securities
Trust, all of which are generally similar but each of which is
separate and is designated by a different series number (the "Fund").
Each series consists of underlying separate unit investment trusts
(such Trusts being collectively referred to herein as the "Fund")
created under the laws of the State of New York pursuant to a
Trust Agreement (the "Indenture"), dated the Initial Date of Deposit,
with Nike Securities L.P., as Sponsor, The Chase Manhattan Bank
(National Association), as Trustee, Securities Evaluation Service,
Inc., as Evaluator, and First Trust Advisors L.P., as Portfolio
Supervisor.
The objective of the Fund and each Series thereof is to protect
Unit holders' capital and provide for potential long-term capital
appreciation through an investment in "zero coupon" U.S. Treasury
bonds, such securities being referred to herein as the "Treasury
Obligations" and the remainder of the Trust's portfolio is invested
in shares of Templeton Growth Fund, Inc. or Templeton Foreign
Fund, (collectively, the "Templeton Funds"). The Treasury Obligations
evidence the right to receive a fixed payment at a future date
from the U.S. Government and are backed by the full faith and
credit of the U.S. Government. The guarantee of the U.S. Government
does not apply to the market value of the Treasury Obligations
or the Units of the Trust, whose net asset value will fluctuate
and, prior to maturity, may be more or less than a purchaser's
acquisition cost. Templeton is an open end mutual fund whose objective
is to obtain long-term capital growth through a flexible policy
of investing in stocks and debt obligations of companies and governments
of any nation (in the case of Templeton Growth Fund, Inc.) or
companies and governments outside the United States (in the case
of Templeton Foreign Fund). Collectively, the Treasury Obligations
and Templeton shares in the Trust are referred to herein as the
"Securities." There is, of course, no guarantee that the objective
of the Trust will be achieved.
The Fund has been organized so that purchasers of Units should
receive, at the termination of a Trust, an amount per Unit at
least equal to $1.00 per Unit (which is equal to the per Unit
value upon maturity of the Treasury Obligations), even if the
Templeton shares never paid a dividend and the value of Templeton
shares in the Trust were to decrease to zero, which the Sponsor
considers highly unlikely. To the extent that Units of the Trust
are redeemed, the aggregate value of the Securities in the Trust
will be reduced and the undivided fractional interest represented
by each outstanding Unit of the Trust will increase. See "How
May Units be Redeemed?"
What are the Expenses and Charges?
At no cost to the Fund, the Sponsor has borne all the expenses
of creating and establishing the Fund, including the cost of the
initial preparation, printing and execution of the Indenture and
the certificates for the Units, legal and accounting expenses,
expenses of the Trustee and other out-of-pocket expenses. The
Sponsor will not receive any fees in connection with its activities
relating to the Fund. However, First Trust Advisors L.P., an affiliate
of the Sponsor, will receive an annual supervisory fee, which
is not to exceed the amount set forth in Part One for each Trust,
for providing portfolio supervisory services for each Trust. Such
fee is based on the number of Units outstanding in a Trust on
January 1 of each year except for a trust during the year or years
in which an initial offering period occurs in which case the fee
for a month is based on the number of Units outstanding at the
end of such month. The fee may exceed the actual costs of providing
such supervisory services for a Trust, but at no time will the
total amount received for portfolio supervisory services rendered
to unit investment trusts to which First Trust Advisors L.P. is
the Sponsor in any calendar year exceed the aggregate cost to
First Trust Advisors L.P. of supplying such services in such year.
Page 3
The Evaluator will receive a fee as indicated in Part One for
each Trust. No fee is paid to the Evaluator with respect to the
Templeton shares in the Trust. The Trustee pays certain expenses
of the Trust for which it is reimbursed by the Trust. The Trustee
will receive for its ordinary recurring services to a Trust and
for all normal expenses of the Trustee incurred by or in connection
with its responsibilities under the Indenture, an annual fee computed
at $.85 per annum per 1,000 Units in the Trust outstanding based
upon the largest aggregate number of Units of the Trust outstanding
at any time during the year. For a discussion of the services
performed by the Trustee pursuant to its obligations under the
Indenture, reference is made to the material set forth under "Rights
of Unit Holders."
The Trustee's and Evaluator's fees are payable from the Income
Account of the Trust to the extent funds are available and then
from the Principal Account of the Trust. Since the Trustee has
the use of the funds being held in the Principal and Income Accounts
for payment of expenses and redemptions and since such Accounts
are noninterest-bearing to Unit holders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to
the Trust is expected to result from the use of these funds. Both
fees may be increased without approval of the Unit holders by
amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor.
The following additional charges are or may be incurred by the
Trust: all legal and annual auditing expenses of the Trustee incurred
by or in connection with its responsibilities under the Indenture;
the expenses and costs of any action undertaken by the Trustee
to protect the Trust and the rights and interests of the Unit
holders; fees of the Trustee for any extraordinary services performed
under the Indenture; indemnification of the Trustee for any loss,
liability or expense incurred by it without negligence, bad faith
or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification
of the Sponsor for any loss, liability or expense incurred without
gross negligence, bad faith or willful misconduct in acting as
Depositor of the Trust; all taxes and other government charges
imposed upon the Securities or any part of the Trust (no such
taxes or charges are being levied or made or, to the knowledge
of the Sponsor, contemplated). The above expenses and the Trustee's
annual fee, when paid or owing to the Trustee, are secured by
a lien on the Trust. In addition, the Trustee is empowered to
sell Securities in the Trust in order to make funds available
to pay all these amounts if funds are not otherwise available
in the Income and Principal Accounts of the Trust except that
the Trustee shall not sell Treasury Obligations to pay Trust expenses.
The Indenture requires the Trust to be audited on an annual basis
at the expense of the Trust by independent auditors selected by
the Sponsor. So long as the Sponsor is making a market for the
Units, the Sponsor is required to bear the cost of such annual
audits to the extent such cost exceeds $.50 per 1,000 Units. Unit
holders of the Trust covered by an audit may obtain a copy of
the audited financial statements upon request.
What is the Federal Tax Status of Unit Holders?
The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition
of the Units. The summary is limited to investors who hold Units
as "Capital Assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code
of 1986 (the "Code"). Unit holders should consult their tax advisors
in determining the federal, state, local and any other tax consequences
of the purchase, ownership and disposition of Units in a Trust.
In the opinion of Chapman and Cutler, counsel for the Sponsor,
under then existing law:
1. Each Trust is not an association taxable as a corporation
for federal income tax purposes; each Unit holder will be treated
as the owner of a pro rata portion of each of the assets of each
Trust under the Code; the income of each Trust will be treated
as income of the Unit holders thereof under the Code; and each
Unit holder will be considered to have received his pro rata share
of income derived from each Trust asset when such income is received
by a Trust.
2. Each Unit holder will have a taxable event when a Trust disposes
of a Security (whether by sale, exchange, liquidation, redemption,
or otherwise) or upon the sale or redemption of Units by such Unit
Page 4
holder. The price a Unit holder pays for his Units is allocated
among his pro rata portion of each Security held by a Trust (in
proportion to the fair market values thereof on the date the Unit
holder purchases his Units) in order to determine his tax basis
for his pro rata portion of each Security held by a Trust. The
Treasury Obligations held by the Trusts are treated as stripped
bonds and are treated as bonds issued at an original issue discount
as of the date a Unit holder purchases his Units. Because the
Treasury Obligations represent interests in "stripped" U.S. Treasury
bonds, a Unit holder's initial cost for his pro rata portion of
each Treasury Obligation held by the Trusts (determined at the
time he or she acquires his or her Units, in the manner described
above) shall be treated as its "purchase price" by the Unit holder.
Original issue discount is effectively treated as interest for
federal income tax purposes and the amount of original issue discount
in this case is generally the difference between the bond's purchase
price and its stated redemption price at maturity. A Unit holder
will be required to include in gross income for each taxable year
the sum of his daily portions of original issue discount attributable
to the Treasury Obligations held by the Trusts as such original
issue discount accrues and will, in general, be subject to federal
income tax with respect to the total amount of such original issue
discount that accrues for such year even though the income is
not distributed to the Unit holders during such year to the extent
it is not less than a "de minimis" amount as determined under
a Treasury Regulation issued on December 28, 1992, relating to
stripped bonds. To the extent the amount of such discount is less
than the respective "de minimis" amount, such discount shall be
treated as zero. In general, original issue discount accrues daily
under a constant interest rate method which takes into account
the semi-annual compounding of accrued interest. In the the case
of the Treasury Obligations, this method will generally result
in an increasing amount of income to the Unit holders each year.
Unit holders should consult their tax advisors regarding the federal
income tax consequences and accretion of original issue discount.
For Federal income tax purposes, a Unit holder's pro rata portion
of dividends, as defined by Section 316 of the Code, paid with
respect to a Fund share held by the Trust is taxable as ordinary
income to the extent of such Fund's current and accumulated "earnings
and profits." A Unit holder's pro rata portion of dividends paid
on such Fund share which exceed such current and accumulated earnings
and profits will first reduce a Unit holder's tax basis in such
Fund share, and to the extent that such dividends exceed a Unit
holder's tax basis in such Fund share shall generally be treated
as capital gain. In general, any such capital gain will be short-term
unless a Unit holder has held his Units for more than one year.
3. A Unit holder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Securities held by a
Trust will generally be considered a capital gain except in the
case of a dealer or a financial institution and will be long-term
if the Unit holder has held his Units for more than one year.
A Unit holder's portion of loss, if any, upon the sale or redemption
of Units or the disposition of Securities held by a Trust will
generally be considered a capital loss (except in the case of
a dealer) and will be long-term if the Unit holder has held his
Units for more than one year. Unit holders should consult their
tax advisors regarding the recognition of gains and losses for
federal income tax purposes.
Because Unit holders are deemed to directly own a pro rata portion
of the Templeton shares as discussed above, Unit holders are advised
to read the discussion of tax consequences set forth in the current
prospectus for Templeton. Distributions declared by Templeton
on the Templeton shares in October, November or December that
are held by a Trust and paid during the following January will
be treated as having been received by Unit holders on December
31 in the year such distributions were declared. Distributions
of the Fund's net capital gain which the Fund properly designates
as capital gain dividends will be taxable to the Unit holders
as long-term capital gains regardless of how long a person has
been a Unit holder. If a Unit holder holds his Units for six months
or less or if a Trust holds shares of Templeton for six months
or less, any loss incurred by a Unit holder related to the disposition
of Templeton shares will be treated as a long-term capital loss
to the extent of any long-term capital gains distributions received
(or deemed to have
Page 5
been received) with respect to such shares. For taxpayers other
than corporations, net capital gains are subject to a maximum
stated marginal tax rate of 28 percent. However, it should be
noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at
which ordinary income and capital gains are taxed.
The "Revenue Reconciliation Act of 1993" (the "Tax Act") raised
tax rates on ordinary income while capital gains remain subject
to a 28% maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision
that recharacterizes capital gains as ordinary income in the case
of certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993.
Unit holders and prospective investors should consult with their
tax advisors regarding the potential effect of this provision
on their investment in Units. If a Unit holder dispenses of a
Unit, he or she is deemed thereby to have disposed of his or her
entire pro rata interest in all assets of the Trust involved,
including his or her pro rata portion of all the Securities represented
by the Unit.
Distributions on the Fund shares which are taxable as ordinary
income to the Unit holders will constitute dividends for federal
income tax purposes. To the extent dividends received by the Fund
are attributable to foreign corporations, a corporation that owns
Units will not be entitled to the dividends received deduction
with respect to the pro rata portion of such dividends, since
the dividends received deduction is generally available only with
respect to dividends paid by domestic corporations. However, to
the extent dividends received by the Fund are from United States
corporations (other than real estate investment trusts) and are
designated by the Fund as being eligible for the dividends received
deduction, distributions received by corporate Unit holders with
respect to Fund shares attributable to such dividends may qualify
for the 70% dividends received deduction, subject to limitations
otherwise applicable to the availability of the deduction.
Limitations on Deductibility of Trust Expenses by Unit holders.
Each Unit holder's pro rata share of each expense paid by the
Trust is deductible by the Unit holder to the same extent as though
the expense had been paid directly by him, subject to the following
limitation. It should be noted that as a result of the Tax Reform
Act of 1986, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee
business expenses will be deductible by an individual only to
the extent they exceed 2% of such individual's adjusted gross
income. Unit holders may be required to treat some or all of the
expenses of the Trust as miscellaneous itemized deductions subject
to this limitation.
Templeton may elect to pass through to its shareholders the foreign
income and similar taxes paid by Templeton in order to enable
such shareholders to take a credit (or deduction) for foreign
income taxes paid by Templeton. If such an election is made, Unit
holders of a Trust, because they are deemed to own a pro rata
portion of the Templeton shares held by the Trust, as described
above, must include in their gross income, for federal income
tax purposes, both their portion of dividends received by the
Trust from Templeton, and also their portion of the amount which
Templeton deems to be the Trust's portion of foreign income taxes
paid with respect to, or withheld from, dividends, interest or
other income of Templeton from its foreign investments. Unit holders
may then subtract from their federal income tax the amount of
such taxes withheld, or else treat such foreign taxes as deductions
from gross income; however, as in the case of investors receiving
income directly from foreign sources, the above described tax
credit or deduction is subject to certain limitations. Unit holders
should consult their tax advisors regarding this election and
its consequences to them.
General. Each Unit holder will be requested to provide the Unit
holder's taxpayer identification number to the Trustee and to
certify that the Unit holder has not been notified that payments
to the Unit holder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate certification
are not provided when requested, distributions by the Trusts to
such Unit holder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions
by a Trust will generally be subject to United States income taxation
and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons
(accrual of original issue discount
Page 6
on the Treasury Obligations may not be subject to taxation or
withholding provided certain requirements are met). Such persons
should consult their tax advisors.
Unit holders will be notified annually of the amounts of original
issue discount, income dividends and long-term capital gains distributions
includable in the Unit holder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions.
Dividend income, long-term capital gains and accrual of original
issue discount may also be subject to state and local taxes. Foreign
investors may be subject to different Federal income tax consequences
than those described above. Investors should consult their tax
advisors for specific information on the tax consequences of investing
in the Trusts and of particular types of distributions.
Unit holders desiring to purchase Units for tax-deferred plans
and IRAs should consult their broker for details on establishing
such accounts. Units may also be purchased by persons who already
have self-directed plans established. See "Why are Investments
in the Trust Suitable for Retirement Plans?"
The foregoing discussion related only to United States federal
income taxes; Unit holders may be subject to state and local taxation
in other jurisdictions. Unit holders should consult their tax
advisers regarding potential state or local taxation with repect
to the Units.
In the opinion of Carter, Ledyard & Milburn, Special Counsel to
the Trusts for New York tax matters, under then existing income
tax laws of the State of New York each Trust is not an association
taxable as a corporation and the income of each Trust will be
treated as the income of the Unit holders thereof.
Why are Investments in the Trust Suitable for Retirement Plans?
Units of a Trust may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other tax-deferred
retirement plans. Generally, federal income tax relating to capital
gains and income received in each of the foregoing plans is deferred
until distributions are received. Distributions from such plans
are generally treated as ordinary income but may, in some cases,
be eligible for special averaging or tax-deferred rollover treatment.
Investors considering participation in any such plan should review
specific tax laws related thereto and should consult their attorneys
or tax advisors with respect to the establishment and maintenance
of any such plan. Such plans are offered by brokerage firms and
other financial institutions. Fees and charges with respect to
such plans may vary.
PORTFOLIO
What are Zero Coupon Treasuries?
The Treasury Obligations deposited in the Trust consist of U.S.
Treasury bonds which have been stripped of their unmatured interest
coupons. The Treasury Obligations evidence the right to receive
a fixed payment at a future date from the U.S. Government, and
are backed by the full faith and credit of the U.S. Government.
Treasury Obligations are purchased at a deep discount because
the buyer obtains only the right to a fixed payment at a fixed
date in the future and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not
make current interest payments (such as the Treasury Obligations)
is that a fixed yield is earned not only on the original investment
but also, in effect, on all earnings during the life of the discount
obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income
on such obligations at a rate as high as the implicit yield on
the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason,
the Treasury Obligations are subject to substantially greater
price fluctuations during periods of changing interest rates than
are securities of comparable quality which make regular interest
payments. The effect of being able to acquire the Treasury Obligations
at a lower price is to permit more of the Trust's portfolio to
be invested in shares of Templeton.
What is Templeton Growth Fund, Inc.?
The portfolio of a Series of the Fund may also contain shares
of Templeton Growth Fund, Inc. Templeton Growth Fund, Inc. (the
"Growth Fund") was incorporated under the laws of Maryland on
November 10, 1986 and is a successor to Templeton Growth Fund,
Ltd. The Growth Fund is registered under the Investment Company
Page 7
Act of 1940, as amended (the "1940 Act"), as an open-end, diversified
management investment company.
The following tables of selected financial information have been
audited by the Growth Fund's independent certified public accountants
for the periods indicated in their report which is incorporated
by reference and which appears in the Growth Fund's 1995 Annual
Report to Shareholders. This statement should be read in conjunction
with the other financial statements and notes thereto included
in the Growth Fund's 1995 Annual Report to Shareholders, which
contains further information about the Growth Fund's performance,
and which is available to Shareholders upon request and without charge.
Page 8
<TABLE>
<CAPTION>
Templeton Growth Fund, Inc.
per Share Operating Performance
(for a Share Outstanding
throughout the Period)
Year Ended August 31
1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 18.95 $ 17.47 $ 15.81 $ 16.14 $ 15.23 $ 16.62 $ 13.65
_________________________________________________________________________________________________________________________________
Income from investment
operations
Net investment income .39 0.29 0.32 0.41 0.45 0.57 0.58
Net realized and unrealized
gain (loss) 1.20 2.97 0.92 1.68 (0.87) 3.12 (2.41)
__________ _________ ________ ________ ________ ________ ________
Total from investment
operations 1.59 2.87 3.29 1.33 2.13 (0.30) 3.70
__________ _________ ________ ________ ________ ________ _______
Less distributions
Dividends from net
investment income (.29) (0.27) (0.36) (0.44) (0.54) (0.62) (0.48)
Distributions from net
realized gains (1.29) (1.12) (1.27) (1.22) (0.68) (0.47) (0.25)
__________ _________ ________ ________ ________ ________ ________
Total distributions (1.58) (1.39) (1.63) (1.66) (1.22) (1.09) (0.73)
__________ _________ ________ ________ ________ ________ ________
Change in net asset
value for the year .01 1.48 1.66 (0.33) 0.91 (1.39) 2.97
_________________________________________________________________________________________________________________________________
Net asset value at
end of period $ 18.96 $ 18.95 $ 17.47 $ 15.81 $ 16.14 $ 15.23 $ 16.62
_________________________________________________________________________________________________________________________________
Total Return [[ 9.51% 17.47% 23.49% 9.22% 15.95% (2.01)% 28.38%
Ratios/Supplemental data
Net Assets, end of
year (in millions) $6,964,298 $5,611.6 $4,033.9 $3,268.6 $2,895.7 $2,466.7 $2,355.3
Ratio to average net
assets of:
Expenses 1.12% 1.10% 1.03% 0.88% 0.75% 0.67% 0.66%
Net investment income 2.40% 1.76% 2.10% 2.62% 3.09% 3.70% 4.20%
Portfolio turnover rate 35.21% 27.35% 28.89% 29.46% 30.28% 18.47% 11.55%
</TABLE>
<TABLE>
<CAPTION>
Eight Months Ended
Aug. 31 Dec. 31 Year Ended
Pro April 30
Forma (1) Pro Forma (1)
_____________________ _____________________
1988 1987 1986 1985
<S> <C> <C> <C> <C>
Net asset value at
beginning of period $ 17.13 $ 12.87 $ 13.33 $ 10.19
_________________________________________________________________________________________________
Income from investment
operations
Net investment income 0.45 0.29 0.14 0.19
Net realized and unrealized
gain (loss) 3.97 0.28 3.72 0.83
_________ _________ _________ _________
Total from investment
operations (1.96) 4.26 0.42 3.91
_________ _________ _________ _________
Less distributions
Dividends from net
investment income (0.44) 0.00 (0.40) (0.24)
Distributions from net
realized gains (1.08) 0.00 (0.48) (0.48)
_________ _________ _________ _________
Total distributions (1.52) 0.00 (0.88) (0.72)
_________ _________ _________ _________
Change in net asset
value for the year (3.48) 4.26 (0.46) 3.19
________________________________________________________________________________________________
Net asset value at
end of period $ 13.65 $ 17.13 $ 12.87 $ 13.33
________________________________________________________________________________________________
Total Return [[ (9.86)% 33.10% 3.32% 40.92%
Ratios/Supplemental data
Net Assets, end of
year (in millions) $1,572.1 $1,633.9 $1,132.6 $2,397.9
Ratio to average net
assets of:
Expenses 0.69% 0.66%[ 2.40%[ 2.50%
Net investment income 3.50% 2.99%[ 1.76%[ 2.11%
Portfolio turnover rate 11.44% 17.55% 9.50% 23.00%
</TABLE>
[FN]
(1) Templeton Growth Fund, Inc. commenced operations on December
31, 1986 as successor in interest to 58% of Templeton Growth Fund,
Ltd. (the "Canadian Fund") which reorganized into two funds on
that date. In accordance with the terms of the reorganization,
the Canadian shareholders, representing 42% of the shares outstanding,
remained shareholders of the Canadian Fund and the non-Canadian
shareholders, representing 58% of the shares outstanding, became
shareholders of Templeton. The per share table is presented as
if the reorganization took place as of the inception of the Canadian
Fund, 58% of the net assets and shares outstanding were allocated
to Templeton Growth Fund, Inc. and Templeton Growth Fund, Inc.
continued to operate in Canada subject to Canadian federal and
provincial taxes until December 31, 1986. No other pro forma adjustments
have been made for any changes in operating costs had the reorganization
taken place at that date. Since the table is on the basis of a
single share outstanding throughout the period, the results illustrated,
except for the number of shares outstanding at the end of each
year, are the same as those shown for the Canadian Fund.
[ Annualized.
[[ Does not reflect sales commissions.
Page 9
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a Shareholder will bear directly
or indirectly in connection with an investment in the Growth Fund.
The figures are estimates of the Growth Fund's expenses for the
current fiscal year, restated to reflect current sales charges
and Rule 12b-1 fees for each class.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of Offering Price) 5.75%*
Annual Templeton Growth Fund, Inc. Operating Expenses
(As a percentage of average net assets)
Management Fees 0.62%
12b-1 Fees 0.24%**
Other Expenses (audit, legal, business management,
transfer agent and custodian) 0.26%
Total Templeton Growth Fund, Inc. Operating Expenses 1.12%
Investors should be aware that the above table is not intended
to reflect in precise detail the fees and expenses associated
with an individual's own investment in the Growth Fund. Rather,
the table has been provided only to assist investors in gaining
a more complete understanding of fees, charges and expenses. The
information in this table does not reflect the charge of up to
$15 per transaction if a Shareholder requests that redemption
proceeds be sent by express mail or wired to a commercial bank
account. For a more detailed discussion of these matters, investors
should refer to the appropriate sections of the Growth Fund's
Prospectus.
You would pay the following expenses on a $1,000 investment, assuming
* There is no sales charge payable on the Templeton Growth Fund,
Inc. shares deposited in a Trust. However, the maximum sales charge
on the Units, and therefore indirectly on the Templeton Growth
Fund, Inc. shares is 5.75% in the secondary market.
** Annual 12b-1 fees may not exceed 0.25% of the Growth Fund's
average net assets annually. After a substantial period, these
expenses, together with the initial sales charge, may total more
than the maximum sales expense that would have been permissible
if imposed entirely as an initial sales charge. Effectively, there
are no 12b-1 fees on Templeton Growth Fund, Inc. shares held in
a Trust. However, Unit holders who acquire shares of Templeton
Growth Fund, Inc. through reinvestment of dividends or other distributions
or through reinvestment at a Trust's termination will begin to
incur 12b-1 fees at such time as shares are acquired.
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
________ ________ ________ ________
$68 $91 $116 $186
The above example is based on the estimated annual operating expenses,
including fees set by contract, shown above and should not be
considered a representation of past or future expenses, which
may be more or less than those shown. The operating expenses are
borne by the Growth Fund and only indirectly by Shareholders as
a result of their investment in the Growth Fund. In addition,
federal securities regulations require the example to assume an
annual rate of return of 5%, but the Growth Fund's actual return
may be more or less than 5%.
Dividends from investment income were paid commencing in 1964
and distributions of capital gains were paid commencing in 1972.
Prior to those years net income and realized capital gains were
retained by the Canadian Fund.
Templeton Growth Fund, Inc. may include its total return in advertisements
or reports to its shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the
average annual compounded rate of return on a hypothetical investment
in Templeton Growth Fund, Inc. over a period of 1, 5 and 10 years
(or up to the life of Templeton Growth Fund, Inc.), will reflect
the deduction of the maximum initial sales charge and deduction
of a proportional share of Templeton Growth Fund, Inc. expenses
Page 10
(on an annual basis), and will assume that all dividends and distributions
are reinvested when paid. Total return may be expressed in terms
of the cumulative value of an investment in Templeton Growth Fund,
Inc. at the end of a defined period of time. For a description
of the methods used to determine total return for Templeton Growth
Fund, Inc., see Templeton Growth Fund, Inc.'s Statement of Additional
Information.
What is Templeton Foreign Fund?
The portfolio of a Series of the Fund may also contains shares
of Templeton Foreign Fund (the "Foreign Fund). Templeton Foreign
Fund is an open-end diversified management investment company,
commonly known as a mutual fund. Templeton Foreign Fund is registered
under the Investment Company Act of 1940 as an open-end, diversified
management investment company. Templeton Foreign Fund's objective
is long-term capital growth through a flexible policy of investing
in stocks and debt obligations of companies and governments outside
the United States. The shares of Templeton Foreign Fund deposited
in a Trust are maintained on the books of Templeton Foreign Fund's
transfer agent.
Templeton Foreign Fund has followed the practice of paying a distribution
at least once annually representing substantially all of its net
investment income and distributing any net realized capital gains.
The following tables of selected financial information have been
audited by the Foreign Fund's independent certified public accountants
for the years indicated in their report which is incorporated
by reference and which appears in the Foreign Fund's 1995 Annual
Report to Shareholders. These statements should be read in conjunction
with the other financial statements and notes thereto included
in the Foreign Fund's 1995 Annual Report to Shareholders, which
contains further information about the Foreign Fund's performance,
and which is available to shareholders upon request and without charge.
Page 11
Templeton Foreign Fund per Share
Operating Performance for a Share
Outstanding Throughout the Period*
<TABLE>
<CAPTION>
Year Ended August 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.01 $ 8.74 $ 7.92 $ 7.91 $ 8.19 $ 7.60 $ 6.37 $ 7.73 $ 5.34 $ 4.10
__________________________________________________________________________________________________________________________________
Income from investment operations
Net investment income 0.23 0.14 0.14 0.20 0.25 0.25 0.22 0.21 0.16 0.12
Net realized and unrealized gain 0.05 1.39 1.21 0.43 0.03 0.92 1.60 (0.97) 2.71 1.25
_________ ________ ________ ________ ________ ______ ______ ______ ______ ______
Total from investment operations 0.28 1.53 1.35 0.63 0.28 1.17 1.82 (0.76) 2.87 1.37
_________ ________ ________ ________ ________ ______ ______ ______ ______ ______
Less distributions
Dividends from net investment income (0.16) (0.13) (0.19) (0.23) (0.26) (0.25) (0.21) (0.19) (0.13) (0.12)
Distributions from net realized gains (0.51) (0.13) (0.34) (0.39) (0.30) (0.33) (0.38) (0.41) (0.35) (0.01)
_________ ________ ________ ________ ________ ______ ______ ______ ______ ______
Total distributions (0.67) (0.26) (0.53) (0.62) (0.56) (0.58) (0.59) (0.60) (0.48) (0.13)
_________ ________ ________ ________ ________ ______ ______ ______ ______ ______
Change in net asset value
for the period 0.39 1.27 0.82 0.01 (0.28) 0.59 1.23 (1.36) 2.39 1.24
__________________________________________________________________________________________________________________________________
Net asset value, end of period $ 9.62 $ 10.01 $ 8.74 $ 7.92 $ 7.91 $ 8.19 $ 7.60 $ 6.37 $ 7.73 $ 5.34
__________________________________________________________________________________________________________________________________
Total return[ 3.14% 17.94% 18.65% 8.52% 4.17% 16.35% 30.99% (8.78)% 59.23% 34.39%
Ratios/supplemental data
Net assets, end of year (in millions) $6,941,238 $5,014.4 $2,667.8 $1,672.2 $1,211.5 $933.0 $438.6 $292.7 $319.6 $185.8
Ratio to average net assets of:
Expenses 1.15% 1.14% 1.12% 0.94% 0.80% 0.77% 0.81% 0.81% 0.77% 0.79%
Net investment income 2.81% 1.84% 2.11% 2.92% 3.59% 3.95% 3.65% 3.29% 2.89% 2.99%
Portfolio turnover rate 21.78% 38.75% 21.29% 22.00% 19.24% 11.49% 16.62% 20.37% 14.49% 20.97%
</TABLE>
[FN]
[ Does not reflect sales commissions or service charges.
* Per share amounts for years ended prior to August 31, 1994,
have been restated to reflect a 3-for-1 stock split effective
February 25, 1994.
Page 12
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a Shareholder will bear directly
or indirectly in connection with an investment in the Foreign
Fund. The figures are estimates of the Foreign Fund's expenses
for the current fiscal year, restated to reflect current sales
charges and Rule 12b-1 fees for each class.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of Offering Price) 5.75%*
Annual Templeton Foreign Fund Operating Expenses
(As a percentage of average net assets)
Management Fees 0.63%
12b-1 Fees 0.25%**
Other Expenses (audit, legal, business management,
transfer agent and custodian) 0.27%
Total Templeton Foreign Fund Operating Expenses 1.15%
Investors should be aware that the above table is not intended
to reflect in precise detail the fees and expenses associated
with an individual's own investment in the Foreign Fund. Rather,
the table has been provided only to assist investors in gaining
a more complete understanding of fees, charges and expenses. The
information in this table does not reflect the charge of up to
$15 per transaction if a Shareholder requests that redemption
proceeds be sent by express mail or wired to a commercial bank
account. For a more detailed discussion of these matters, investors
should refer to the appropriate sections of the Foreign Fund's
Prospectus.
* There is no sales charge payable on the Templeton Foreign Fund
shares deposited in the Trust. However, the maximum sales charge
on the Units, and therefore indirectly on the Templeton Foreign
Fund shares, is 5.8% in the secondary market.
** These expenses may not exceed 0.25% of Templeton Foreign Fund's
average net assets annually. After a substantial period, these
expenses, together with the initial sales charge, may total more
than the maximum sales expense that would have been permissible
if imposed entirely as an initial sales charge.
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
________ ________ ________ ________
$69 $92 $117 $189
The above example is based on the estimated annual operating expenses,
including fees set by contract, shown above and should not be
considered a representation of past or future expenses, which
may be more or less than those shown. The operating expenses are
borne by the Foreign Fund and only indirectly by Shareholders
as a result of their investment in the Foreign Fund. In addition,
federal securities regulations require the example to assume an
annual rate of return of 5%, but the Foreign Fund's actual return
may be more or less than 5%.
What is Templeton's Investment Objective and Policy?
Templeton's investment objective is long-term capital growth,
which it seeks to achieve through a flexible policy of investing
in stocks and debt obligations of companies and governments of
any nation (in the case of Templeton Growth Fund, Inc.) or in
stocks and debt obligations of companies and governments outside
the United States (in the case of Templeton Foreign Fund). Any
income realized will be incidental.
Although Templeton generally invests in common stock, it may also
invest in preferred stocks and certain debt securities, rated
or unrated, such as convertible bonds and bonds selling at a discount.
Whenever, in the judgment of the Investment Manager, as defined
herein, market or economic conditions warrant, Templeton may,
for temporary defensive purposes, invest without limit in U.S.
Government securities,
Page 13
bank time deposits in the currency of any major nation and commercial
paper meeting the quality ratings set forth under "Investment
Objective and Policies" in the Statement of Additional Information
of Templeton, and purchase from banks or broker-dealers Canadian
or U.S. Government securities with a simultaneous agreement by
the seller to repurchase them within no more than seven days at
the original purchase price plus accrued interest.
Templeton may invest no more than 5% of its total assets in securities
issued by any one company or government, exclusive of U.S. Government
securities. Although Templeton may invest up to 25% of its assets
in a single industry, it has no present intention of doing so.
Templeton may not invest more than 5% of its assets in warrants
(exclusive of warrants acquired in units or attached to securities)
nor more than 10% of its assets in securities with a limited trading
market. The Investment Objective and Policies described above,
as well as most of the investment restrictions described in Templeton's
Statement of Additional Information, cannot be changed without
shareholder approval. Templeton invests for long-term growth of
capital and does not intend to place emphasis upon short-term
trading profits. Accordingly, Templeton expects to have a portfolio
turnover rate of less than 50%.
Templeton may also purchase and sell stock index futures contracts
up to an aggregate amount not exceeding 20% of the total net assets.
In addition, in order to increase its return or to hedge all or
a portion of its portfolio investments, Templeton may purchase
and sell put and call options on securities indices.
Investment Techniques for Growth Fund
The Growth Fund is authorized to use the various investment techniques
described below. Although these strategies are regularly used
by some investment companies and other institutional investors
in various markets, some of these strategies cannot at the present
time be used to a significant extent by the Growth Fund in some
of the markets in which the Growth Fund will invest and may not
be available for extensive use in the future.
Repurchase Agreements. When the Growth Fund acquires a security
from a U.S. bank or a registered broker-dealer, it may simultaneously
enter into a repurchase agreement, wherein the seller agrees to
repurchase the security at a specified time and price. The repurchase
price is in excess of the purchase price by an amount which reflects
an agreed-upon rate of return, which is not tied to the coupon
rate of the underlying security. Under the 1940 Act, repurchase
agreements are considered to be loans collateralized by the underlying
security and therefore will be fully collateralized. However,
if the seller should default on its obligation to repurchase the
underlying security, the Growth Fund may experience delay or difficulty
in exercising its rights to realize upon the security and might
incur a loss if the value of the security declines, as well as
incur disposition costs in liquidating the security.
Options or Indices. The Growth Fund may purchase and write (i.e.,
sell) put and call options on securities indices that are traded
on United States and foreign exchanges or in the over-the-counter
markets. An option on a securities index permits the purchaser
of the option, in return for the premium paid, the right to receive
from the seller cash equal to the difference between the closing
price of the index and the exercise price of the option. The Growth
Fund may write a put or call option only if the option is "covered."
This means that so long as the Growth Fund is obligated as the
writer of an option, it will maintain with its custodian cash
or cash equivalents equal to the contract value (in the case of
call options) or exercise price (in the case of put options).
The Growth Fund will not purchase put or call options if the aggregate
premium paid for such options would exceed 5% of its total assets.
Stock Index Futures Contracts. For hedging purposes only, the
Growth Fund may purchase and sell stock index futures contracts
up to an aggregate amount not exceeding 20% of its total assets.
A stock index futures contract is an agreement under which two
parties agree to take or make delivery of an amount of cash based
on the difference between the value of a stock index at the beginning
and at the end of the contract period. When the Growth Fund enters
into a stock index futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance
under the contract. As the value of the stock index fluctuates,
either party to the contract is required to make additional margin
deposits, known as "variation margin," to cover any additional
obligation it may have under the contract. In addition, when
Page 14
the Growth Fund enters into a futures contract, it will segregate
assets or "cover" its position in accordance with the 1940 Act.
See "Investment Objective and Policies-Stock Index Futures Contracts"
in the Growth Fund's SAI. The Growth Fund may not at any time
commit more than 5% of its total assets to initial margin deposits
on futures contracts.
Loans of Portfolio Securities. The Growth Fund may lend to banks
and to broker-dealers portfolio securities with an aggregate market
value of up to one-third of its total assets to generate income.
Such loans must be secured by collateral (consisting of any combination
of cash, U.S. Government securities or irrevocable letters of
credit) in an amount at least equal (on a daily market-to-market
basis) to the current market value of the securities loaned. The
Growth Fund may terminate the loans at any time and obtain the
return of the securities loaned within five business days. The
Growth Fund will continue to receive any interest or dividends
paid on the loaned securities and will continue to retain any
voting rights with respect to the securities.
Depositary Receipts. The Growth Fund may purchase sponsored or
unsponsored American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") and Global Depositary Receipts ("GDRs") (collectively,
"Depositary Receipts"). ADRs are Depositary Receipts typically
used by a U.S. bank or trust company which evidence ownership
of underlying securities issued by a foreign corporation. EDRs
and GDRs are typically issued by foreign banks or trust companies,
although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either
a foreign or a United States corporation. Generally, Depositary
Receipts in registered form are designed for use in the U.S. securities
market and Depositary Receipts in bearer form are designed for
use in securities markets outside the United States. Depositary
Receipts may not necessarily be denominated in the same currency
as the underlying securities into which they may be converted.
Depositary Receipts may be issued pursuant to sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements
to have its securities traded in the form of Depositary Receipts.
In unsponsored programs, the issuer may not be directly involved
in the creation of the program. Although regulatory requirements
with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information
from an issuer that has participated in the creation of a sponsored
program. Accordingly, there may be less information available
regarding issuers of securities underlying unsponsored programs
and there may not be a correlation between such information and
the market value of the Depositary Receipts. Depositary Receipts
also involve the risks of other investments in foreign securities,
as discussed below. For purposes of the Fund's investment policies,
the Growth Fund's investments in Depositary Receipts will be deemed
to be investments in the underlying securities.
How is Net Asset Value of Templeton Determined?
The net asset value per share of Templeton is determined as of
the scheduled closing time of the NYSE (generally 4:00 p.m., New
York time) each day that the NYSE is open for trading, by dividing
the value of Templeton's securities plus any cash and other assets
(including accrued interest and dividends receivable) less all
liabilities (including accrued expenses) by the number of shares
outstanding, adjusted to the nearest whole cent. A security listed
or traded on a recognized stock exchange or NASDAQ is valued at
its last sale price on the principal exchange on which the security
is traded. The value of a foreign security is determined in its
national currency as of the close of trading on the foreign exchange
on which it is traded, or as of the scheduled closing time of
the NYSE (generally 4:00 p.m., New York time), if that is earlier,
and that value is then converted into its U.S. dollar equivalent
at the foreign exchange rate in effect at noon, New York time,
on the day the value of the foreign security is determined. If
no sale is reported at that time, the mean between the current
bid and asked price is used. Occasionally, events which affect
the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of
the New York Stock Exchange, and will therefore not be reflected
in the computation of Templeton's net asset value. If events materially
affecting the value of such securities occur during such period,
then these securities will be valued at fair value as determined
by the management and approved in good faith by the Board of Directors.
All other securities for which over-the-counter market quotations
are readily available
Page 15
are valued at the mean between the current bid and asked price.
Securities for which market quotations are not readily available
and other assets are valued at fair value as determined by the
management and approved in good faith by the Board of Directors
of the Templeton Funds.
Who is the Investment Manager of Templeton?
The Investment Manager of Templeton is Templeton Global Advisors
Ltd., Nassau, Bahamas (the "Investment Manager"). The Investment
Manager manages the investment and reinvestment of the Templeton
Funds' assets. The Investment Manager is an indirect wholly owned
subsidiary of Franklin Resources, Inc. ("Franklin"). Through its
subsidiaries, Franklin is engaged in various aspects of the financial
services industry.
The Investment Manager manages the investment and reinvestment
of the assets of Templeton Growth Fund, Inc. and Templeton Foreign
Fund. The Investment Manager does not furnish any overhead items
or facilities for the Templeton Funds, although such expenses
are paid by some investment advisers of other investment companies.
As compensation for its services, the Templeton Funds pay the
Investment Manager a fee which, during the most recent fiscal
year, represented 0.63% of its average daily net assets for the
Templeton Foreign Fund and 0.62% of its average daily net assets
for the Templeton Growth Fund, Inc.
The Investment Manager and its affiliates serve as advisers for
a wide variety of public investment mutual funds and private clients
in many nations. The Investment Manager and its predecessors have
been investing globally over the past 52 years and, with affiliates,
provide investment management and advisory services to a worldwide
client base, including over 4.3 million mutual fund shareholders,
foundations, endowments, employee benefit plans and individuals.
The Investment Manager and its affiliates have approximately 4,100
employees in the United States, Australia, Scotland, Germany,
Hong Kong, Luxembourg, the Bahamas, Singapore, Canada and Russia.
The Investment Manager uses a disciplined, long-term approach
to value-oriented global and international investing. Securities
are selected for Templeton's portfolio on the basis of fundamental
company-by-company analysis. Many different selection methods
are used for different funds and clients, and these methods are
changed and improved by the Investment Manager's research on superior
selection methods.
The Investment Manager performs similar services for other funds
and accounts and there may be times when the actions taken with
respect to the Templeton Fund's portfolio will differ from those
taken by the Investment Manager on behalf of other funds and accounts.
Neither the Investment Manager and its affiliates, its officers,
directors or employees, nor the officers and Directors of the
Templeton Funds are prohibited from investing in securities held
by the Templeton Funds or other funds and accounts which are managed
or administered by the Investment Manager to the extent such transactions
comply with the Templeton Fund's Code of Ethics. Please see "Investment
Management and Other Services-Investment Management Agreement"
in the Templeton Funds' SAI for further information on securities
transactions and a summary of the Fund's Code of Ethics.
The Investment Manager does not furnish any other services or
facilities for the Templeton Funds, although such expenses are
paid by some investment advisers of other investment companies.
As compensation for its services, the Templeton Funds pay the
Investment Manager a fee which, during the most recent fiscal
year, represented 0.62% of its average daily net assets.
The lead portfolio manager for the Templeton Funds is Mark G.
Holowesko. Mr. Holowesko holds a B.A. from the College of Holy
Cross and an M.B.A. from Babson College. He joined the Templeton
organization in 1985, and is responsible for coordinating equity
research worldwide for the Investment Manager. Prior to joining
the Templeton organization, Mr. Holowesko worked with Roy West
Trust Corporation (Bahamas) Limited as an investment administrator.
His duties at Roy West included managing trust and individual
accounts, as well as conducting research of worldwide equity markets.
Dorian B. Foyil and Jeffrey A. Everett exercise secondary portfolio
management responsibilities with respect to the Fund. Mr. Foyil
holds a B.B.A. in Accounting and Computer Science from Temple
University and an M.B.A. in Finance from the Wharton School
Page 16
of Business. He is Vice President of the Investment Manager and
head of the Investment Manager's research technology group. Prior
to joining the Templeton organization, Mr. Foyil was a research
analyst for four years with UBS Phillips & Drew in London, England.
Mr. Everett holds a B.S. in Finance from Pennsylvania State University.
He joined the Templeton organization in 1989 and is Vice President,
Portfolio Management/Research, of the Investment Manager. Prior
to joining the Templeton organization, Mr. Everett was an investment
officer at First Pennsylvania Investment Research, a division
of First Pennsylvania Corporation, where he analyzed equity and
convertible securities. Mr. Everett was also responsible for coordinating
research for Centre Square Investment Group, the pension management
subsidiary of First Pennsylvania Corporation. Further information
concerning the Investment Managers is included under the heading
"Investment Management and Other Services" in the Templeton Funds' SAI.
Risk Factors
Shareholders should understand that all investments involve risk
and there can be no guarantee against loss resulting from an investment
in the Templeton Funds, nor can there be any assurance that the
Templeton Funds' investment objective will be attained. As with
any investment in securities, the value of, and income from, an
investment in the Templeton Funds can decrease as well as increase,
depending on a variety of factors which may affect the values
and income generated by the Fund's portfolio securities, including
general economic conditions and market factors. In addition to
the factors which affect the value of individual securities, a
Shareholder may anticipate that the value of the Shares of the
Templeton Funds will fluctuate with movements in the broader equity
and bond markets. A decline in the stock market of any country
in which the Templeton Funds is invested may also be reflected
in declines in the price of Shares of the Templeton Funds. Changes
in currency valuations will also affect the price of Shares of
the Templeton Funds. History reflects both decreases and increases
in worldwide stock markets and currency valuations, and these
may recur unpredictably in the future. The value of debt securities
held by the Templeton Funds generally will vary inversely with
changes in prevailing interest rates. Additionally, investment
decisions made by the Investment Manager will not always be profitable
or prove to have been correct. The Templeton Funds are not intended
as a complete investment program.
Successful use of stock index futures contracts and options on
securities indices by the Templeton Funds is subject to certain
special risk considerations. A liquid stock index option or futures
market may not be available when the Templeton Funds seek to offset
adverse market movements. In addition, there may be an imperfect
correlation between movements in the securities included in the
index and movements in the securities in the Templeton Funds'
portfolio. Successful use of stock index futures contracts and
options on securities indices is further dependent on the Investment
Manager's ability to predict correctly movements in the direction
of the stock markets and no assurance can be given that its judgment
in this respect will be correct. Risks in the purchase and sale
of stock index futures and options are further referred to in
each Templeton Funds' SAI.
The Templeton Funds have the right to purchase securities in any
foreign country, developed or developing. Investors should consider
carefully the substantial risks involved in investing in securities
issued by companies and governments of foreign nations, which
are in addition to the usual risks inherent in domestic investments.
There is the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in foreign nations
or other taxes imposed with respect to investments in foreign
nations, foreign exchange controls (which may include suspension
of the ability to transfer currency from a given country), foreign
investment controls on daily stock market movements, default in
foreign government securities, political or social instability,
or diplomatic developments which could affect investment in securities
of issuers in foreign nations. Some countries may withhold portions
of interest and dividends at the source. In addition, in many
countries there is less publicly available information about issuers
than is available in reports about companies in the United States.
Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to
United States companies. The Templeton Funds
Page 17
may encounter difficulties or be unable to vote proxies, exercise
shareholder rights, pursue legal remedies, and obtain judgment
in foreign courts.
Brokerage commissions, custodial services and other costs relating
to investment in foreign countries are generally more expensive
than in the United States. Foreign securities markets also have
different clearance and settlement procedures, and in certain
markets there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making
it difficult to conduct such transactions. Delays in settlement
could result in temporary periods when assets of the Templeton
Funds are uninvested and no return is earned thereon. The inability
of the Templeton Funds to make intended security purchases due
to settlement problems could cause the Templeton Funds to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses
to the Templeton Funds due to subsequent declines in value of
the portfolio security or, if the Templeton Funds have entered
into a contract to sell the security, could result in possible
liability to the purchaser.
In many foreign countries, there is less government supervision
and regulation of business and industry practices, stock exchanges,
brokers and listed companies than in the United States. There
is an increased risk, therefore, of uninsured loss due to lost,
stolen, or counterfeit stock certificates. In addition, the foreign
securities markets of many of the countries in which the Templeton
Funds may invest may also be smaller, less liquid, and subject
to greater price volatility than those in the United States. The
Templeton Funds may invest in Eastern European countries, which
involves special risks that are described under "Risk Factors"
in each Templeton Funds' SAI.
Prior governmental approval of foreign investments may be required
under certain circumstances in some developing countries, and
the extent of foreign investment in domestic companies may be
subject to limitation in other developing countries. Foreign ownership
limitations also may be imposed by the charters of individual
companies in developing countries to prevent, among other concerns,
violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales
by foreign investors may require governmental registration and/or
approval in some developing countries. The Templeton Funds could
be adversely affected by delays in or a refusal to grant any required
governmental registration or approval for such repatriation.
Depositary Receipts may not necessarily be denominated in the
same currency as the underlying securities into which they may
be converted. In addition, the issuers of the securities underlying
unsponsored Depositary Receipts are not obligated to disclose
material information in the United States and, therefore, there
may be less information available regarding such issuers and there
may not be a correlation between such information and the market
value of the Depositary Receipts. Depositary Receipts also involve
the risks of other investments in foreign securities, as discussed above.
Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been
and may continue to be adversely affected by trade barriers, exchange
controls, managed adjustments in relative currency value and other
protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may
continue to be adversely affected by economic conditions in the
countries with which they trade.
The Templeton Funds are authorized to invest in medium quality
or high-risk, lower quality debt securities that are rated between
BBB and as low as CCC by Standard & Poor's ("S&P") and between
Baa and as low as Caa by Moody's Investors Service, Inc. ("Moody's")
or, if unrated, are of equivalent investment quality as determined
by the Investment Manager. As an operating policy, which may be
changed by the Board of Directors without Shareholder approval,
the Templeton Funds will not invest more than 5% of their total
assets in debt securities rated lower than BBB by S&P or Baa by
Moody's. The Board may consider a change in this operating policy
if, in its judgment, economic conditions change such that a higher
level of investment in high-risk, lower quality debt securities
would be consistent with the interests of the Templeton Funds
and their Shareholders. High-risk, lower quality debt securities,
commonly referred to as "junk
Page 18
bonds," are regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation and may
be in default. Unrated debt securities are not necessarily of
lower quality than rated securities, but they may not be attractive
to as many buyers. Regardless of rating levels, all debt securities
considered for purchase (whether rated or unrated) will be carefully
analyzed by the Investment Manager to insure, to the extent possible,
that the planned investment is sound. The Templeton Funds may,
from time to time, purchase defaulted debt securities if, in the
opinion of the Investment Manager, the issuer may resume interest
payments in the near future. The Templeton Funds will not invest
more than 10% of their total assets in defaulted debt securities,
which may be illiquid.
The Templeton Funds usually effect currency exchange transactions
on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market. However, some price spread on currency
exchange transactions (to cover service charges) will be incurred
when the Templeton Funds convert assets from one currency to another.
There are further risk considerations, including possible losses
through the holding of securities in domestic and foreign custodian
banks and depositories, described in each Templeton Funds' SAI.
PUBLIC OFFERING
How is the Public Offering Price Determined?
Units are offered at the Public Offering Price as indicated in
Part One attached hereto. The Public Offering Price per 1,000
units is based on the aggregate bid side evaluation of the Treasury
Obligations and the net asset value of the Templeton shares in
the Trust, plus or minus cash, if any, in the Principal Account
held or owned by the Trust, plus a maximum sales charge of 5.8%
of the Public Offering Price (equivalent to 6.157% of the net
amount invested) divided by the number of outstanding Units of
the Trust multiplied by 1,000. The minimum purchase of the Trust
is $1,000. The applicable sales charge is reduced by a discount
as indicated below for volume purchases:
<TABLE>
<CAPTION>
Percent of Percent of
Offering Net Amount
Number of Units Price Invested
___________________ __________ ________
<S> <C> <C>
100,000 but less than 500,000 0.60% 0.6036%
500,000 but less than 1,000,000 1.30% 1.3171%
1,000,000 or more 2.10% 2.1450%
</TABLE>
Any such reduced sales charge shall be the responsibility of the
selling Underwriter or dealer. The Sponsor will pay Managing Underwriters
and Senior Underwriters an additional concession of .10% for volume
purchases of $100,000 or more. The Sponsor will also pay Underwriters
an additional concession of .40% on volume purchases of $1,000,000
or more. The reduced sales charge structure will apply on all
purchases of Units in the Trust by the same person on any one
day from any one Underwriter or dealer. Additionally, Units purchased
in the name of the spouse of a purchaser or in the name of a child
of such purchaser under 21 years of age will be deemed, for the
purposes of calculating the applicable sales charge, to be additional
purchases by the purchaser. The reduced sales charges will also
be applicable to a trustee or other fiduciary purchasing securities
for a single trust estate or single fiduciary account. With respect
to the employees, officers and directors (including their immediate
families and trustees, custodians or a fiduciary for the benefit
of such person) of Nike Securities L.P. and its subsidiaries,
the sales charge is reduced by 2% of the Public Offering Price
for purchases of Units.
The Public Offering Price will be equal to the bid price per Unit
of the Treasury Obligations and the net asset value of the Templeton
shares therein plus or minus a pro rata share of cash, if any,
in the Principal Account of the Trust plus the applicable sales
charge. The offering price of the Treasury Obligations in the
Trust may be expected to be greater than the bid price of the
Treasury Obligations by less than 2%. The Public Offering Price
of Units on the date of this Prospectus may vary in accordance
with fluctuations in the prices of the underlying Securities.
Page 19
Although payment is normally made three business days following
the order for purchase, payment may be made prior thereto. Cash,
if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934. Delivery of
Certificates representing Units so ordered will be made five business
days following such order or shortly thereafter. See "Rights of
Unit Holders-How May Units be Redeemed?" for information regarding
the ability to redeem Units ordered for purchase.
How are Units Distributed?
Sales may be made to dealers and others at prices which represent
a concession or agency commission of 4.0% of the Public Offering
Price. The Sponsor reserves the right to change the amount of
the concession or agency commission from time to time. Certain
commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge paid
by these customers is retained by or remitted to the banks in
the amounts indicated in the third preceding sentence. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have not indicated that
these particular agency transactions are not permitted under such
Act. In Texas and in certain other states, any banks making Units
available must be registered as broker/dealers under state law.
What are the Sponsor's Profits?
The Underwriters of the Trust, including the Sponsor, will receive
a gross sales commission equal to 5.8% of the Public Offering
Price of the Units (equivalent to 6.157% of the net amount invested)
less any reduced sales charge for quantity purchases as described
under "Public Offering-How is the Public Offering Price Determined?"
See "Underwriting" for information regarding the receipt of the
excess gross sales commissions by the Sponsor from the other Underwriters
and additional concessions available to the Underwriters, dealers
and others.
In maintaining a market for the Units, the Sponsor will also realize
profits or sustain losses in the amount of any difference between
the price at which Units are purchased and the price at which
Units are resold (which price includes a sales charge of 5.8%)
or redeemed.
Will There be a Secondary Market?
Although it is not obligated to do so, the Sponsor intends to
maintain a market for the Units and continuously to offer to purchase
Units at prices, subject to change at any time, based upon the
aggregate bid price of the Treasury Obligations in the portfolio
of the Trust and the net asset value of the Templeton shares in
the Trust plus or minus cash, if any, in the Principal Account
of the Trust. All expenses incurred in maintaining a secondary
market, other than the fees of the Evaluator, the supervisory
and audit expenses and the costs of the Trustee in transferring
and recording the ownership of Units, will be borne by the Sponsor.
If the supply of Units exceeds demand, or for some other business
reason, the Sponsor may discontinue purchases of Units at such
prices. IF A UNIT HOLDER WISHES TO DISPOSE OF HIS UNITS, HE SHOULD
INQUIRE OF THE SPONSOR AS TO CURRENT MARKET PRICES PRIOR TO MAKING
A TENDER FOR REDEMPTION TO THE TRUSTEE. Prospectuses relating
to certain other unit investment trusts indicate an intention,
subject to change, on the part of the respective sponsors of such
funds to repurchase units of those funds on the basis of a price
higher than the bid prices of the securities in the funds. Consequently,
depending upon the prices actually paid, the repurchase price
of other sponsors for units of their funds may be computed on
a somewhat more favorable basis than the repurchase price offered
by the Sponsor for Units of the Trust in secondary market transactions.
As in this Trust, the purchase price per unit of such funds will
depend primarily on the value of the securities in the portfolio
of the fund.
From time to time the Sponsor may implement programs under which
Underwriters and dealers of the Trust may receive nominal awards
from the Sponsor for each of their registered representatives
who have sold a minimum number of UIT Units during a specified
time period. In addition, at various times the Sponsor may implement
other programs under which the sales force of an Underwriter or
dealer may be eligible
Page 20
to win other nominal awards for certain sales efforts, or under
which the Sponsor will reallow to any such Underwriter or dealer
that sponsors sales contests or recognition programs conforming
to criteria established by the Sponsor, or participates in sales
programs sponsored by the Sponsor, an amount not exceeding the
total applicable sales charges on the sales generated by such
person at the public offering price during such programs. Also,
the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying
Underwriters or dealers for certain services or activities which
are primarily intended to result in sales of Units of the Trusts.
Such payments are made by the Sponsor out of its own assets, and
not out of the assets of the Trusts. These programs will not change
the price Unit holders pay for their Units or the amount that
the Trusts will receive from the Units sold.
RIGHTS OF UNIT HOLDERS
How is Evidence of Ownership Issued and Transferred?
The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the
Trustee. Ownership of Units may be evidenced by registered certificates
executed by the Trustee and the Sponsor. Delivery of certificates
representing Units ordered for purchase is normally made five
business days following such order or shortly thereafter. Certificates
are transferable by presentation and surrender to the Trustee
properly endorsed or accompanied by a written instrument or instruments
of transfer. Certificates to be redeemed must be properly endorsed
or accompanied by a written instrument or instruments of transfer.
A Unit holder must sign exactly as his name appears on the face
of the certificate with the signature guaranteed by a participant
in the Securities Transfer Agents Medallion Program ("STAMP")
or such other signature guaranty program in addition to, or in
substitution for, STAMP as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates
of corporate authority. Record ownership may occur before settlement.
Certificates will be issued in fully registered form, transferable
only on the books of the Trustee in denominations of one Unit
or any multiple thereof, numbered serially for purposes of identification.
Unit holders may elect to hold their Units in uncertificated form.
The Trustee will maintain an account for each such Unit holder
and will credit each such account with the number of Units purchased
by that Unit holder. Within two business days of the issuance
or transfer of Units held in uncertificated form, the Trustee
will send to the registered owner of Units a written initial transaction
statement containing a description of the Trust; the number of
Units issued or transferred; the name, address and taxpayer identification
number, if any, of the new registered owner; a notation of any
liens and restrictions of the issuer and any adverse claims to
which such Units are or may be subject or a statement that there
are no such liens, restrictions or adverse claims; and the date
the transfer was registered. Uncertificated Units are transferable
through the same procedures applicable to Units evidenced by certificates
(described above), except that no certificate need be presented
to the Trustee and no certificate will be issued upon the transfer
unless requested by the Unit holder. A Unit holder may at any
time request the Trustee to issue certificates for Units.
Although no such charge is now made or contemplated, a Unit holder
may be required to pay $2.00 to the Trustee per certificate reissued
or transferred and to pay any governmental charge that may be
imposed in connection with each such transfer or exchange. For
new certificates issued to replace destroyed, stolen or lost certificates,
the Unit holder may be required to furnish indemnity satisfactory
to the Trustee and pay such expenses as the Trustee may incur.
Mutilated certificates must be surrendered to the Trustee for replacement.
How are Income and Principal Distributed?
The Trustee will distribute any net income (other than accreted
interest) received with respect to any of the Securities in the
Trust on or about the Distribution Dates to Unit holders of record
on the preceding Record Date. See Part One for each Trust. Proceeds
received on the sale of any Securities in the Trust, to the extent
not used to meet redemptions of Units or pay expenses, will be
distributed annually on the Distribution Date to Unit holders
of record on the preceding Record Date.
Page 21
INCOME WITH RESPECT TO THE ORIGINAL ISSUE DISCOUNT ON THE TREASURY
OBLIGATIONS IN THE TRUST, WILL NOT BE DISTRIBUTED CURRENTLY, ALTHOUGH
UNIT HOLDERS WILL BE SUBJECT TO FEDERAL INCOME TAX AS IF A DISTRIBUTION
HAD OCCURRED. SEE "WHAT IS THE FEDERAL TAX STATUS OF UNIT HOLDERS?"
The Record Dates and Distribution Dates were established so as
to occur shortly after the record date and on the payment dates
of Templeton. Templeton normally pays a dividend in October of
each year representing substantially all of its net investment
income and net realized capital gains, if any. Pursuant to current
Internal Revenue Service regulations, Templeton pays a second
dividend and distribution in December of each year.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of any
distribution made by the Trust if the Trustee has not been furnished
the Unit holder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to
the Internal Revenue Service and may be recovered by the Unit
holder under certain circumstances by contacting the Trustee,
otherwise the amount may be recoverable only when filing a tax
return. Under normal circumstances the Trustee obtains the Unit
holder's tax identification number from the selling broker. However,
a Unit holder should examine his or her statements from the Trustee
to make sure that the Trustee has been provided a certified tax
identification number in order to avoid this possible "back-up
withholding." In the event the Trustee has not been previously
provided such number, one should be provided as soon as possible.
Within a reasonable time after the Trust is terminated, each Unit
holder will, upon surrender of his Units for redemption, receive:
(i) the number of shares of Templeton attributable to his Units,
which will be distributed "in-kind" directly to his account, rather
than redeemed, (ii) a pro rata share of the amounts realized upon
the disposition of the Treasury Obligations and (iii) a pro rata
share of any other assets of the Trust, less expenses of the Trust,
subject to the limitation that Treasury Obligations may not be
sold to pay for Trust expenses. Not less than 60 days prior to
the termination of the Trust, Unit holders will be offered the
option of having the proceeds from the disposition of the Treasury
Obligations in the Trust invested, at the net asset value on the
date such proceeds become available to the Trust, in additional
shares of Templeton at net asset value. Unless a Unit holder indicates
that he wishes to reinvest such amounts, they will be paid in
cash, as indicated above. A Unit holder may, of course, at any
time after the shares are distributed to his account, instruct
Templeton to redeem all or a portion of the shares in his account.
Shares of Templeton, as more fully described in its prospectus,
will be redeemed at the then current net asset value. If within
180 days of the termination of the Trust a registered owner of
Units has not surrendered the Units, the Trustee shall liquidate
the shares of Templeton held for such owner and hold the funds
to which such owner is entitled until such Units are surrendered.
The Trustee will credit to the Income Account of the Trust any
dividends or distributions received on the Templeton shares therein.
All other receipts (e.g. return of principal, capital gains, etc.)
are credited to the Principal Account of the Trust.
The Trustee may establish reserves (the "Reserve Account") within
the Trust for state and local taxes, if any, and any governmental
charges payable out of the Trust.
How Can Distributions to Unit Holders be Reinvested?
Each Unit holder of the Trust will have distributions of principal,
capital gains, if any, or income automatically invested in Templeton
shares deposited at such share's net asset value next computed,
unless he indicates at the time of purchase, or subsequently notifies
the Trustee in writing, that he wishes to receive cash payments.
Reinvestment by the Trust in Templeton shares will normally be
made as of the ex-dividend date for Templeton after the Trustee
deducts therefrom the expenses of the Trust. THE RULE 12B-1 FEES
IMPOSED ON SHARES HELD IN THE TRUST ARE REBATED TO THE TRUST AND
ARE USED TO REDUCE EXPENSES OF THE TRUST RESULTING IN INCREASED
DISTRIBUTIONS TO UNIT HOLDERS. UNIT HOLDERS WHO ACQUIRE SHARES
OF TEMPLETON THROUGH REINVESTMENT OF DIVIDENDS OR OTHER
DISTRIBUTIONS OR THROUGH REINVESTMENT AT THE TRUST'S TERMINATION
WILL BEGIN TO INCUR RULE 12B-1 FEES AT SUCH TIME AS SHARES ARE
ACQUIRED.
Page 22
Additional information with respect to the investment objective
and the management of Templeton is contained in its prospectus,
which can be obtained from the Sponsor or any broker/dealer with
a currently effective sales agreement with Franklin Templeton
Distributors, Inc.
Unit holders who are receiving distributions in cash may elect
to participate in the automatic reinvestment feature by filing
with the Trustee an election to have such distributions reinvested
without a sales charge. Such election must be received by the
Trustee at least ten days prior to the Record Date applicable
to any distribution in order to be in effect for such Record Date.
Any such election shall remain in effect until a subsequent notice
is received by the Trustee.
Exchange Privilege. Subject to the following limitations, shares
held in a Unit holder's reinvestment account may be exchanged
for shares of other Templeton funds, without sales charge, on
the basis of their relative net asset values per share at the
time of exchange. THE EXCHANGE PRIVILEGE DOES NOT APPLY TO TEMPLETON
FUND SHARES IN THE TRUST'S PORTFOLIO, ONLY TO A UNIT HOLDER'S
REINVESTMENT ACCOUNT. The exchange privilege is not a right and
may be suspended, terminated or modified at any time.
EXCHANGE PURCHASES ARE SUBJECT TO THE MINIMUM INVESTMENT REQUIREMENTS
OF THE FUND PURCHASED. EXCHANGES ARE PERMITTED ONLY AFTER AT LEAST
15 DAYS HAVE ELAPSED FROM THE DATE OF THE PURCHASE OF THE TEMPLETON
FUND SHARES TO BE EXCHANGED.
Exchange instructions may be given in writing or by telephone.
Telephone exchange privileges automatically apply to each Unit
holder's reinvestment account as shareholder of record unless
and until the Transfer Agent of the Templeton Funds receives written
instructions from the shareholder(s) of record canceling such privileges.
Telephonic exchanges can involve only Templeton Fund shares in
non-certificated form. Templeton Fund shares held in certificate
form are not eligible, but may be returned and qualify for these
services. All accounts involved in a telephonic exchange must
have the same registration and dividend option as the account
from which the Templeton Fund shares are being exchanged. If all
telephone exchange lines are busy (which might occur, for example,
during periods of substantial market fluctuations), shareholders
of Templeton might not be able to request telephone exchanges
and would have to submit written exchange requests.
Unless a shareholder of the Templeton Funds elects to decline
the telephone exchange privilege, the shareholder constitutes
and appoints the Transfer Agent of the Templeton Funds as the
true and lawful attorney to surrender for redemption or exchange
any and all unissued Templeton Fund shares held by it in an account
with any eligible Templeton fund, and authorizes and directs the
Transfer Agent of the Templeton Funds to act upon any instruction
from any person. The Transfer Agent of the Templeton Funds will
accept instructions by telephone to exchange Templeton Fund shares
held in any account for shares of any other eligible Templeton
fund, provided the registration and mailing address of the Templeton
Fund shares to be purchased are identical to those of the Templeton
Fund shares to be redeemed. Further, a shareholder(s) agrees that
neither the Transfer Agent of the Templeton Funds, any of its
affiliates nor the Templeton Funds will be liable for any loss,
damages, expense or cost arising out of any requests effected
in accordance with an authorization, including requests effected
by impostors or persons otherwise unauthorized to act on behalf
of the account. If the shareholder is an entity other than an
individual, such entity may be required to certify the persons
that have been duly elected and are now legally holding the titles
given and that the said entity is duly organized and existing
and has the power to take action called for by this continuing
authorization.
Neither the Templeton Funds nor the Transfer Agent of the Templeton
Funds will be responsible for acting upon any instructions believed
by them to be genuine. Forms for declining the telephone exchange
privilege and prospectuses of the other Templeton funds may be
obtained from Templeton Funds Distributors, Inc. A gain or loss
for tax purposes will be realized upon the exchange, depending
on the cost basis of the Templeton shares redeemed.
This exchange privilege is available only in states where shares
of the Templeton Funds being acquired legally may be sold and
may be modified, limited or terminated at any time by the Templeton
Funds upon 60 days
Page 23
written notice. A Unit holder who wishes to make an exchange should
first obtain and review a current prospectus of the fund into
which he or she wishes to exchange. All exchanges shall be governed
by the Templeton Funds' then current prospectus. Broker-dealers
who process exchange orders on behalf of their customers may charge
a fee for their services. Such fee may be avoided by making requests
for exchange directly to the Transfer Agent of the Templeton Funds.
What Reports Will Unit Holders Receive?
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of income, if any, and
the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per 1,000 Units. Within
a reasonable time after the end of each calendar year, the Trustee
will furnish to each person who at any time during the calendar
year was a Unit holder of the Trust the following information
in reasonable detail: (1) a summary of transactions in the Trust
for such year; (2) any Securities sold during the year and the
Securities held at the end of such year by the Trust; (3) the
redemption price per 1,000 Units based upon a computation thereof
on the 31st day of December of such year (or the last business
day prior thereto); and (4) amounts of income and capital gains
distributed during such year.
How May Units be Redeemed?
A Unit holder may redeem all or a portion of his Units by tender
to the Trustee at its corporate trust office in the City of New
York of the certificates representing the Units to be redeemed,
or in the case of uncertificated Units, delivery of a request
for redemption, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed as explained above (or by
providing satisfactory indemnity, as in connection with lost,
stolen or destroyed certificates), and payment of applicable governmental
charges, if any. No redemption fee will be charged. On the third
business day following such tender, the Unit holder will be entitled
to receive in cash an amount for each Unit equal to the Redemption
Price per 1,000 Units next computed after receipt by the Trustee
of such tender of Units. The "date of tender" is deemed to be
the date on which Units are received by the Trustee, except that
as regards Units received after 4:00 p.m. Eastern time, the date
of tender is the next day on which the New York Stock Exchange
is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption
price computed on that day. Units so redeemed shall be cancelled.
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unit holder's tax identification number
in the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be recovered
by the Unit holder only when filing a tax return. Under normal
circumstances the Trustee obtains the Unit holder's tax identification
number from the selling broker. However, any time a Unit holder
elects to tender Units for redemption, such Unit holder should
make sure that the Trustee has been provided a certified tax identification
number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such
number, one must be provided at the time redemption is requested.
Any amounts paid on redemption representing income shall be withdrawn
from the Income Account of the Trust to the extent that funds
are available for such purpose. All other amounts paid on redemption
shall be withdrawn from the Principal Account of the Trust.
The Trustee is empowered to sell Securities of the Trust in order
to make funds available for redemption. To the extent that Securities
are sold, the size and diversity of the Trust will be reduced.
Such sales may be required at a time when Securities would not
otherwise be sold and might result in lower prices than might
otherwise be realized. Shares of Templeton will be sold to meet
redemptions of Units before Treasury Obligations, although Treasury
Obligations may be sold if the Trust is assured of retaining a
sufficient principal amount of Treasury Obligations to provide
funds upon maturity of the Trust at least equal to $1.00 per Unit.
Page 24
The Redemption Price per Unit (as well as the secondary market
Public Offering Price) will be determined on the basis of the
bid price of the Treasury Obligations and the net asset value
of the Templeton shares in the Trust plus or minus cash, if any,
in the Principal Account of the Trust as of the close of trading
on the New York Stock Exchange on the date any such determination
is made. The Redemption Price per 1,000 Units is the pro rata
share of each Unit determined by the Trustee by adding: (1) the
cash on hand in the Trust other than cash deposited in the Trust
to purchase Securities not applied to the purchase of such Securities;
(2) the aggregate value of the Securities (including "when issued"
contracts, if any) held in the Trust, as determined by the Evaluator
on the basis of bid prices of the Treasury Obligations and the
net asset value of the Templeton shares next computed; and (3)
dividends receivable on Templeton shares trading ex-dividend as
of the date of computation; and deducting therefrom: (1) amounts
representing any applicable taxes or governmental charges payable
out of the Trust; (2) an amount representing estimated accrued
expenses of the Trust, including but not limited to fees and expenses
of the Trustee (including legal and auditing fees), the Evaluator,
the Supervisor and counsel fees, if any; (3) cash held for distribution
to Unit holders of record of the Trust as of the business day
prior to the evaluation being made; and (4) other liabilities
incurred by the Trust; and finally dividing the results of such
computation by the number of Units of the Trust outstanding as
of the date thereof.
The right of redemption may be suspended and payment postponed
for any period during which the New York Stock Exchange is closed
(other than for customary weekend and holiday closings) or during
which the Securities and Exchange Commission determines that trading
on that Exchange is restricted or any emergency exists, as a result
of which disposal or evaluation of the Securities is not reasonably
practicable, or for such other periods as the Securities and Exchange
Commission may by order permit. Under certain extreme circumstances,
the Sponsor may apply to the Securities and Exchange Commission
for an order permitting a full or partial suspension of the right
of Unit holders to redeem their Units. The Trustee is not liable
to any person in any way for any loss or damage which may result
from any such suspension or postponement.
How May Units be Purchased by the Sponsor?
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase
such Units by notifying the Trustee on the same business day and
by making payment therefor to the Unit holder not later than the
day on which the Units would otherwise have been redeemed by the
Trustee. Units held by the Sponsor may be tendered to the Trustee
for redemption as any other Units. In the event the Sponsor does
not purchase Units, the Trustee may sell Units tendered for redemption
in the over-the-counter market, if any, as long as the amount
to be received by the Unit holder is equal to the amount he would
have received on redemption of the Units. Any profit or loss resulting
from the resale or redemption of Units acquired by the Sponsor
will belong to the Sponsor.
How May Securities be Removed from the Trust?
The portfolio of the Trust is not "managed" by the Sponsor or
the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. The Indenture provides that
the Sponsor may (but need not) direct the Trustee to dispose of
a Security in the unlikely event that an issuer of a Security
defaults in the payment of dividends or interest or there exist
certain other materially adverse conditions described in the Indenture.
The Trustee may also sell Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose
of redeeming Units of the Trust tendered for redemption and the
payment of expenses; provided, however, that in the case of Securities
sold to meet redemption requests, Treasury Obligations may only
be sold if the Trust is assured of retaining a sufficient principal
amount of Treasury Obligations to provide funds upon maturity
of the Trust at least equal to $1.00 per Unit. Treasury Obligations
may not be sold to meet Trust expenses.
Page 25
INFORMATION AS TO SPONSOR, TRUSTEE AND EVALUATOR
Who is the Sponsor?
Nike Securities L.P., the Sponsor, specializes in the underwriting,
trading and distribution of unit investment trusts and other securities.
Nike Securities L.P., an Illinois limited partnership formed in
1991, acts as Sponsor for successive series of The First Trust
Combined Series, The First Trust Special Situations Trust, The
First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds, The First Trust GNMA, Templeton Growth and Treasury
Trust, Templeton Foreign Fund & U.S. Treasury Securities Trust
and The Advantage Growth and Treasury Securities Trust. First
Trust introduced the first insured unit investment trust in 1974
and to date more than $9 billion in First Trust unit investment
trusts have been deposited. The Sponsor's employees include a
team of professionals with many years of experience in the unit
investment trust industry. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and Securities Investor
Protection Corporation and has its principal offices at 1001 Warrenville
Road, Lisle, Illinois 60532; telephone number (708) 241-4141.
As of December 31, 1994, the total partners' capital of Nike Securities
L.P. was $10,863,058 (audited). (This paragraph relates only to
the Sponsor and not to the Trust or to any series thereof or to
any other Underwriter. The information is included herein only
for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations.
More detailed financial information will be made available by
the Sponsor upon request.)
Who is the Trustee?
The Trustee is The Chase Manhattan Bank (National Association),
a national banking association with its principal executive office
located at 1 Chase Manhattan Plaza, New York, New York 10081 and
its unit investment trust office at 770 Broadway, New York, New
York 10003. Unit holders who have questions regarding the Trusts
may call the Customer Service Help Line at 1-800-682-7520. The
Trustee is subject to supervision by the Comptroller of the Currency,
the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System.
The Trustee, whose duties are ministerial in nature, has not participated
in the selection of the Securities. For information relating to
the responsibilities of the Trustee under the Indenture, reference
is made to the material set forth under "Rights of Unit Holders."
The Trustee and any successor trustee may resign by executing
an instrument in writing and filing the same with the Sponsor
and mailing a copy of a notice of resignation to all Unit holders.
Upon receipt of such notice, the Sponsor is obligated to appoint
a successor trustee promptly. If the Trustee becomes incapable
of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint
a successor as provided in the Indenture. If upon resignation
of a trustee no successor has accepted the appointment within
30 days after notification, the retiring trustee may apply to
a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only
when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which a Trustee shall be a party, shall
be the successor Trustee. The Trustee must be a banking corporation
organized under the laws of the United States or any State and
having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
Limitations on Liabilities of Sponsor and Trustee
The Sponsor and the Trustee shall be under no liability to Unit
holders for taking any action or for refraining from taking any
action in good faith pursuant to the Indenture, or for errors
in judgment, but shall be liable only for their own willful misfeasance,
bad faith, gross negligence (ordinary negligence in the case of
the Trustee) or reckless disregard of their obligations and duties.
The Trustee shall not be liable for depreciation
Page 26
or loss incurred by reason of the sale by the Trustee of any of
the Securities. In the event of the failure of the Sponsor to
act under the Indenture, the Trustee may act thereunder and shall
not be liable for any action taken by it in good faith under the
Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee under the Indenture or
upon or in respect of the Trust which the Trustee may be required
to pay under any present or future law of the United States of
America or of any other taxing authority having jurisdiction.
In addition, the Indenture contains other customary provisions
limiting the liability of the Trustee.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or
its affairs are taken over by public authorities, then the Trustee
may (a) appoint a successor Sponsor at rates of compensation deemed
by the Trustee to be reasonable and not exceeding amounts prescribed
by the Securities and Exchange Commission, or (b) terminate the
Indenture and liquidate the Trust as provided herein, or (c) continue
to act as Trustee without terminating the Indenture.
Who is the Evaluator?
The Evaluator is Securities Evaluation Service, Inc., 531 East
Roosevelt Road, Suite 200, Wheaton, Illinois 60187. The Evaluator
may resign or may be removed by the Sponsor and the Trustee, in
which event the Sponsor and the Trustee are to use their best
efforts to appoint a satisfactory successor. Such resignation
or removal shall become effective upon the acceptance of appointment
by the successor Evaluator. If upon resignation of the Evaluator
no successor has accepted appointment within 30 days after notice
of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
The Trustee, Sponsor and Unit holders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the
Indenture shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator
shall be under no liability to the Trustee, Sponsor or Unit holders
for errors in judgment. This provision shall not protect the Evaluator
in any case of willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
OTHER INFORMATION
How May the Indenture be Amended or Terminated?
The Sponsor and the Trustee have the power to amend the Indenture
without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision
of the Indenture which may be defective or inconsistent with any
other provision contained therein, or (2) to make such other provisions
as shall not adversely affect the interest of the Unit holders
(as determined in good faith by the Sponsor and the Trustee).
The Indenture provides that the Trust shall terminate upon the
maturity, redemption or other disposition of the last of the Treasury
Obligations held in the Trust but in no event beyond the Mandatory
Termination Date as set forth in Part One for each Trust. The
Trust may be liquidated at any time by consent of 100% of the
Unit holders of the Trust or by the Trustee in the event that
Units of the Trust not yet sold aggregating more than 60% of the
Units of the Trust are tendered for redemption by the Underwriters,
including the Sponsor. If the Trust is liquidated because of the
redemption of unsold Units of the Trust by the Underwriters, the
Sponsor will refund to each purchaser of Units of the Trust the
entire sales charge paid by such purchaser. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit
holders of the Trust. Within a reasonable period after termination,
the Trustee will follow the procedures set forth under "How are
Income and Principal Distributed?"
Legal Opinions
The legality of the Units offered hereby and certain matters relating
to federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for
the Sponsor. Carter,
Page 27
Ledyard & Milburn will act as counsel for the Trustee and as
special New York tax counsel for the Trust.
Experts
The statement of net assets, including the portfolio, of each
Trust contained in Part One of this Prospectus has been audited
by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing therein, and is included in reliance
upon such report given upon the authority of such firm as experts
in accounting and auditing.
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Page 31
CONTENTS:
Templeton Growth and Treasury Trust
Templeton Foreign Fund & U.S. Treasury Securities Trust:
What are Templeton Growth and Treasury Trust
and Templeton Foreign Fund &
U.S. Treasury Securities Trust? 3
What are the Expenses and Charges? 3
What is the Federal Tax Status of Unit Holders? 4
Why are Investments in the Trust Suitable for
Retirement Plans? 7
Portfolio:
What are Zero Coupon Treasuries? 7
What is Templeton Growth Fund, Inc.? 7
What is Templeton Foreign Fund? 11
What is Templeton's Investment Objective
and Policy? 13
Investment Techniques for Growth Fund 14
How is Net Asset Value of Templeton Determined? 15
Who is the Investment Manager of Templeton? 16
Risk Factors 17
Public Offering:
How is the Public Offering Price Determined? 19
How are Units Distributed? 20
What Are the Sponsor's Profits? 20
Will There be a Secondary Market? 20
Rights of Unit Holders:
How is Evidence of Ownership Issued and
Transferred? 21
How are Income and Principal Distributed? 21
How Can Distributions to Unit Holders be
Reinvested? 22
What Reports Will Unit Holders Receive? 24
How May Units be Redeemed? 24
How May Units be Purchased by the Sponsor? 25
How May Securities be Removed from the Trust? 25
Information as to Sponsor, Trustee and Evaluator:
Who is the Sponsor? 26
Who is the Trustee? 26
Limitations on Liabilities of Sponsor and Trustee 26
Who is the Evaluator? 27
Other Information:
How May the Indenture be Amended or
Terminated? 27
Legal Opinions 27
Experts 28
______________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
THIS PROSPECTUS DOES NOT CONTAIN ALL THE INFORMATION SET
FORTH IN THE REGISTRATION STATEMENTS AND EXHIBITS RELATING THERETO,
WHICH THE TRUST HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, AND TO WHICH REFERENCE IS HEREBY MADE.
TEMPLETON GROWTH AND
TREASURY TRUST
TEMPLETON FOREIGN FUND &
U.S. TREASURY SECURITIES TRUST
Prospectus
Part Two
January 31, 1996
First Trust (registered trademark)
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-708-241-4141
Trustee:
The Chase Manhattan Bank
(National Association)
770 Broadway
New York, New York 10003
1-800-682-7520
THIS PART TWO MUST BE
ACCOMPANIED BY PART ONE.
PLEASE RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE
CONTENTS OF POST-EFFECTIVE AMENDMENT
OF REGISTRATION STATEMENT
This Post-Effective Amendment of Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Auditors
Financial Data Schedule
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, Templeton Growth and Treasury Trust, Series 1,
certifies that it meets all of the requirements for effectiveness
of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective
Amendment of its Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized in the
Village of Lisle and State of Illinois on March 1, 1996.
TEMPLETON GROWTH AND TREASURY TRUST,
SERIES 1
(Registrant)
By NIKE SECURITIES L.P.
(Depositor)
By Carlos E. Nardo
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment of Registration Statement has been
signed below by the following person in the capacity and on the
date indicated:
Signature Title* Date
Robert D. Van Kampen Sole Director of )
Nike Securities )
Corporation, the )
General Partner ) March 1, 1996
of Nike Securities L.P. )
) Carlos E. Nardo
) Attorney-in-Fact**
*The title of the person named herein represents his capacity in
and relationship to Nike Securities L.P., Depositor.
**An executed copy of the related power of attorney was filed
with the Securities and Exchange Commission in connection
with the Amendment No. 1 to Form S-6 of The First Trust
Special Situations Trust, Series 18 (File No. 33-42683) and
the same is hereby incorporated herein by this reference.
S-2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated November 10, 1995 in
this Post-Effective Amendment to the Registration Statement and
related Prospectus of Templeton Growth and Treasury Trust dated
December 20, 1995.
ERNST & YOUNG
Chicago, Illinois
December 19, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Post
Effective Amendment to form S-6 and is qualified in its entirety by reference to
such Post Effective Amendment to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> TEMPLETON G&T TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-1-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 46,140,748
<INVESTMENTS-AT-VALUE> 53,886,242
<RECEIVABLES> 43,413
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,929,655
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 294,109
<TOTAL-LIABILITIES> 294,109
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,140,748
<SHARES-COMMON-STOCK> 42,000,718
<SHARES-COMMON-PRIOR> 45,968,474
<ACCUMULATED-NII-CURRENT> (250,696)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,745,494
<NET-ASSETS> 53,635,546
<DIVIDEND-INCOME> 1,880,062
<INTEREST-INCOME> 2,382,261
<OTHER-INCOME> 0
<EXPENSES-NET> 59,512
<NET-INVESTMENT-INCOME> 4,202,811
<REALIZED-GAINS-CURRENT> 450,990
<APPREC-INCREASE-CURRENT> 369,014
<NET-CHANGE-FROM-OPS> 5,022,815
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,035,726
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 3,967,756
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,733,288)
<ACCUMULATED-NII-PRIOR> (14,173)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
