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TEMPLETON PROSPECTUS -- MAY 1, 1994
GLOBAL OPPORTUNITIES TRUST AS SUPPLEMENTED NOVEMBER 30, 1994
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INVESTMENT Templeton Global Opportunities Trust (the "Fund") seeks long-
OBJECTIVE AND term capital growth through a flexible policy of investing in
POLICIES global securities. Although the Fund invests primarily 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. Any income realized
will be incidental. THE FUND MAY INVEST UP TO 25% OF ITS TOTAL
ASSETS IN HIGH YIELD, HIGH RISK DEBT INSTRUMENTS THAT ARE
PREDOMINANTLY SPECULATIVE. SEE "RISK FACTORS."
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PURCHASE OF Please complete and return the Shareholder Application. If you
SHARES need assistance in completing this form, please call our
Account Services Department. The Fund's Shares may be
purchased at a price equal to their net asset value plus a
sales charge not exceeding 5.75% of the Offering Price. The
minimum initial investment is $100 ($25 minimum for subsequent
investments).
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PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Fund that a prospective investor ought to know before
investing. Investors are advised to read and retain this
Prospectus for future reference. A Statement of Additional
Information ("SAI") dated May 1, 1994, as supplemented
November 4, 1994, has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated in its
entirety by reference in and made a part of this Prospectus.
The SAI is available without charge upon request to Franklin
Templeton Distributors, Inc., 700 Central Avenue, St.
Petersburg, Florida 33701-3628 or by calling the Account
Services Department.
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ACCOUNT SERVICES DEPARTMENT--1-800-354-9191 OR 813-823-8712
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TEMPLETON "STAR" SERVICE (24 hours, seven days a week access to current
prices, shareholder account balances/values, last transaction and duplicate
account statements)--1-800-654-0123
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TABLE OF CONTENTS
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EXPENSE TABLE......... 2
SELECTED FINANCIAL
INFORMATION.......... 3
GENERAL DESCRIPTION... 3
Investment Objective
and Policies........ 4
INVESTMENT TECHNIQUES. 5
Repurchase
Agreements.......... 5
Borrowing............ 5
Loans of Portfolio
Securities.......... 5
Options on Securities
or Indices.......... 5
Forward Foreign
Currency Contracts
and Options on
Foreign Currencies.. 5
Futures Contracts.... 6
Depositary Receipts.. 6
RISK FACTORS.......... 6
HOW TO BUY SHARES OF
THE FUND............. 8
Net Asset Value...... 8
Offering Price....... 9
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Cumulative Quantity
Discount............ 10
Letter of Intent..... 10
Group Purchases...... 10
Net Asset Value
Purchases........... 11
Automatic Investment
Plan................ 12
Institutional
Accounts............ 12
Account Statements... 12
Templeton STAR
Service............. 12
Retirement Plans..... 12
EXCHANGE PRIVILEGE.... 12
Exchanges by Timing
Accounts............ 13
HOW TO SELL SHARES OF
THE FUND............. 14
Reinstatement
Privilege........... 16
Contingent Deferred
Sales Charge........ 16
Systematic
Withdrawal Plan..... 16
Redemptions by
Telephone........... 17
TELEPHONE
TRANSACTIONS......... 17
Verification
Procedures.......... 17
Restricted Accounts.. 17
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General.............. 18
MANAGEMENT OF THE
FUND................. 18
Investment Manager... 18
Business Manager..... 19
Transfer Agent....... 19
Custodian............ 19
Plan of Distribution. 19
Expenses............. 19
Brokerage
Commissions......... 19
GENERAL INFORMATION... 20
Description of
Shares/Share
Certificates........ 20
Meetings of
Shareholders........ 20
Dividends and
Distributions....... 20
Federal Tax
Information......... 20
Inquiries............ 21
Performance
Information......... 21
WITHHOLDING
INFORMATION.......... 22
CORPORATE RESOLUTION.. 23
AUTHORIZATION
AGREEMENT............ 24
THE FRANKLIN TEMPLETON
GROUP................ 25
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SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
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.
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EXPENSE TABLE
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SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of Offering
Price)................................................................ 5.75%
Deferred sales charge.................................................. None*
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees........................................................ 0.80%
12b-1 Fees............................................................. 0.25%**
Other Expenses (audit, legal, business management, transfer agent and
custodian)............................................................ 0.46%
Total Fund Operating Expenses.......................................... 1.51%
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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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: $72 $102 $135 $227
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* Investments of $1 million or more are not subject to an initial sales
charge; however, a contingent deferred sales charge of 1% is imposed in the
event of certain redemption transactions within one year following such
investments. See "How to Sell Shares of the Fund--Contingent Deferred Sales
Charge."
** These expenses may not exceed 0.25% of the Fund's average net assets
annually. (See "Management of the Fund--Plan of Distribution." 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.
The information in the table above is an estimate based on the Fund's
expenses as of the end of the most recent fiscal year and is provided for
purposes of assisting current and prospective Shareholders in understanding
the various costs and expenses that an investor in the Fund will bear,
directly or indirectly. The information in the 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 or an
administrative service fee of $5.00 per exchange for market timing or
allocation service accounts. THE 5% ANNUAL RETURN AND ANNUAL EXPENSES SHOULD
NOT BE CONSIDERED A REPRESENTATION OF ACTUAL OR EXPECTED FUND PERFORMANCE OR
EXPENSES, BOTH OF WHICH MAY VARY. For a more detailed discussion of the Fund's
fees and expenses, see "Management of the Fund."
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SELECTED FINANCIAL INFORMATION
For a Share outstanding throughout the periods indicated
The following table of selected financial information has been audited by
McGladrey & Pullen, independent certified public accountants, for the periods
indicated in their report which is incorporated by reference and which appears
in the Fund's 1993 Annual Report to Shareholders. This statement should be
read in conjunction with the other financial statements and notes thereto
included in the Fund's 1993 Annual Report to Shareholders, which contains
further information about the Fund's performance, and which is available to
shareholders upon request and without charge.
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FEBRUARY 28, 1990
YEAR ENDED DECEMBER 31, (COMMENCEMENT
PER SHARE OPERATING PERFORMANCE ---------------------------- OF OPERATIONS) TO
(FOR A SHARE OUTSTANDING 1993 1992 1991 DECEMBER 31, 1990
THROUGHOUT THE PERIOD) -------- -------- -------- -----------------
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Net asset value, beginning of
period........................ $10.75 $10.94 $ 8.36 $ 9.40
Income from investment
operations:
Net investment income......... .12 .14 .17 .27
Net realized and unrealized
gain (loss).................. 3.97 .61 2.59 (1.04)
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Total from investment
operations.................... 4.09 .75 2.76 (.77)
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Distributions:
Dividends from net investment
income....................... (.11) (.14) (.01) (.27)
Distributions from net
realized gains............... (.27) (.65) (.17) --
Distribution in excess of
realized gains............... -- (.15) -- --
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Total distributions............ (.38) (.94) (.18) (.27)
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Change in net asset value for
the period.................... 3.71 (.19) 2.58 (1.04)
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Net asset value, end of period. $14.46 $10.75 $10.94 $ 8.36
======== ======== ======== ========
TOTAL RETURN* 38.13% 6.85% 31.16% (8.19)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000)......................... $410,747 $248,807 $200,848 $159,018
Ratio of expenses to average
net assets.................... 1.51% 1.63% 1.76% 1.64%**
Ratio of net investment income
to average net assets......... 1.07% 1.36% 1.63% 3.55%**
Portfolio turnover rate........ 40.56% 22.03% 21.02% 15.92%
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*Total return does not reflect sales charges. Not annualized in periods of
less than one year.
**Annualized.
GENERAL DESCRIPTION
Templeton Global Opportunities Trust (the "Fund") was organized as a
business trust under the laws of Massachusetts on October 2, 1989, and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act") as an open-end diversified management investment company.
3
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INVESTMENT OBJECTIVE AND POLICIES. The Fund's investment objective is long-
term capital growth, which it seeks to achieve through a flexible policy of
investing in global securities. Any income realized will be incidental.
Although the Fund invests primarily in common stock, it may also invest in
preferred stock and certain debt securities, rated or unrated, such as
convertible bonds and bonds selling at a discount. The Fund may invest in
stocks and debt obligations of companies and debt obligations of governments
of any nation. Under normal circumstances, the Fund will invest at least 65%
of its total assets in issuers domiciled in at least three different nations
(one of which may be the United States).
The Trustees of the Fund have adopted a non-fundamental policy, effective
July 15, 1994, that no more than 25% of the Fund's assets will be invested in
debt securities rated less than Baa by Moody's Investors Service, Inc.
("Moody's") or BBB by Standard & Poor's Corporation ("S&P"). The Fund will not
invest in debt securities rated less than Caa by Moody's or CCC by S&P. Debt
securities rated Caa by Moody's are of poor standing. Such securities may be
in default or there may be present elements of danger with respect to
principal or interest. Debt securities rated CCC by S&P are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and principal in accordance with the terms of the obligation.
While such securities may have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposure to adverse
conditions. See "Risk Factors." Certain debt securities can provide the
potential for capital appreciation based on various factors such as changes in
interest rates, economic and market conditions, improvement in an issuer's
ability to repay principal and pay interest, and ratings upgrades.
Additionally, convertible bonds offer the potential for capital appreciation
through the conversion feature, which enables the holder of the bond to
benefit from increases in the market price of the securities into which they
are convertible.
Whenever, in the judgment of Templeton Investment Counsel, Inc. (the
"Investment Manager"), market or economic conditions warrant, the Fund may,
for temporary defensive purposes, invest without limit in money market
securities, denominated in dollars or in the currency of any foreign country,
issued by entities organized in the U.S. or any foreign country. Such
investments may include short-term (less than 12 months to maturity) and
medium-term (not greater than five years to maturity) obligations issued or
guaranteed by the U.S. Government or the government of a foreign country,
their agencies or instrumentalities; finance company and corporate commercial
paper, and other short-term corporate obligations, in each case rated Prime-1
by Moody's or A or better by S&P or, if unrated, of comparable quality as
determined by the Investment Manager; and repurchase agreements with banks and
broker-dealers with respect to such securities. In addition, for temporary
defensive purposes, the Fund may invest up to 25% of its total assets in
obligations of banks (including certificates of deposit, time deposits and
bankers' acceptances); provided that the Fund will limit its investment in
time deposits for which there is a penalty for early withdrawal to 10% of its
total assets.
As a diversified management investment company, the Fund 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 the Fund may
invest up to 25% of its assets in a single industry, it has no present
intention of doing so. The Fund may not invest more than 5% of its assets in
warrants (exclusive of warrants acquired in units or attached to securities)
or more than 10% of its assets in securities with a limited trading market.
The investment objective and policies described above, as well as all of the
investment restrictions described in the SAI, cannot be changed without
Shareholder approval.
The Fund may also lend its portfolio securities and borrow money for
investment purposes (i.e., "leverage" its portfolio). In addition, the Fund
may enter into transactions in options on securities, securities indices and
foreign currencies, forward foreign currency contracts, and futures contracts
and related options. When deemed appropriate by the Investment Manager, the
Fund may invest cash balances in repurchase agreements and other money market
investments to maintain liquidity in an amount to meet expenses or for day to
day operating purposes. In addition, when the Fund experiences large cash
inflows through issuance of new Shares, and desirable investment securities
which are consistent with the Fund's investment objective are unavailable in
sufficient quantities or at reasonable prices, the Fund may invest in money
market instruments for a limited time pending availability of such securities.
These investment techniques are described below and under the heading
"Investment Objective and Policies" in the SAI.
4
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The Fund does not intend to emphasize short-term trading profits and usually
expects to have a portfolio turnover rate not exceeding 100%.
INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS. When the Fund acquires a security from a bank or a
registered broker-dealer, it may simultaneously enter into a repurchase
agreement, wherein the seller agrees to repurchase the security as 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 on 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
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 disposition costs in liquidating the security.
BORROWING. The Fund may borrow up to 10% of the value of its total assets
from banks to increase its holdings of portfolio securities. Under the 1940
Act, the Fund is required to maintain continuous asset coverage of 300% with
respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of the
Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value,
and money borrowed will be subject to interest and other costs (which may
include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of its total
assets generally to generate income to offset Fund expenses. 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 marked-to-market basis) to the current market value of the
securities loaned. The Fund may terminate the loans at any time and obtain the
return of the securities loaned within five business days. The 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.
OPTIONS ON SECURITIES OR INDICES. The Fund may write (i.e., sell) covered
put and call options and purchase put and call options on securities or
securities indices that are traded on United States and foreign exchanges or
in the over-the-counter markets. An option on a security is a contract that
permits the purchaser of the option, in return for the premium paid, the right
to buy a specified security (in the case of a call option) or to sell a
specified security (in the case of a put option) from or to the writer of the
option at a designated price during the term of the option. 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 Fund may write a call or put option only if the option is
"covered." This means that so long as the Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or
hold a call at the same exercise price, for the same exercise period, and on
the same securities as the written call. A put is covered if the Fund
maintains liquid assets with a value equal to the exercise price in a
segregated account, or holds a put on the same underlying securities at an
equal or greater exercise price. The value of the underlying securities on
which options may be written at any one time will not exceed 15% of the total
assets of the Fund. The Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of its total assets at
the time of purchase.
FORWARD FOREIGN CURRENCY CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES. The
Fund may enter into forward foreign currency exchange contracts ("forward
contracts") to attempt to minimize the risk to the Fund from adverse changes
in the relationship between
5
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the U.S. dollar and foreign currencies. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a future date
which is individually negotiated and privately traded by currency traders and
their customers. The Fund may enter into a forward contract, for example, when
it enters into a contract for the purchase or sale of a security denominated
in a foreign currency in order to "lock in" the U.S. dollar price of the
security. The Fund will not enter into forward foreign currency contracts if,
as a result, the Fund will have more than 20% of its total assets committed to
the consummation of such contracts. The Fund may also purchase and write put
and call options on foreign currencies for the purpose of protecting against
declines in the dollar value of foreign portfolio securities and against
increases in the U.S. dollar cost of foreign securities to be acquired.
FUTURES CONTRACTS. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock index futures contracts, foreign currency
futures contracts and options on any of the foregoing. A financial futures
contract is an agreement between two parties to buy or sell a specified debt
security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the
difference between the value of the index at the beginning and at the end of
the contract period. A futures contract on a foreign currency is an agreement
to buy or sell a specified amount of a currency for a set price on a future
date.
When the Fund enters into a 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 security, index or currency
fluctuates, either party to the contract is required to make additional margin
payments, know as "variation margin," to cover any additional obligation it
may have under the contract. In addition, when the 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--Futures Contracts" in
the SAI.
The Fund may not commit more than 5% of its total assets to initial margin
deposits on futures contracts and related options. The value of the underlying
securities on which futures contracts will be written at any one time will not
exceed 25% of the total assets of the Fund.
DEPOSITARY RECEIPTS. The 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 issued 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 Fund's investments in Depositary Receipts will
be deemed to be investments in the underlying securities.
RISK FACTORS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Fund nor
can there be any assurance that the Fund's investment objective will be
attained. As with any investment in securities, the value of, and income from,
an investment in the Fund 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
6
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of the Fund will fluctuate with movements in the broader equity and bond
markets, as well. A decline in the stock market of any country in which the
Fund is invested may also be reflected in declines in the price of the Shares
of the Fund. Changes in currency valuations will also affect the price of the
Shares of the Fund. History reflects both decreases and increases in worldwide
stock markets and currency valuations, and these may reoccur unpredictably in
the future. Additionally, investment decisions made by the Investment Manager
will not always be profitable or prove to have been correct.
The Fund has an unlimited right to purchase securities in any developed
foreign country and may invest up to 25% of its total assets in securities in
underdeveloped countries. Investors should consider carefully the substantial
risks involved in investing in foreign securities, 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 the foreign nation (including withholding taxes on interest and
dividends) or other taxes imposed with respect to investments in the foreign
nation, foreign exchange controls (which may include suspension of the ability
to transfer currency from a given country), default in foreign government
securities, political or social instability or diplomatic developments which
could affect investments 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 U.S. companies. Further, the Fund may
encounter difficulties or be unable to pursue legal remedies and obtain
judgments in foreign courts. 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 Fund
are uninvested and no return is earned thereon. The inability of the Fund to
make intended security purchases due to settlement problems could cause the
Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses
to the Fund due to subsequent declines in value of the portfolio security or,
if the Fund has 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.
Foreign securities transactions may be subject to higher brokerage and
custodial costs than domestic securities transactions. In addition, the
foreign securities markets of many of the countries in which the Fund may
invest may also be smaller, less liquid and subject to greater price
volatility than those in the United States.
The Fund will 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 spreads on currency exchange (to cover service charges)
will be incurred when the Fund converts assets from one currency to another.
Leveraging by means of borrowing may exaggerate the effect of any increase
or decrease in the value of portfolio securities on the Fund's net asset
value, and money borrowed will be subject to interest and other costs (which
may include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
Successful use of futures contracts and related options is subject to
special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures position is sought to be
closed. In addition, there may be an imperfect correlation between movements
in the securities or foreign currency on which the futures or options contract
is based and movements in the securities or currency in the Fund's portfolio.
Successful use of futures or options contracts is further dependent on the
Investment Manager's ability to correctly predict movements in the securities
or foreign currency markets and no assurance can be given that its judgment
will be correct. Successful use of options on securities or stock indices is
subject to similar risk considerations.
Effective July 15, 1994, the Fund may invest up to 25% of its total assets
in high yield, high risk debt instruments that are predominantly speculative.
Although they may offer higher yields than higher rated securities, low rated
and unrated debt securities generally involve greater volatility of price and
risk of principal and income, including the possibility of default by, or
bankruptcy of, the
7
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issuers of the securities. In addition, the markets in which low rated and
unrated debt securities are traded are more limited than those in which higher
rated securities are traded. The existence of limited markets for particular
securities may diminish the Fund's ability to sell the securities at fair
value either to meet redemption requests or to respond to a specific economic
event such as a deterioration in the creditworthiness of the issuer. Reduced
secondary market liquidity for certain low rated or unrated debt securities
may also make it more difficult for the Fund to obtain accurate market
quotations for the purposes of valuing the Fund's portfolio. Market quotations
are generally available on many low rated or unrated securities only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of low rated debt
securities, especially in a thinly traded market. Analysis of the
creditworthiness of issuers of low rated debt securities may be more complex
than for issuers of higher rated securities, and the ability of the Fund to
achieve its investment objective may, to the extent of investment in low rated
debt securities, be more dependent upon such creditworthiness analysis than
would be the case if the Fund were investing in higher rated securities.
Low rated debt securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of low rated debt securities have been found to be less
sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic downturns or individual corporate developments.
A projection of an economic downturn or of a period of rising interest rates,
for example, could cause a decline in low rated debt securities prices because
the advent of a recession could lessen the ability of a highly leveraged
company to make principal and interest payments on its debt securities. If the
issuer of low rated debt securities defaults, the Fund may incur additional
expenses to seek recovery. The low rated bond market is relatively new, and
many of the outstanding low rated bonds have not endured a major business
recession.
There are further risk considerations, including possible losses through the
holding of securities in domestic and foreign custodian banks and depositories
and risks associated with borrowing, described elsewhere in the Prospectus and
in the SAI.
HOW TO BUY SHARES OF THE FUND
Shares of the Fund may be purchased at the Offering Price through any broker
which has a dealer agreement with Franklin Templeton Distributors, Inc.
("FTD"), the Principal Underwriter for the Shares of the Fund, or directly
from FTD upon receipt by FTD of a completed Shareholder Application and check.
The minimum initial purchase order is $100 (other than in monthly investment
plans, such as sponsored payroll deduction, automatic investment, split-
funding or comparable plans, which require a minimum of $25), with subsequent
investments of $25 or more.
NET ASSET VALUE. The net asset value of the Shares of the Fund is computed
as of the close of trading on each day the New York Stock Exchange is open for
trading, by dividing the value of the Fund'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 close of trading on
the New York Stock Exchange, 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 the Fund'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 Trustees. All other
securities for which over-the-counter market quotations are readily available
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 Trustees.
8
<PAGE>
OFFERING PRICE. The Offering Price to the public on purchases of the Fund's
Shares made at one time by a single purchaser, by an individual, his or her
spouse and their children under age 21, or by a single trust account or
fiduciary account, other than an employee benefit plan, is the net asset value
per Share plus a sales charge not exceeding 5.75% of the Offering Price (6.10%
of the net asset value), which is reduced on larger sales as shown below:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
-----------------------------------------------
AMOUNT OF SINGLE AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
SALE AT OFFERING PRICE NET ASSET VALUE OFFERING PRICE
OFFERING PRICE OF THE SHARES PURCHASED OF THE SHARES PURCHASED RETAINED BY DEALERS
- ---------------- ----------------------- ----------------------- -------------------
<S> <C> <C> <C>
Less than $50,000....... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000............... 4.50% 4.71% 3.75%
$100,000 but less than
$250,000............... 3.50% 3.63% 2.80%
$250,000 but less than
$500,000............... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000............. 2.00% 2.04% 1.60%
$1,000,000 or more...... none none (see below)*
</TABLE>
- -------
* The following commissions will be paid by FTD to dealers who initiate and
are responsible for purchases of $1 million or more or for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $10 million or more: 1.00% on sales of up to $2
million, plus 0.80% on sales of $2 million to $3 million, plus 0.50% on
sales of $3 million to $50 million, plus 0.25% on sales of $50 million to
$100 million, plus 0.15% on sales in excess of $100 million.
No initial sales charge applies on investments of $1 million or more, but a
contingent deferred sales charge of 1% is imposed on certain redemptions
within one year of the purchase. See "How to Sell Shares of the Fund--
Contingent Deferred Sales Charge."
A sales charge of 4% of the Offering Price (4.17% of the net asset value) is
applicable to all purchases of Shares made for any qualified or non-qualified
employee benefit plan. Of the 4% sales charge applicable to such purchases,
3.20% of the Offering Price will be retained by dealers.
At the discretion of FTD, the entire sales commission may at times be
reallowed to dealers. During periods when 90% or more of the sales commission
is reallowed, such dealers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933. FTD or its affiliates, at their
expense, may also provide additional compensation to dealers in connection
with sales of Shares of the Fund and other funds in the Franklin Group of
Funds(R) and the Templeton Family of Funds (collectively, the "Franklin
Templeton Group"). Compensation may include financial assistance to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising, sales campaigns and/or shareholder
services and programs regarding one or more funds in the Franklin Templeton
Group and other dealer-sponsored programs or events. In some instances, this
compensation may be made available only to certain dealers whose
representatives have sold or are expected to sell significant amounts of such
Shares. Compensation may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside
of the U.S. for meetings or seminars of a business nature. Dealers may not use
sales of the Fund's Shares to qualify for this compensation to the extent such
may be prohibited by the laws of any state or any self-regulatory agency, such
as the National Association of Securities Dealers, Inc. In addition, FTD or
its affiliates may make ongoing payments to brokerage firms, financial
institutions (including banks) and others to facilitate the administration and
servicing of shareholder accounts. None of the aforementioned additional
compensation is paid for by the Fund or its Shareholders.
A continuing trail fee will be paid to qualifying dealers at the annual rate
of 0.25% of the average daily net asset value of Fund Shares registered in the
name of that broker-dealer as nominee or held in a Shareholder account that
designates that broker-dealer as
9
<PAGE>
dealer of record. This fee is paid in order to promote selling efforts and to
compensate dealers for providing certain services, including processing
purchase and redemption transactions, establishing Shareholder accounts and
providing certain information and assistance with respect to the Fund.
As to telephone orders placed with FTD by dealers, the dealer must receive
the investor's order before the close of the New York Stock Exchange and
transmit it to FTD by 5:00 p.m., New York time, for the investor to receive
that day's Offering Price. Payment for such orders must be made by check in
U.S. currency and must be promptly submitted to FTD. Orders mailed to FTD by
dealers or individual investors are effected at the Offering Price next
computed after the purchase order accompanied by payment has been received by
FTD. Such payment must be made by check in U.S. currency drawn on a commercial
bank in the United States and, if over $100,000, may not be deemed to have
been received until the proceeds have been collected unless the check is
certified or issued by such bank. Any subscription may be rejected by FTD or
by the Fund.
Investors should promptly check the confirmation advice that is mailed after
each purchase (or redemption) in order to ensure that the purchase (or
redemption) of Shares has been accurately recorded in the investor's account.
CUMULATIVE QUANTITY DISCOUNT. The schedule of reduced sales charges also may
be applied to qualifying sales on a cumulative basis. For this purpose, the
dollar amount of the sale is added to the higher of (1) the value (calculated
at the applicable Offering Price) or (2) the purchase price, of any other
Shares of the Fund and/or other funds in the Franklin Templeton Group owned at
that time by the purchaser, his or her spouse, and their children under age
21. In addition, the aggregate investments of a trustee or other fiduciary
account (for an account under exclusive investment authority) may be
considered in determining whether a reduced sales charge is available, even
though there may be a number of beneficiaries of the account. For example, if
the investor held Shares valued at $40,000 (or, if valued at less than
$40,000, had been purchased for $40,000) and purchased an additional $20,000
of the Fund's Shares, the sales charge for the $20,000 purchase would be at
the rate of 4.50%. It is FTD's policy to give investors the best sales charge
rate possible; however, there can be no assurance that an investor will
receive the appropriate discount unless, at the time of placing the purchase
order, the investor or the dealer makes a request for the discount and gives
FTD sufficient information to determine whether the purchase will qualify for
the discount. On telephone orders from dealers for the purchase of Shares to
be registered in "street name," FTD will accept the dealer's instructions with
respect to the applicable sales charge rate to be applied. The Cumulative
Quantity Discount may be amended or terminated at any time.
LETTER OF INTENT. Investors may also reduce sales charges on all investments
by means of a Letter of Intent ("LOI") which expresses the investor's
intention to invest a certain amount within a 13-month period in Shares of the
Fund or any other fund in the Franklin Templeton Group. See the Shareholder
Application. The minimum initial investment under an LOI is 5% of the total
LOI amount. Shares purchased with the first 5% of such amount will be held in
escrow to secure payment of the higher sales charge applicable to the Shares
actually purchased if the full amount indicated is not purchased, and such
escrowed Shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. A purchase not originally made pursuant to an LOI may be
included under a subsequent LOI executed within 90 days of the purchase. Any
redemptions made by the Shareholder during the 13-month period will be
subtracted from the amount of the purchases for purposes of determining
whether the terms of the LOI have been completed. For a further description of
the Letter of Intent, see "Purchase, Redemption and Pricing of Shares--Letter
of Intent" in the SAI.
GROUP PURCHASES. An individual who is a member of a qualified group may also
purchase Shares of the Fund at the reduced sales charge applicable to the
group as a whole. The sales charge is based upon the aggregate dollar value of
Shares previously purchased and still owned by the group, plus the amount of
the current purchase. For example, if members of the group had previously
invested and still held $80,000 of Fund Shares and now were investing $25,000,
the sales charge would be 3.50%. Information concerning the current sales
charge applicable to a group may be obtained by contacting FTD.
10
<PAGE>
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund Shares at a discount, and
(iii) satisfies uniform criteria which enable FTD to realize economies of
scale in its costs of distributing Shares. A qualified group must have more
than 10 members, must be available to arrange for group meetings between
representatives of the Fund or FTD and the members, must agree to include
sales and other materials related to the Fund in its publications and mailings
to members at reduced or no cost to FTD, and must seek to arrange for payroll
deduction or other bulk transmission of investments to the Fund.
If an investor selects a payroll deduction plan, subsequent investments will
be automatic and will continue until such time as the investor notifies the
Fund and the investor's employer to discontinue further investments. Due to
the varying procedures to prepare, process and forward the payroll deduction
information to the Fund, there may be a delay between the time of the payroll
deduction and the time the money reaches the Fund. The investment in the Fund
will be made at the Offering Price per Share determined on the day that both
the check and payroll deduction data are received in required form by the
Fund.
NET ASSET VALUE PURCHASES. Shares of the Fund may be purchased at net asset
value without imposition of a sales charge by the following persons: (i)
trustees or other fiduciaries purchasing securities for certain retirement
plans with assets of $10 million or more; (ii) directors, trustees and
officers of the investment companies sponsored by Templeton Worldwide, Inc.
and its affiliates (the "Templeton Group"), directors, officers and employees
(current or retired) in the Templeton Group (and their families), and
retirement plans established by the Templeton Group for employees; (iii)
companies exchanging shares with or selling assets to the Fund pursuant to a
merger, acquisition or exchange offer; (iv) registered securities dealers and
their affiliates, for their investment account only, and registered personnel
and employees of securities dealers and their spouses and family members in
accordance with the internal policies and procedures of the employing
securities dealer; (v) insurance company separate accounts; (vi) accounts
managed by the Templeton Group; (vii) Shareholders of Templeton Institutional
Funds, Inc. reinvesting redemption proceeds from that fund under an employee
benefit plan qualified under Section 401 of the Internal Revenue Code of 1986,
as amended (the "Code") in Shares of the Fund; (viii) certain unit investment
trusts and unit holders of such trusts reinvesting their distributions from
the trusts in the Fund; and (ix) employees (and their families) of financial
institutions which have, directly or through affiliates, signed an agreement
with FTD.
Shares of the Fund may also be purchased at net asset value by employee
benefit plans qualified under Section 401 of the Code including salary
reduction plans qualified under Section 401(k) of the Code, subject to minimum
requirements with respect to number of employees or amount of purchase, which
may be established by FTD. Currently, those criteria require that the employer
establishing the plan have 500 or more employees or that the amount invested
or to be invested during the subsequent 13-month period in the Fund or any
other funds in the Franklin Templeton Group must total at least $1 million.
Employee benefit plans not qualified under Section 401 of the Code may be
afforded the same privilege if they meet the above requirements as well as the
uniform criteria for qualified groups described above under "Group Purchases"
which enable FTD to realize economies of scale in its sales efforts and sales-
related expenses.
Shares of the Fund may also be purchased at net asset value by anyone who
has taken a distribution from an existing retirement plan already invested in
any funds in the Franklin Templeton Group. In order to exercise this
privilege, a written order for the purchase of Shares of the Fund must be
received by Franklin Templeton Trust Company, the Fund, or the Fund's transfer
agent, Franklin Templeton Investor Services, Inc., within 120 days after the
plan distribution. To obtain a free Prospectus for any fund in the Franklin
Templeton Group, please call toll free at 1-800-DIAL BEN (1-800-342-5236).
Shares of the Fund may be purchased at net asset value by trust companies
and bank trust departments for funds over which they exercise exclusive
discretionary investment authority and which are held in a fiduciary, agency,
advisory, custodial or similar capacity. Such purchases are subject to minimum
requirements with respect to amount of purchase, which may be established by
FTD. Currently, those criteria require that the amount invested or to be
invested during the subsequent 13-month period in the Fund or any other funds
in the Franklin Templeton Group must total at least $1 million. Orders for
such accounts will be accepted by mail accompanied by a check, or by telephone
or other means of electronic data transfer directly from the bank or trust
company, with payment by federal funds received by the close of business on
the next business day following such order.
11
<PAGE>
Shares of the Fund may also be purchased at net asset value by investors who
have, within the past 60 days, redeemed an investment in a registered
management investment company which charges a contingent deferred sales
charge, and which has investment objectives similar to those of the Fund.
Shares of the Fund may also be purchased at net asset value by any state,
county or city, or any instrumentality, department, authority or agency
thereof, which has determined that the Fund is a legally permissible
investment and which is prohibited by applicable investment laws from paying a
sales charge or commission in connection with the purchase of shares of any
registered management investment company (an "eligible governmental
authority"). Such investors should consult their own legal advisers to
determine whether and to what extent the Shares of the Fund constitute legal
investments for them. Municipal investors considering investment of proceeds
of bond offerings into the Fund should consult with expert counsel to
determine the effect, if any, of various payments made by the Fund or its
investment manager on arbitrage rebate calculations. If an investment by an
eligible governmental authority at net asset value is made through a dealer
who has executed a dealer agreement with FTD, FTD or one of its affiliates may
make a payment, out of their own resources, to such dealer in an amount not to
exceed 0.25% of the amount invested. Contact Templeton's Institutional Account
Services Department for additional information.
AUTOMATIC INVESTMENT PLAN. Investors may accumulate Fund Shares regularly
each month by means of automatic debits to their checking accounts ($25
minimum). Forms for this purpose are in the Shareholder Application in this
Prospectus. Such a plan is voluntary and may be discontinued by written notice
to FTD, which must be received at least 10 days prior to the collection date,
or by FTD upon written notice to the investor at least 30 days prior to the
collection date.
INSTITUTIONAL ACCOUNTS. There may be additional methods of purchasing,
redeeming or exchanging shares of the Fund available for institutional
accounts. For further information, contact Templeton's Institutional Account
Services Department at 1-800-684-4001.
ACCOUNT STATEMENTS. Shareholder accounts are opened in accordance with the
Shareholder's registration instructions. Transactions in the account, such as
additional investments and dividend reinvestments, will be reflected on
regular confirmation statements from Franklin Templeton Investor Services,
Inc. (the "Transfer Agent").
TEMPLETON STAR SERVICE. Shareholders may check the current prices of Shares,
account balances/values, a description of the last transaction, and duplicate
account statements, 24 hours a day, 365 days a year, with Templeton STAR
Service by calling 1-800-654-0123 from a touch-tone telephone. A fund code
(the Fund's code is 415) and the Shareholder's account number are necessary
for accessing information (other than Share prices) from Templeton STAR
Service.
RETIREMENT PLANS. Shares of the Fund may be purchased through various
retirement plans including the following plans for which Franklin Templeton
Trust Company or its affiliate acts as trustee or custodian: IRAs, Simplified
Employee Pensions, 403(b) plans, qualified plans for corporations, self-
employed individuals or partnerships, and 401(k) plans. For further
information about any of the plans, agreements, applications and annual fees,
contact Franklin Templeton Distributors, Inc. To determine which retirement
plan is appropriate, an investor should contact his or her tax adviser.
EXCHANGE PRIVILEGE
A Shareholder may exchange shares into other funds in the Franklin Templeton
Group (except Templeton American Trust, Inc., Templeton Capital Accumulator
Fund, Inc., Templeton Variable Annuity Fund, Templeton Variable Products
Series Fund and Franklin Valuemark II). However, Shares purchased at net asset
value and subject to a contingent deferred sales charge (see "How to Sell
Shares of the Fund -- Contingent Deferred Sales Charge") are not eligible for
exchange between the Templeton Family of Funds and the Franklin Group of
Funds (R) (this restriction does not apply to exchanges within an employee
benefit plan).
Exchange purchases are subject to the minimum investment requirements of the
fund purchased and no sales charge generally applies. However, exchanges of
shares from the Franklin Templeton Money Funds are subject to applicable sales
charges on the funds being purchased, unless the Franklin Templeton Money Fund
shares were acquired by an exchange from a fund having a sales charge, or by
reinvestment of dividends or capital gain distributions. Exchanges of shares
of a fund which were purchased with a lower sales charge to a fund which has a
higher sales charge will be charged the difference, unless the shares were
held in the original fund for at
12
<PAGE>
least six months prior to executing the exchange. All exchanges are permitted
only after at least 15 days have elapsed from the date of the purchase of the
Shares to be exchanged.
A Shareholder may exchange Shares by writing to the Transfer Agent (see "How
to Sell Shares of the Fund"), by contacting his or her investment dealer or--
if the Shareholder Application indicates that the Shareholder has not declined
the option--by telephoning 1-800-354-9191. Telephone exchange instructions
must be received by FTD by 4:00 p.m., New York time. Telephonic exchanges can
involve only Shares in non-certificated form. 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 Shares are being exchanged. The
Fund and the Transfer Agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Please refer to "Telephone
Transactions -- Verification Procedures." Forms for declining the telephone
exchange privilege and prospectuses of the other funds in the Franklin
Templeton Group may be obtained from FTD. Exchange redemptions and purchases
are processed simultaneously at the share prices next determined after the
exchange order is received. (See "How to Buy Shares of the Fund--Offering
Price.") A gain or loss for tax purposes generally will be realized upon the
exchange, depending on the tax basis of the Shares redeemed.
This exchange privilege is available only in states where shares of the fund
being acquired may legally be sold and may be modified, limited or terminated
at any time by the Fund upon 60 days' written notice. A Shareholder 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. 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.
During periods of drastic economic or market changes, it is possible that
the telephone exchange privilege may be difficult to implement. In this event,
Shareholders should follow the other exchange procedures discussed in this
section, including the procedures for processing exchanges through broker-
dealers.
The equivalent of an exchange involving retirement accounts (including IRAs)
between the Templeton Family of Funds and the Franklin Group of Funds(R)
requires the completion of additional documentation before it can be effected.
Call 1-800-354-9191 for further information and forms.
EXCHANGES BY TIMING ACCOUNTS. In the case of market timing or allocation
services ("Timing Accounts"), FTD will deduct an administrative service fee of
$5.00 per exchange. Timing Accounts generally include accounts administered so
as to redeem or purchase shares based upon certain predetermined market
indicators. In accordance with the terms of their respective prospectuses,
certain funds in the Franklin Templeton Group do not accept or may place
differing limitations than those described below on exchanges by Timing
Accounts.
The Fund reserves the right to temporarily or permanently terminate the
exchange privilege or reject any specific purchase order for any Timing
Account or any person whose transactions seem to follow a timing pattern who:
(i) makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1% of the Fund's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
In addition, the Fund reserves the right to refuse the purchase side of
exchange requests by any Timing Account, person, or group if, in the
Investment Manager's judgment, the Fund would be unable to invest effectively
in accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A Shareholder's exchanges into the Fund may
be restricted or refused
13
<PAGE>
if the Fund receives or anticipates simultaneous orders affecting significant
portions of the Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Fund and
therefore may be refused.
Finally, as indicated above, the Fund and FTD reserve the right to refuse
any order for the purchase of Shares.
HOW TO SELL SHARES OF THE FUND
Shares will be redeemed, without charge, on request of the Shareholder in
"Proper Order" to the Transfer Agent. "PROPER ORDER" MEANS THAT THE REQUEST TO
REDEEM MUST MEET ALL OF THE FOLLOWING REQUIREMENTS:
1. Except as provided below under "Redemptions by Telephone," it must be in
writing, signed by the Shareholder(s) exactly in the manner as the Shares are
registered, and must specify either the number of Shares, or the dollar amount
of Shares, to be redeemed and sent to Franklin Templeton Investor Services,
Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030;
2. The signature(s) of the redeeming Shareholder(s) must be guaranteed by an
"eligible guarantor," including (1) national or state banks, savings
associations, savings and loan associations, trust companies, savings banks,
industrial loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing agencies; (3)
securities broker-dealers which are members of a national securities exchange
or a clearing agency or which have minimum net capital of $100,000; or (4)
institutions that participate in the Securities Transfer Agent Medallion
Program ("STAMP") or other recognized signature medallion program. A notarized
signature will not be sufficient for the request to be in Proper Order. If the
Shares are registered in more than one name, the signature of each of the
redeeming Shareholders must be guaranteed. A signature guarantee is not
required for redemptions of $50,000 or less, requested by and payable to all
Shareholders of record, to be sent to the address of record for that account.
However, the Fund reserves the right to require signature guarantees on all
redemptions. A signature guarantee is required in connection with any written
request for transfer of Shares. Also, a signature guarantee is required if the
Fund or the Transfer Agent believes that a signature guarantee would protect
against potential claims based on the transfer instructions, including, for
example, when (a) the current address of one or more joint owners of an
account cannot be confirmed, (b) multiple owners have a dispute or give
inconsistent instructions to the Fund, (c) the Fund has been notified of an
adverse claim, (d) the instructions received by the Fund are given by an
agent, not the actual registered owner, (e) the Fund determines that joint
owners who are married to each other are separated or may be the subject of
divorce proceedings, or (f) the authority of a representative of a
corporation, partnership, association, or other entity has not been
established to the satisfaction of the Fund;
3. Any outstanding certificates must accompany the request together with a
stock power signed by the Shareholder(s), with signature(s) guaranteed as
described in Item 2 above;
4. Liquidation requests of corporate, partnership, trust and custodianship
accounts, and accounts under court jurisdiction, require the following
documentation to be in proper form:
. Corporation--(i) Signature guaranteed letter of instruction from the
authorized officer(s) of the corporation, and (ii) a corporate
resolution in a form satisfactory to the Transfer Agent;
. Partnership--(i) Signature guaranteed letter of instruction from a
general partner and, if necessary, (ii) pertinent pages from the
partnership agreement identifying the general partners or other
documentation in a form satisfactory to the Transfer Agent;
. Trust--(i) Signature guaranteed letter of instruction from the
trustee(s), and (ii) a copy of the pertinent pages of the trust
document listing the trustee(s) or a certificate of incumbency if the
trustee(s) are not listed on the account registration;
. Custodial (other than a retirement account)--Signature guaranteed
letter of instruction from the custodian;
14
<PAGE>
. Accounts under court jurisdiction--Check court documents and the
applicable state law since these accounts have varying requirements,
depending upon the state of residence; and
5. Redemption of Shares held in a retirement plan for which Franklin
Templeton Trust Company or its affiliate acts as trustee or custodian must
conform to the distribution requirements of the plan and the Fund's redemption
requirements above. Distributions from such plans are subject to additional
requirements under the Code, and certain documents (available from the
Transfer Agent) must be completed before the distribution may be made. For
example, distributions from retirement plans are subject to withholding
requirements under the Code, and the IRS Form W-4P (available from the
Transfer Agent) may be required to be submitted to the Transfer Agent with the
distribution request, or the distribution will be delayed. Franklin Templeton
Investor Services, Inc. and its affiliates assume no responsibility to
determine whether a distribution satisfies the conditions of applicable tax
laws and will not be responsible for any penalties assessed.
To avoid delay in redemption or transfer, Shareholders having questions
about these requirements should contact the Account Services Department by
calling 1-800-354-9191 or 813-823-8712.
The redemption price will be the net asset value of the Shares next computed
after the redemption request in Proper Order is received by the Transfer
Agent. Payment of the redemption price ordinarily will be made by check (or by
wire at the sole discretion of the Transfer Agent if wire transfer is
requested, including name and address of the bank and the Shareholder's
account number to which payment of the redemption proceeds is to be wired)
within seven days after receipt of the redemption request in Proper Order.
However, if Shares have been purchased by check, the Fund will make redemption
proceeds available when a Shareholder's check received for the Shares
purchased has been cleared for payment by the Shareholder's bank, which,
depending upon the location of the Shareholder's bank, could take up to 15
days or more. The check will be mailed by first-class mail to the
Shareholder's registered address (or as otherwise directed). Remittance by
wire (to a commercial bank account in the same name(s) as the Shares are
registered) or express mail, if requested, are subject to a handling charge of
up to $15, which will be deducted from the redemption proceeds.
The Fund, through FTD, also repurchases Shares (whether in certificate or
book-entry form) through securities dealers. The Fund normally will accept
orders to repurchase such Shares by wire or telephone from dealers for their
customers at the net asset value next computed after the dealer has received
the Shareholder's request for repurchase, if the dealer received such request
before closing time of the New York Stock Exchange on that day. Dealers have
the responsibility of submitting such repurchase requests by calling not later
than 5:00 p.m., New York time, on such day in order to obtain that day's
applicable redemption price. Repurchase of Shares is for the convenience of
Shareholders and does not involve a charge by the Fund; however, securities
dealers may impose a charge on the Shareholder for transmitting the notice of
repurchase to the Fund. The Fund reserves the right to reject any order for
repurchase, which right of rejection might adversely affect Shareholders
seeking redemption through the repurchase procedure. Ordinarily, payment will
be made to the securities dealer within seven days after receipt of a
repurchase order and Share certificate (if any) in "Proper Order" as set forth
above. The Fund will also accept, from member firms of the New York Stock
Exchange, orders to repurchase Shares for which no certificates have been
issued by wire or telephone without a redemption request signed by the
Shareholder, provided the member firm indemnifies the Fund and FTD from any
liability resulting from the absence of the Shareholder's signature. Forms for
such indemnity agreement can be obtained from FTD.
The Fund may involuntarily redeem an investor's Shares if the net asset
value of such Shares is less than $100, provided that involuntary redemptions
will not result from fluctuations in the value of an investor's Shares. In
addition, the Fund may involuntarily redeem the Shares of an investor who has
failed to provide the Fund with a certified taxpayer identification number or
such other tax-related certifications as the Fund may require. A notice of
redemption sent by first-class mail to the investor's address of record will
fix a date not less than 30 days after the mailing date, and the Shares will
be redeemed at the net asset value at the close of business on that date,
unless sufficient additional Shares are purchased to bring the aggregate
account value up to $100 or more, or unless a certified
15
<PAGE>
taxpayer identification number (or such other information as the Fund has
requested) has been provided, as the case may be. A check for the redemption
proceeds will be mailed to the investor at the address of record.
REINSTATEMENT PRIVILEGE. A former Shareholder of any eligible fund in the
Franklin Templeton Group may reinvest proceeds from a redemption or a dividend
or capital gains distribution, without a sales charge, in any other eligible
Templeton Fund by sending a written request and a check to the Transfer Agent
within 120 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt. However, if a
Shareholder's original investment was in a fund with a lower sales charge, or
no sales charge, the Shareholder must pay the difference. Credit will be given
for any contingent deferred sales charge paid on the Shares redeemed. The
amount of gain or loss resulting from a redemption may be affected by exercise
of the reinstatement privilege if the Shares redeemed were held 90 days or
less, or if a Shareholder reinvests in the same fund within 30 days.
CONTINGENT DEFERRED SALES CHARGE. In order to recover commissions paid to
dealers on qualified investments of $1 million or more, or for purchases made
by certain retirement plans of organizations with collective retirement plan
assets of $10 million or more, a contingent deferred sales charge of 1%
applies to certain redemptions by those investors within the first year after
investing. The charge is 1% of the lesser of the value of the Shares redeemed
(exclusive of reinvested dividends and capital gain distributions) or the
total cost of such Shares, and is retained by FTD. In determining if a charge
applies and the amount of any such charge, the first Shares redeemed are those
purchased with reinvested dividends and capital gain distributions, followed
by others held the longest. The contingent deferred sales charge is waived for
exchanges (except if Shares acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions to participants in
qualified retirement plans due to death, disability or attainment of age 59
1/2; for tax-free returns of excess contributions to employee benefit plans;
for distributions from employee benefit plans; and for redemptions through the
Systematic Withdrawal Plan.
SYSTEMATIC WITHDRAWAL PLAN. A Shareholder may establish a Systematic
Withdrawal Plan ("Plan") and receive periodic payments from the account
provided that the net asset value of the Shares held by the Shareholder is at
least $5,000. There are no service charges for establishing or maintaining a
Plan. The minimum amount which the Shareholder may withdraw is $50 per
withdrawal transaction although this is merely the minimum amount allowed
under the Plan and should not be mistaken for a recommended amount. The Plan
may be established on a monthly, quarterly, semi-annual or annual basis. If
the Shareholder establishes a Plan, any capital gain distributions and income
dividends paid by the Fund to the Shareholder's account must be reinvested for
the Shareholder's account in additional Shares at net asset value. Payments
are then made from the liquidation of Shares at net asset value on the day of
the liquidation (which is generally on or about the 25th of the month) to meet
the specified withdrawals. Payments are generally received three to five days
after the date of liquidation. By completing the "Special Payment Instructions
for Distributions" section of the Shareholder Application included with this
Prospectus, a Shareholder may direct the selected withdrawals to another fund
in the Franklin Templeton Group, to another person, or directly to a checking
account. Liquidation of Shares may reduce or possibly exhaust the Shares in
the Shareholder's account, to the extent withdrawals exceed Shares earned
through dividends and distributions, particularly in the event of a market
decline. If the withdrawal amount exceeds the total Plan balance, the account
will be closed and the remaining balance will be sent to the Shareholder. As
with other redemptions, a liquidation to make a withdrawal payment is a sale
for Federal income tax purposes. Because the amount withdrawn under the Plan
may be more than the Shareholder's actual yield or income, part of such a Plan
payment may be a return of the Shareholder's investment.
Maintaining a Plan concurrently with purchases of additional Shares of the
Fund would be disadvantageous because of the sales charge on the additional
purchases. The Shareholder should ordinarily not make additional investments
of less than $5,000 or three times the annual withdrawals under the Plan
during the time such a Plan is in effect. A Plan may be terminated on written
notice by the Shareholder or the Fund, and it will terminate automatically if
all Shares are liquidated or withdrawn from the account, or upon the Fund's
receipt of notification of the death or incapacity of the Shareholder.
Shareholders may change the amount (but not below $50) and schedule of
withdrawal payments or suspend one such payment by giving written notice to
the Transfer Agent at least seven business days prior to the end of the month
preceding a scheduled payment. Share certificates may not be issued while a
Plan is in effect.
16
<PAGE>
REDEMPTIONS BY TELEPHONE. Shareholders who file a Telephone Redemption
Authorization Agreement (the "Agreement") (a copy of which is included in this
Prospectus) may redeem Shares of the Fund by telephone, subject to the
Restricted Account exception noted under "Telephone Transactions--Restricted
Accounts." The Fund and the Transfer Agent will employ reasonable procedures
to confirm that instructions given by telephone are genuine. Shareholders,
however, bear the risk of loss in certain cases as described under "Telephone
Transactions--Verification Procedures."
For Shareholder accounts with a completed Agreement on file, redemptions of
uncertificated Shares or Shares which have previously been deposited with the
Fund or the Transfer Agent may be made for up to $50,000 per day per Fund
account. Telephone redemption requests received before 4:00 p.m., New York
time, on any business day will be processed that same day. The redemption
check will be sent within seven days, made payable to all the registered
owners on the account, and will be sent only to the address of record.
Redemption requests by telephone will not be accepted within 30 days following
an address change by telephone. In that case, a Shareholder should follow the
other redemption procedures set forth in this Prospectus. Institutional
accounts which wish to execute redemptions in excess of $50,000 must complete
an Institutional Telephone Privileges Agreement which is available from
Templeton's Institutional Account Services Department by telephoning 1-800-
684-4001.
TELEPHONE TRANSACTIONS
Shareholders of the Fund and their dealer of record, if any, may be able to
execute various transactions by calling the Transfer Agent at 1-800-354-9191.
All Shareholders will be able to: (i) effect a change in address, (ii) change
a dividend option (see "Restricted Accounts" below), (iii) transfer Fund
Shares in one account to another identically registered account in the Fund,
and (iv) exchange Fund Shares as described in this Prospectus by telephone. In
addition, Shareholders who complete and file an Agreement as described under
"How to Sell Shares of the Fund--Redemptions by Telephone" will be able to
redeem Shares of the Fund.
VERIFICATION PROCEDURES. The Fund and the Transfer Agent will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. These will include: recording all telephone calls requesting
account activity by telephone, requiring that the caller provide certain
personal and/or account information requested by the telephone service agent
at the time of the call for the purpose of establishing the caller's
identification, and sending a confirmation statement on redemptions to the
address of record each time account activity is initiated by telephone. So
long as the Fund and the Transfer Agent follow instructions communicated by
telephone which were reasonably believed to be genuine at the time of their
receipt, neither they nor their affiliates will be liable for any loss to the
Shareholder caused by an unauthorized transaction. Shareholders are, of
course, under no obligation to apply for or accept telephone transaction
privileges. In any instance where the Fund or the Transfer Agent is not
reasonably satisfied that instructions received by telephone are genuine, the
requested transaction will not be executed, and neither the Fund, the Transfer
Agent, nor their affiliates will be liable for any losses which may occur
because of a delay in implementing a transaction.
RESTRICTED ACCOUNTS. Telephone redemptions and dividend option changes may
not be accepted on Franklin Templeton Trust Company ("FTTC") or Templeton
Funds Trust Company ("TFTC") retirement accounts. To assure compliance with
all applicable regulations, special forms are required for any distribution,
redemption, or dividend payment. Although the telephone exchange privilege is
extended to these retirement accounts, a Franklin Templeton Transfer
Authorization Form must be on file in order to transfer retirement plan assets
between the Franklin Group of Funds (R) and the Templeton Family of Funds
within the same plan type. Changes to dividend options for these accounts must
also be made in writing.
To obtain further information regarding distribution or transfer procedures,
including any required forms, FTTC retirement account shareholders may call
1-800-527-2020 (toll free), and TFTC retirement account shareholders may call
1-800-354-9191 (press "2") (also toll free).
17
<PAGE>
GENERAL. During periods of drastic economic or market changes, it is
possible that the telephone transaction privileges will be difficult to
execute because of heavy telephone volume. In such situations, Shareholders
may wish to contact their dealer for assistance, or to send written
instructions to the Fund as detailed elsewhere in this Prospectus.
Neither the Fund nor the Transfer Agent will be liable for any losses
resulting from the inability of a Shareholder to execute a telephone
transaction.
The telephone transaction privilege may be modified or discontinued by the
Fund at any time upon 60 days' written notice to Shareholders.
MANAGEMENT OF THE FUND
The Fund is managed by its Board of Trustees and all powers are exercised by
or under authority of the Board. Information relating to the Trustees and
Executive Officers is set forth under the heading "Management of the Fund" in
the SAI.
INVESTMENT MANAGER. The Investment Manager of the Fund is Templeton
Investment Counsel, Inc., a Florida corporation located at Broward Financial
Centre, Fort Lauderdale, Florida 33394-3091. 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 furnishes the Fund with investment research, advice
and supervision and has responsibility for management of the Fund's portfolio.
The Investment Manager does not furnish any overhead items or facilities for
the Fund, although such expenses are paid by some investment advisers of other
investment companies. As compensation for its services, the Fund pays the
Investment Manager a fee which, during the most recent fiscal year,
represented 0.80% of its average daily net assets.
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 Templeton organization has been investing globally over the past 52 years
and, with its affiliates, provides investment management and advisory services
to a worldwide client base, including over 3.0 million mutual fund
shareholders, foundations and endowments, employee benefit plans and
individuals. The Investment Manager and its affiliates have approximately
3,200 employees in 10 different countries and a global network of over 50
investment research sources. Many different selection methods are used for
different funds and clients, and many are changed and improved by the
Investment Manager's research on superior selection methods.
Management of the Fund is supported by the Templeton organization's large
staff of research analysts, traders and other investment specialists based in
Fort Lauderdale, Nassau, New York, Edinburgh, Toronto, Hong Kong, Melbourne
and Singapore. Templeton's research analysts use a disciplined, long term
approach to value oriented global and international investing. Securities are
selected for the Fund's portfolio from a list of eligible securities
maintained and constantly updated by Templeton's analysts on the basis of
fundamental company-by-company analysis, which utilizes a global database of
company information. Management believes that the Templeton organization's
team approach benefits Fund investors by bringing together many disciplines
and leveraging the organization's extensive resources. Currently, the lead
portfolio manager for the Fund is Howard J. Leonard. Mr. Leonard joined the
Investment Manager in 1989 and is Vice President, Portfolio
Management/Research, of the Investment Manager. Prior to 1989, Mr. Leonard was
director of investment research at First Pennsylvania Bank, where he was
responsible for equity and fixed income research activities. Mr. Leonard also
worked previously at Provident National Bank as a security analyst covering a
variety of industries. Gary P. Motyl, a Senior Vice President of the
Investment Manager, and Mark R. Beveridge, Vice President of the Investment
Manager, also exercise significant portfolio management responsibilities with
respect to the Fund. Mr. Motyl has been a security analyst and portfolio
manager with the Investment Manager since 1981. Prior to joining the Templeton
organization, Mr. Motyl worked from 1974 to 1979 as
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<PAGE>
a security analyst with Standard & Poor's Corporation. He then worked as a
research analyst and portfolio manager from 1979 to 1981 with Landmark First
National Bank. In this capacity he had responsibility for equity research and
managed several pension and profit sharing plans. Mr. Beveridge joined the
Templeton organization in 1985 and is Vice President of the Investment Manager
and a member of the Templeton Research Technology Group with responsibility
for industrial components and market coverage of Venezuela. Prior to joining
the Templeton organization, Mr. Beveridge was a principal with a financial
accounting software firm.
The Investment Manager has entered into a Sub-Advisory Agreement with Dean
Witter InterCapital Inc. ("InterCapital"), whose address is Two World Trade
Center, New York, New York 10048, pursuant to which InterCapital provides the
Investment Manager with investment advisory assistance and portfolio
management advice. InterCapital, which was incorporated in July, 1992, is a
wholly-owned subsidiary of Dean Witter, Discover & Co. In an internal
reorganization which took place in January, 1993, InterCapital assumed the
investment advisory, management and administrative activities previously
performed by the InterCapital Division of Dean Witter Reynolds Inc., a broker-
dealer affiliate of InterCapital. InterCapital provides the Investment Manager
on an ongoing basis with analyses regarding economic and market conditions,
asset allocation, foreign currency matters and the advisability of entering
into foreign exchange contracts. For its services, the Investment Manager pays
InterCapital a monthly fee at an annual rate of 0.25% of the Fund's average
daily net assets. Further information concerning the Investment Manager and
InterCapital is included under the heading "Investment Management and Other
Services" in the SAI.
BUSINESS MANAGER. Templeton Global Investors, Inc. provides certain
administrative facilities and services for the Fund, including payment of
salaries of officers, preparation and maintenance of books and records,
preparation of tax returns, preparation of financial reports, monitoring
compliance with regulatory requirements and monitoring tax-deferred retirement
plans. For its services, the Fund pays the Business Manager a monthly fee
equivalent on an annual basis to 0.15% of the average daily net assets of the
Fund, reduced to 0.135% of such assets in excess of $200 million, to 0.10% of
such assets in excess of $700 million, and to 0.075% of such assets in excess
of $1,200 million. The combined investment management and business management
fees paid by the Fund are higher than those paid by most other investment
companies.
TRANSFER AGENT. Franklin Templeton Investor Services, Inc. serves as
transfer agent and dividend disbursing agent for the Fund.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Fund's
assets.
PLAN OF DISTRIBUTION. The Fund has a plan of distribution or "12b-1 Plan"
under which it may reimburse FTD for its costs and expenses for activities
primarily intended to result in the sale of Fund Shares. Expenditures by the
Fund under the plan may not exceed 0.25% annually of the Fund's average daily
net assets. Under the plan, costs and expenses not reimbursed in any one given
month (including costs and expenses not reimbursed because they exceeded the
limit of 0.25% per annum of the Fund's average daily net assets) may be
reimbursed in subsequent months or years, subject to applicable law. FTD has
informed the Fund that the costs and expenses that may be reimbursable in
future months or years were $799,696 (0.19% of its net assets) at December 31,
1993.
EXPENSES. For the fiscal year ended December 31, 1993, expenses amounted to
1.51% of the Fund's average net assets.
BROKERAGE COMMISSIONS. The Fund's brokerage policies are described under the
heading "Brokerage Allocation" in the SAI. The Fund's brokerage policies
provide that the receipt of research services from a broker and the sale of
Shares by a broker are factors which may be taken into account in allocating
securities transactions, so long as the prices and execution provided by the
broker equal the best available within the scope of the Fund's brokerage
policies.
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<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The capitalization of the Fund
consists of an unlimited number of Shares of beneficial interest, par value of
$.01 per Share. The Board of Trustees is authorized, in its discretion, to
classify and allocate the unissued Shares of the Fund, each such class to
represent a different portfolio of securities. Each Share entitles the holder
to one vote.
Under Massachusetts law, Shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the
Declaration of Trust disclaims liability of the Shareholders, Trustees and
officers of the Fund for acts or obligations of the Fund, which are binding
only on the assets and property of the Fund. The Declaration of Trust provides
for indemnification out of Fund property for all loss and expense of any
Shareholder held personally liable for the obligations of the Fund. The risk
of a Shareholder incurring financial loss on account of Shareholder liability
is limited to circumstances in which the Fund itself would be unable to meet
its obligations and, thus, should be considered remote.
The Fund will not ordinarily issue certificates for Shares purchased. Share
certificates representing whole (not fractional) Shares are issued only upon
the specific request of the Shareholder made in writing to the Transfer Agent.
No charge is made for the issuance of one certificate for all or some of the
Shares purchased in a single order.
MEETINGS OF SHAREHOLDERS. Massachusetts business trust law does not require
the Fund to hold annual Shareholder meetings, although special meetings may be
called from time to time. The Fund will be required to hold a meeting to elect
Trustees to fill any existing vacancies on the Board if, at any time, fewer
than a majority of the Trustees have been elected by the Shareholders of the
Fund. In addition, the holders of not less than two-thirds of the outstanding
Shares or other voting interests of the Fund may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as a Trustee if requested in
writing to do so by the holders of not less than 10% of the outstanding Shares
of the Fund. The Fund is required to assist in Shareholder communications in
connection with the calling of a Shareholder meeting to consider the removal
of a Trustee or Trustees.
DIVIDENDS AND DISTRIBUTIONS. The Fund intends to pay a dividend at least
annually representing substantially all of its net investment income and any
net realized capital gains. Income dividends and capital gains distributions
paid by the Fund, other than on those Shares whose owners keep them registered
in the name of a broker-dealer, are automatically reinvested on the payable
date in whole or fractional Shares of the Fund at net asset value as of the
ex-dividend date, unless a Shareholder makes a written or telephonic request
for payments in cash. Income dividends and capital gains distributions will be
paid in cash on Shares during the time that their owners keep them registered
in the name of a broker-dealer, unless the broker-dealer has made arrangements
with the Transfer Agent for reinvestment.
Prior to purchasing Shares of the Fund, the impact of dividends or capital
gains distributions which have been declared but not yet paid should be
carefully considered. Any dividend or capital gains distribution paid shortly
after a purchase by a Shareholder prior to the record date will have the
effect of reducing the per Share net asset value of the Shares by the amount
of the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, generally will be
subject to tax.
Checks are forwarded by first-class mail to the address of record. The
proceeds of any such checks which are not accepted by the addressee and are
returned to the Fund will be reinvested for the Shareholder's account in whole
or fractional Shares at net asset value next computed after the check has been
received by the Transfer Agent. Subsequent distributions automatically will be
reinvested at net asset value as of the ex-dividend date in additional whole
or fractional Shares.
FEDERAL TAX INFORMATION. The Fund intends to elect to be treated and to
qualify each year as a regulated investment company under Subchapter M of the
Code. See the SAI for a summary of the requirements that must be satisfied to
so qualify. A regulated
20
<PAGE>
investment company generally is not subject to federal income tax on income
and capital gains distributed in a timely manner to its shareholders. Earnings
of the Fund not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of this tax, the Fund intends to comply with this
distribution requirement. The Fund intends to distribute substantially all of
its net investment income and realized capital gains to Shareholders, which
generally will be taxable income or capital gains in their hands.
Distributions declared in October, November or December to Shareholders of
record on a date in such month and paid during the following January will be
treated as having been received by Shareholders as of December 31 in the year
such distributions were declared. The Fund will inform Shareholders each year
of the amount and nature of such income or gains. The Fund may be required to
withhold Federal income tax at the rate of 31% of all taxable distributions
(including redemptions) paid to Shareholders who fail to provide the Fund with
their correct taxpayer identification number or to make required
certifications. A more detailed description of tax consequences to
Shareholders is contained in the SAI under the heading "Tax Status."
INQUIRIES. Shareholders' inquiries will be answered promptly. They should be
addressed to Franklin Templeton Investor Services, Inc., 700 Central Avenue,
P.O. Box 33030, St. Petersburg, Florida 33733-8030--telephone 1-800-354-9191
or 813-823-8712. Transcripts of Shareholder accounts less than three-years old
are provided on request without charge; requests for transactions going back
more than three years from the date the request is received by the Transfer
Agent are subject to a fee of up to $15 per account.
PERFORMANCE INFORMATION. The Fund may include its total return in
advertisements or reports to 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 the Fund over
a period of 1, 5 and 10 years (or up to the life of the Fund), will reflect
the deduction of the maximum initial sales charge and deduction of a
proportional share of Fund expenses (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 the Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Fund, see "Performance Information" in the SAI.
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<PAGE>
INSTRUCTIONS AND IMPORTANT NOTICE
SUBSTITUTE W-9 INSTRUCTIONS INFORMATION
GENERAL. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the IRS.
OBTAINING A NUMBER. If you do not have a Social Security Number Taxpayer
Identification Number, you must obtain Form SS-5 or Form SS-4 from your local
Social Security or IRS office and apply for one. If you have checked the
"Awaiting TIN" box and signed the certification, withholding will apply to
payments relating to your account unless you provide a certified TIN within 60
days.
WHAT SSN TIN TO GIVE. Please refer to the following guidelines:
<TABLE>
<CAPTION>
ACCOUNT TYPE GIVE SSN OF ACCOUNT TYPE GIVE EMPLOYER ID # OF
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
. Individual Individual . Trust, Estate, or Trust, Estate, or
Pension Plan Trust Pension Plan Trust
- ------------------------------------------------------------------------------------
. Joint Owner who will be . Corporation, Corporation,
Individual paying tax or first- Partnership, or other Partnership, or other
named individual organization organization
- ------------------------------------------------------------------------------------
. Unif. Minor . Broker nominee Broker nominee
Gift/Transfer
to Minor
- ------------------------------------------------------------------------------------
. Sole Owner of business
Proprietor
- ------------------------------------------------------------------------------------
. Legal Ward, Minor, or
Guardian Incompetent
- ------------------------------------------------------------------------------------
</TABLE>
EXEMPT RECIPIENTS. Please provide your TIN and check the "Exempt Recipient"
box if you are an exempt recipient. Exempt recipients generally include:
A corporation A real estate investment trust
A financial institution A common trust fund operated by a bank
under section 584(a)
An organization exempt from tax An exempt charitable remainder trust
under section 501(a), or an or a non-exempt trust described in
individual retirement plan section 4947(a)(1)
A registered dealer in securities An entity registered at all times
or commodities registered in the under the Investment Company Act of
U.S. or a U.S. possession 1940
IRS PENALTIES. If you do not supply us with your SSN TIN, you will be subject
to an IRS $50 penalty unless your failure is due to reasonable cause and not
willful neglect. If you fail to report certain income on your Federal income
tax return, you will be treated as negligent and subject to an IRS 20% penalty
on any underpayment of tax attributable to such negligence, unless there was
reasonable cause for the resulting underpayment and you acted in good faith.
If you falsify information on this form or make any other false statement
resulting in no backup withholding on an account which should be subject to
backup withholding, you may be subject to an IRS $500 penalty and certain
criminal penalties including fines and imprisonment.
SUBSTITUTE W-8 INSTRUCTIONS INFORMATION
EXEMPT FOREIGN PERSON. Check the "Exempt Foreign Person" box if you qualify as
a non-resident alien or foreign entity that is not subject to certain U.S.
information return reporting or to backup withholding rules. Dividends paid to
your account may be subject to withholding of up to 30%. You are an "Exempt
Foreign Person" if you are not (1) a citizen or resident of the U.S., or (2) a
U.S. corporation, partnership, estate, or trust. In the case of an individual,
an "Exempt Foreign Person" is one who has been physically present in the U.S.
for less than 31 days during the current calendar year. An individual who is
physically present in the U.S. for at least 31 days during the current
calendar year will still be treated as an "Exempt Foreign Person," provided
that the total number of days physically present in the current calendar year
and the two preceding calendar years does not exceed 183 days (counting all of
the days in the current calendar year, only one-third of the days in the first
preceding calendar year and only one-sixth of the days in the second preceding
calendar year). In addition, lawful permanent residents or green card holders
may not be treated as "Exempt Foreign Persons." If you are an individual or an
entity, you must not now be, or at this time expect to be, engaged in a U.S.
trade or business with respect to which any gain derived from transactions
effected by the Fund/Payer during the calendar year is effectively connected
to the U.S. (or your transactions are exempt from U.S. taxes under a tax
treaty).
PERMANENT ADDRESS. The Shareholder Application must contain your permanent
address if you are an "Exempt Foreign Person." If you are an individual,
provide your permanent address. If you are a partnership or corporation,
provide the address of your principal office. If you are an estate or trust,
provide the address of your permanent residence or the principal office of any
fiduciary.
NOTICE OF CHANGE IN STATUS. If you become a U.S. citizen or resident after you
have provided certification of your foreign status, or if you cease to be an
"Exempt Foreign Person," you must notify the Fund/Payer within 30 days of your
change in status. Reporting will then begin on the account(s) listed, and
backup withholding may also begin unless you certify to the Fund/Payer that
(1) the tax payer identification number you have given is correct, and (2) the
Internal Revenue Service has not notified you that you are subject to backup
withholding because you failed to report certain interest or dividend income.
You may use Form W-9, "Payer's Request for Taxpayer Identification Number and
Certification," to make these certifications. If an account is no longer
active, you do not have to notify a Fund/Payer or broker of your change in
status unless you also have another account with the same Fund/Payer that is
still active. If you receive interest from more than one Fund/Payer or have
dealings with more than one broker or barter exchange, file a certificate with
each. If you have more than one account with the same Fund/Payer, the
Fund/Payer may require you to file a separate certificate for each account.
WHEN TO FILE. File these certifications with the Fund before a payment is made
to you, unless you have already done this in either of the two preceding
calendar years. Only certifications that are in proper order will be treated
as having been filed with the Fund.
HOW OFTEN YOU MUST FILE. This certificate generally remains in effect for
three calendar years. A Fund/Payer or broker, however, may require that a new
certificate be filed each time a payment is made. On joint accounts for which
each joint owner is a foreign person, each must provide a certification of
foreign status.
1/94
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<PAGE>
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of
a resolution or other certificate of authority to authorize the purchase as
well as sale (redemption) of shares and withdrawals by checks or drafts. You
may use the following form of resolution or you may prefer to use your own. It
is understood that the Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly elected
______________________ of _________________________________________________
TITLE CORPORATE NAME
a _______________________ organized under the laws of the State of ___________
TYPE OF ORGANIZATION STATE
and that the following is a true and correct copy of a resolution adopted by
the Board of Directors at a meeting duly called and held on __________________
DATE
RESOLVED, that the _________________________________________________ of this
OFFICERS' TITLES
Corporation or Association are authorized to open an account in the name of
the Corporation or Association with one or more of the Franklin Group of
Funds (R) or Templeton Family of Funds (collectively, the "Funds") and to
deposit such funds of this Corporation or Association in this account as
they deem necessary or desirable; that the persons authorized below may
endorse checks and other instruments for deposit to said account or
accounts; and
FURTHER RESOLVED,that any of the following __________________ officers are
NUMBER
authorized to sign any share assignment on behalf of this Corporation or
Association and to take any other actions as may be necessary to sell or
redeem its shares in the Funds or to sign checks or drafts withdrawing funds
from the account; and
FURTHER RESOLVED, that this Corporation or Association shall hold harmless,
indemnify, and defend the Funds, their custodian bank, Franklin Templeton
Distributors, Inc., Franklin Templeton Investor Services, Inc., and their
affiliates, from any claim, loss or liability resulting in whole or in
part, directly or indirectly, from their reliance from time to time upon
any certifications by the secretary or any assistant secretary of this
Corporation or Association as to the names of the individuals occupying
such offices and their acting in reliance upon these resolutions until
actual receipt by them of a certified copy of a resolution of the Board of
Directors of the Corporation or Association modifying or revoking any or
all such resolutions.
The undersigned further certifies that the below named persons, whose
signatures appear opposite their names and office titles, are duly elected
officers of the Corporation or Association. (Attach additional list if
necessary)
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME OF CORPORATION OR ASSOCIATION DATE
Certified from minutes ________________________________________________________
NAME AND TITLE
CORPORATE SEAL (if appropriate)
23
<PAGE>
THE FRANKLIN TEMPLETON TELEPHONE REDEMPTION AUTHORIZATION AGREEMENT
You may use Franklin Templeton's telephone redemption privilege to redeem
uncertificated Franklin Templeton Fund shares for up to $50,000 (or your
Shareholder account balance, whichever is less) per day, per fund account in
accordance with the terms of the Fund's Prospectus.
The telephone redemption privilege is available only to Shareholders who
specifically request it. If you would like to add this redemption privilege to
the other telephone transaction privileges automatically available to Franklin
Templeton Fund shareholders, please sign and return this authorization to
Franklin Templeton Investor Services, Inc. ("Services"), transfer agent and
shareholder servicing agent for the Franklin Templeton Funds.
SHAREHOLDER AUTHORIZATION: I/We request the telephone redemption privilege
under the terms described below and in the prospectus for each investment
company in the Franklin Templeton Group of Funds (a "Franklin Templeton Fund"
or a "Fund"), now opened or opened at a later date, holding shares registered
as follows:
- ------------------------------------- ---------------------------------------
PRINT NAME(S) AS SHOWN IN YOUR ACCOUNT REGISTRATION ("SHAREHOLDER")
- ------------------------------------- ---------------------------------------
ACCOUNT NUMBER(S)
I/We authorize each Fund and Services to honor and act upon telephone requests
given as provided in this agreement to redeem shares from any
Shareholder account:
- ------------------------------------- ---------------------------------------
SIGNATURE(S) AND DATE
- ------------------------------------- ---------------------------------------
PRINT NAME(S) (AND TITLE/CAPACITY, IF APPLICABLE)
VERIFICATION PROCEDURES: I/We understand and agree that: (1) each Fund and
Services will employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine and that if these
confirmation procedures are not followed, the Fund or Services may be liable
for any losses due to unauthorized or fraudulent telephone instructions; (2)
the confirmation procedures will include the recording of telephone calls
requesting redemptions, requiring that the caller provide certain personal
and/or account information requested by the telephone service agent at the
time of the call for the purpose of establishing the caller's identification,
and the sending of confirmation statements to the address of record each time
a redemption is initiated by telephone; and (3) so long as the Fund and
Services follow the confirmation procedures in acting on instructions
communicated by telephone which were reasonably believed to be genuine at the
time of receipt, neither they, nor their parent or affiliates, will be liable
for any loss, damages or expenses caused by an unauthorized or fraudulent
redemption request.
JOINTLY OWNED/CO-TRUSTEE ACCOUNTS: Each of us signing this agreement as either
joint owners or co-trustees authorizes each Fund and Services to honor
telephone redemption requests given by ANY ONE of the signers, or our
investment representative of record, if any, ACTING ALONE.
APPOINTMENT OF ATTORNEY-IN-FACT: In order to issue telephone redemption
requests acting alone, each of us individually makes the following
appointment: I hereby appoint the other joint owner(s)/co-trustee(s) as my
agent(s) (attorney[s]-in-fact) with full power and authority to individually
act for me in any lawful way with respect to the issuance of instructions to a
Fund or Services in accordance with the telephone redemption privilege we have
requested by signing this agreement. This appointment shall not be affected by
my subsequent disability or incompetency and shall remain in effect until it
is revoked by either written notice from any one of us delivered to a Fund or
Services by registered mail, return receipt requested or by a Fund or Services
upon receipt of any information that causes a Fund or Services to believe in
good faith that there is or that there may be a dispute among any of us with
respect to the Franklin Templeton Fund account(s) covered by this agreement.
Each of us agrees to notify the Fund or Services immediately upon the death of
any of the signers.
CORPORATE/PARTNERSHIP/TRUST/RETIREMENT ACCOUNTS: The Shareholder and each of
us signing this agreement on behalf of the Shareholder represent and warrant
to each Franklin Templeton Fund and Services that the Shareholder has the
authority to enter into this agreement and that each of us is duly authorized
to execute this agreement on behalf of the Shareholder. The Shareholder agrees
that its election of the telephone redemption privilege means that a Fund or
Services may honor a telephone redemption request given by ANY
officer/partner/member/administrator/or agent of the Shareholder ACTING ALONE.
RESTRICTED ACCOUNTS: Telephone redemptions may not be accepted on Franklin
Templeton Trust Company or Templeton Funds Trust Company retirement accounts.
PLEASE RETURN THIS FORM TO:
Franklin Templeton Investor Services, Inc., Attn.: Telephone Redemptions
Dept., 700 Central Avenue, St. Petersburg, Florida 33701-3628.
24
<PAGE>
THE FRANKLIN TEMPLETON GROUP
To receive a free brochure and prospectus, which contain more complete
information, including charges and expenses on each of the funds listed below,
call Franklin Fund Information, toll free, at 1-800-DIAL-BEN (1-800-342-5236)
or Templeton Fund Information at 1-800-292-9293. Please read the prospectus
carefully before you invest or send money.
TEMPLETON
FAMILY OF FUNDS
Templeton American Trust
Templeton Developing
Markets Trust
Templeton Foreign Fund
Templeton Global
Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global Rising
Dividends Fund
Templeton Growth Fund
Templeton Income Fund
Templeton Money Fund
Templeton Real Estate
Securities Fund
Templeton Smaller
Companies Growth Fund
Templeton World Fund
FRANKLIN GROUP
OF FUNDS(R)
FRANKLIN GLOBAL/
INTERNATIONAL FUNDS
Franklin Global Health Care Fund
Franklin Global Government
Income Fund
Franklin Global Utilities Fund
Franklin International Equity Fund
Franklin Pacific Growth Fund
FUNDS SEEKING CAPITAL GROWTH
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin Small Cap Growth Fund
FUNDS SEEKING GROWTH AND
INCOME
Franklin Balance Sheet
Investment Fund
Franklin Convertible
Securities Fund
Franklin Income Fund
Franklin Equity Income Fund
Franklin Utilities Fund
FUNDS SEEKING HIGH CURRENT
INCOME
Franklin's AGE High Income Fund
Franklin Investment Grade
Income Fund
Franklin Premier Return Fund
Franklin U.S. Government
Securities Fund
FUNDS SEEKING TAX-FREE
INCOME
Franklin Federal Tax-Free
Income Fund
Franklin High Yield Tax-Free
Income Fund
Franklin California High Yield
Municipal Fund
Franklin Alabama Tax-Free
Income Fund
Franklin Arizona Tax-Free
Income Fund
Franklin California Tax-Free
Income Fund
Franklin Colorado Tax-Free
Income Fund
Franklin Connecticut Tax-Free
Income Fund
Franklin Florida Tax-Free
Income Fund
Franklin Georgia Tax-Free
Income Fund
Franklin Hawaii Municipal
Bond Fund
Franklin Indiana Tax-Free
Income Fund
Franklin Kentucky Tax-Free
Income Fund
Franklin Louisiana Tax-Free
Income Fund
Franklin Maryland Tax-Free
Income Fund
Franklin Missouri Tax-Free
Income Fund
Franklin New Jersey Tax-Free
Income Fund
Franklin New York Tax-Free
Income Fund
Franklin North Carolina Tax-Free
Income Fund
Franklin Oregon Tax-Free
Income Fund
Franklin Pennsylvania Tax-Free
Income Fund
Franklin Puerto Rico Tax-Free
Income Fund
Franklin Texas Tax-Free
Income Fund
Franklin Virginia Tax-Free
Income Fund
Franklin Washington Municipal
Bond Fund
FUNDS SEEKING TAX-FREE
INCOME THROUGH INSURED
PORTFOLIOS
Franklin Insured Tax-Free
Income Fund
Franklin Arizona Insured Tax-
Free Income Fund
Franklin California Insured Tax-
Free Income Fund
Franklin Florida Insured Tax-Free
Income Fund
Franklin Massachusetts Insured
Tax-Free Income Fund
Franklin Michigan Insured Tax-
Free Income Fund
Franklin Minnesota Insured Tax-
Free Income Fund
Franklin New York Insured Tax-
Free Income Fund
Franklin Ohio Insured Tax-Free
Income Fund
FUNDS SEEKING HIGH CURRENT
INCOME AND STABILITY OF
PRINCIPAL
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin Short-Intermediate U.S.
Government Securities Fund
FUND SEEKING HIGH AFTER-TAX
INCOME FOR CORPORATIONS
Franklin Corporate Qualified
Dividend Fund
MONEY MARKET FUNDS SEEKING
SAFETY OF PRINCIPAL AND INCOME
Franklin Money Fund
Franklin Federal Money Fund
Franklin Tax-Exempt Money
Fund
Franklin California Tax-Exempt
Money Fund
Franklin New York Tax-Exempt
Money Fund
IFT Franklin U.S. Treasury
Money Market Portfolio
FUNDS FOR
NON-U.S. INVESTORS
FRANKLIN PARTNERS FUNDS(R)
Franklin Tax-Advantaged
High Yield Securities Fund
Franklin Tax-Advantaged
International Bond Fund
Franklin Tax-Advantaged U.S.
Government Securities Fund
25
<PAGE>
NOTES
------------------
26
<PAGE>
NOTES
------------------
27
<PAGE>
- --------------------------
TEMPLETON GLOBAL
OPPORTUNITIES TRUST
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-354-9191
Sales Information
1-800-292-9293
This Prospectus is not
an offering of the
securities herein
described in any state
in which the offering
is not authorized. No
sales representative,
dealer, or other person
is authorized to give
any information or make
any representations
other than those
contained in this
Prospectus. Further
information may be
obtained from the
Principal Underwriter.
- --------------------------
[RECYCLED TL15 P 11/94
PAPER LOGO
APPEARS HERE]
TEMPLETON
GLOBAL
OPPORTUNITIES
TRUST
Prospectus
May 1, 1994
as supplemented
November 30, 1994
[LOGO OF TEMPLETON WORLDWIDE
APPEARS HERE]
<PAGE>
[LOGO OF TEMPLETON APPEARS HERE]
Mail to: Franklin Templeton Distributors, Inc.
P.O. Box 33031 St. Petersburg, Florida 33733-8031
(800) 393-3001
Please do not use this form for any Retirement Plan for which Templeton Funds
Trust Company or its affiliate serves as custodian or trustee or any of the
following Templeton Funds: Templeton American Trust: Templeton Money Fund;
Templeton Institutional Funds or Templeton Capital Accumulator Fund. Please
request separate Applications and/or Prospectuses.
================================================================================
SHAREHOLDER APPLICATION OR REVISION [_] Please check the box if this is a
revision and see Section 8
================================================================================
<TABLE>
<S> <C> <C>
Date ___________________ [_] Real Estate Securities Fund $______ [_] Global Opportunities Trust $______
[_] Growth Fund $_______ [_] Smaller Companies Growth Fund ______ [_] Americas Government Securities Fund ______
[_] World Fund _________ [_] Income Fund ______ [_] Japan Fund ______
[_] Foreign Fund _______ [_] Global Infrastructure Fund ______ [_] Other ______
[_] Global Rising Dividends Fund ______ [_] Developing Markets Trust ______
</TABLE>
================================================================================
1 ACCOUNT REGISTRATION (PLEASE PRINT)
================================================================================
[_] INDIVIDUAL OR JOINT ACCOUNT
__________________________________________________________ _____-_______-______
First Name Middle Initial Last Name Social Security
Number (SSN)
__________________________________________________________ _____-_______-______
Joint Owner(s) (Joint ownership means "Joint Tenants Social Security
With Rights of Survivorship" unless otherwise specified) Number (SSN)
================================================================================
[_] GIFT/TRANSFER TO A MINOR
__________________ As Custodian For ____________________________________________
Minor's Name (one only)
_____________________ Uniform Gifts/Transfers to Minors Act _____-______-_______
State of Residence Minor's Social
Security Number
Please Note: Custodian's Signature, not Minor's, is required in Section 4.
================================================================================
[_] TRUST, CORPORATION, PARTNERSHIP, OR OTHER ENTITY
______________________________________________________________-_________________
Name Taxpayer Identification Number (TIN)
________________________________________________________________________________
Name of Beneficiary (if to be included Date of Trust Document (must be
in the Registration) completed for registration)
________________________________________________________________________________
Name of Each Trustee (if to be included in the Registration)
================================================================================
2 ADDRESS
================================================================================
__________________________________________________ Daytime Phone (___)_________
Street Address Area Code
____________________________________________-_____ Evening Phone (___)_________
City State Zip Code Area Code
I am a Citizen of: [_] U.S. [_] _____________________________
Country of Residence
================================================================================
3 INITIAL INVESTMENT ($100 minimum initial investment)
================================================================================
Check(s) enclosed for $____________ (Payable to Franklin Templeton Distributors,
Inc. or the Fund(s) indicated above.)
================================================================================
4 SIGNATURE AND TAX CERTIFICATIONS (All registered owners must sign
application)
================================================================================
The Fund reserves the right to refuse to open an account without either a
certified Taxpayer Identification Number ("TIN") or a certification of foreign
status. Failure to provide tax certifications in this section may result in
backup withholding on payments relating to your account and/or in your inability
to qualify for treaty withholding rates.
I am(We are) not subject to backup withholding because I(we) have not been
notified by the IRS that I am(we are) subject to backup withholding as a result
of a failure to report all interest or dividends or because the IRS has notified
me(us) that I am(we are) no longer subject to backup withholding. (If you are
currently subject to backup withholding as a result of a failure to report all
interest or dividends, please cross out the preceding statement.)
[_] The number shown above is my(our) correct TIN, or that of the Minor named in
Section 1.
[_] Awaiting TIN. I am(We are) waiting for a number to be issued to me(us).
I(We) understand that if I(we) do not provide a TIN to the Fund within 60
days, the Fund is required to commence 31% backup withholding until I(we)
provide a certified TIN.
[_] Exempt Recipient. Individuals cannot be exempt. Check this box only after
reading the instructions to see whether you qualify as an exempt recipient.
(You should still provide a TIN.)
[_] Exempt Foreign Person. Check this box only if the following statement
applies: "I am(we are) neither a citizen nor a resident of the United
States. I(we) certify to the best of my(our) knowledge and belief, I(we)
qualify as an exempt foreign person and/or entity as described in the
instructions."
Permanent address for tax purposes:
________________________________________________________________________________
Street Address City State Country Postal Code
PLEASE NOTE: The IRS only allows one TIN to be listed on an account. On joint
accounts, it is preferred that the primary account owner (or person listed first
on the account) list his/her number as requested above.
CERTIFICATION - Under the penalties of perjury, I(we) certify that (1) the
information provided on this application is true, correct and complete, (2)
I(we) have read the prospectus(es) for the Fund(s) in which I am(we are)
investing and agree to the terms thereof, and (3) I am(we are) of legal age or
an emancipated minor. I(we) acknowledge that Shares of the Fund(s) are not
insured or guaranteed by any agency or institution and that an investment in the
Shares involves risks, including the possible loss of principal.
X_____________________________________ X________________________________________
Signature Signature
X_____________________________________ X________________________________________
Signature Signature
Please make a photocopy of this application for your records.
================================================================================
5 BROKER/DEALER USE ONLY (PLEASE PRINT)
================================================================================
+ +
+ We hereby submit this application for the purchase of shares of the Fund +
+ indicated above in accordance with the terms of our selling agreement with +
+ Franklin Templeton Distributors, Inc. ("FTD"), and with the Prospectus for +
+ the Fund. We agree to notify FTD of any purchases made under a Letter of +
+ Intent or Cumulative Quantity Discount. +
+ +------------------------------+ +
+ +Templeton Dealer Number + +
+ + + +
+ +------------------------------+ +
+ +
+ +--------------------------------------------------------------------------+ +
+ + WIRE ORDER ONLY: The attached check for $_____ should be applied against + +
+ + Wire Order + +
+ + + +
+ + Confirmation Number ______________ Dated ___________ For ________ Shares + +
+ +--------------------------------------------------------------------------+ +
+ +
+ Securities Dealer Name _____________________________________________________ +
+ +
+ Main Office Address _____________ Main Office Telephone Number(___)_________ +
+ +
+ Branch Number _____ Representative Number _____ Representative Name ________ +
+ +
+ Branch Address _______________________ Branch Telephone Number(___)_________ +
+ +
+ Authorized Signature, Securities Dealer _______________ Title ______________ +
+==============================================================================+
+ +
+ ACCEPTED: Franklin Templeton Distributors, Inc. By ____________ Date _______ +
+==============================================================================+
Please see reverse side for Shareholder Account Privileges:
<TABLE>
<S> <C> <C> <C>
[X] Distribution Options [X] Special Instructions for Distributions [X] Telephone Exchange Service [X] Letter of Intent
[X] Systematic Withdrawal Plan [X] Automatic Investment Plan [X] Cumulative Quantity Discount
</TABLE>
This application must be preceded or accompanied by a prospectus for the Fund(s)
being purchased.
<PAGE>
================================================================================
6. DISTRIBUTION OPTIONS (Check one)
================================================================================
Check one - if no box is checked, all dividends and capital gains will be
reinvested in additional shares of the Fund.
[_] Reinvest all dividends and capital gains.
[_] Pay capital gains in cash and reinvest dividends.
[_] Pay all dividends in cash and reinvest capital gains.
[_] Pay all dividends and capital gains in cash.
================================================================================
7. OPTIONAL SHAREHOLDER PRIVILEGES
================================================================================
A. SPECIAL PAYMENT INSTRUCTIONS FOR DISTRIBUTIONS (Check one box)
[_] Pay Distributions, as noted in Section 6, to another Franklin or Templeton
Fund.
Fund Name ____________________________ Existing Account Number ____________
[_] Send my Distributions to the person, named below, instead of as registered
in Section 1.
Name ___________________________ Street Address ___________________________
City ___________________________ State _________________ Zip Code _________
================================================================================
B. SYSTEMATIC WITHDRAWAL PLAN
Please withdraw from my Franklin Templeton account $_______($50 minimum)
[_] Monthly [_] Quarterly [_] Semi-Annually or [_] Annually as set forth in
the Prospectus, starting in __________________(Month).
Send the proceeds to: [_] Address of Record OR [_] the Franklin Templeton
Fund or person specified in Section 7(A) - Special Payment Instructions for
Distributions.
================================================================================
C. TELEPHONE TRANSACTIONS
Telephone Exchange Privilege: If the Fund does not receive specific
instructions from the shareholder, either in writing or by telephone, the
Telephone Exchange Privilege (see the prospectus) is automatically extended
to each account. The shareholder should understand, however, that the Fund
and Franklin Templeton Investor Services, Inc. ("FTI") or Templeton Funds
Trust Company and their agents will not be liable for any loss, injury,
damage or expense as a result of acting upon instructions communicated by
telephone reasonably believed to be genuine. The shareholder agrees to hold
the Fund and its agents harmless from any loss, claims, or liability arising
from its or their compliance with such instructions. The shareholder
understands that this option is subject to the terms and conditions set
forth in the prospectus of the fund to be acquired.
[_] No, I do NOT wish to participate in the Telephone Exchange Privilege or
authorize the Fund or its agents, including FTI or Templeton Funds Trust
Company, to act upon instructions received by telephone to exchange shares
for shares of any other account(s) within the Franklin Templeton Group of
Funds.
Telephone Redemption Privilege: This is available to shareholders who
specifically request it and who complete the Franklin Templeton Telephone
Redemption Authorization Agreement in the back of the Fund's prospectus.
================================================================================
D. AUTOMATIC INVESTMENT PLAN
Important: Attach an unassigned, voided check (for Checking Accounts) or a
Savings Account deposit slip here, and complete the information below.
I(We) would like to establish an Automatic Investment Plan (the "Plan") as
described in the Prospectus. I(We) agree to reimburse FTI and/or FTD for any
expenses or losses that they may incur in connection with my(our) Plan,
including any caused by my(our) bank's failure to act in accordance with
my(our) request. If my(our) bank makes any erroneous payment or fails to
make a payment after shares are purchased on my(our) behalf, any such
purchase may be cancelled and I(we) hereby authorize redemptions and/or
deductions from my(our) account for that purpose.
Debit my(our) bank account monthly for $______($25 minimum) on or about
the [_] 1st [_] 5th [_] 15th or [_] 20th day starting _____________ (month),
to be invested in (name of Fund)__________________________ Account Number
(if known)_____________________
================================================================================
E. INSTRUCTIONS TO BANK - AUTOMATIC INVESTMENT PLAN AUTHORIZATION
To: __________________________________ __________________________________
Name of Your Bank ABA Number
_______________________________ __________________ ___________ ___________
Street Address City State Zip Code
I(we) authorize you to charge my(our) Checking/Savings Account and to make
payment to FTD, upon instructions from FTD. I(We) agree that in making
payment for such charges your rights shall be the same as if each were a
charge made and signed personally by me(us). This authority shall remain in
effect until you receive written notice from me(us) changing its terms or
revoking it. Until you actually receive such notice, I(we) agree that you
shall be fully protected in paying any charges under this authority. I(we)
further agree that if any such charge is not made, whether with or with out
cause and whether intentionally or inadvertently, you shall be under no
liability whatsoever.
X_____________________________________________________ ___________________
Signature(s) EXACTLY as shown on your bank records Date
________________________________________________ _________________________
Print Name(s) Account Number
_______________________________ __________________ ___________ ___________
Your Street Address City State Zip Code
================================================================================
F. LETTER OF INTENT (LOI)
[_] I(We) agree to the terms of the LOI and provisions for reservations of
shares and grant FTD the security interest set forth in the Prospectus.
Although I am (we are) not obligated to do so, it is my(our) intention to
invest over a 13 month period in shares of one or more Franklin or Templeton
Funds (including all Money Market Funds in the Franklin Templeton Group) an
aggregate amount at least equal to that which is checked below:
[_] $50,000-99,999 (except for Income Fund)
[_] $100,000-249,999
[_] $250,000-499,999
[_] $500,000-999,999
[_] $1,000,000 or more
Purchases made within the last 90 days will be included as part of your LOI.
Please write in your Account Number(s) ___________ ___________ __________
================================================================================
G. CUMULATIVE QUANTITY DISCOUNT
Shares may be purchased at the Offering Price applicable to the dollar
amount of the sale added to the higher of (1) the value (calculated at the
applicable Offering Price) or (2) the purchase price, of any other Shares of
the Fund and/or other Funds in the Franklin Templeton Group owned at that
time by the purchaser, his or her spouse, and their children under age 21,
including all Money Market Funds in the Franklin Templeton Group as stated
in the Prospectus. In order for this Cumulative Quantity Discount to be made
available, the Shareholder or his or her Securities Dealer must notify FTI
or FTD of the total holdings in the Franklin Templeton Group each time an
order is placed.
[_] I(We) own shares of more than one Fund in the Franklin Templeton Group and
qualify for the Cumulative Quantity Discount described above and in the
Prospectus.
My(Our) other Account Number(s) are ____________ ____________ ____________
================================================================================
8. ACCOUNT REVISION (If Applicable)
If you are using this application to revise your Account Registration, or
wish to have Distributions sent to an address other than the address on your
existing Account's Registration, a Signature Guarantee is required.
Signatures of all registered owners must be guaranteed by an "eligible
guarantor" as defined in the "How to Sell Shares of the Fund" section in the
Fund's Prospectus. A Notary Public is not an acceptable guarantor.
X__________________________________________ ______________________________
Signature(s) of Registered Account Owners Account Number(s)
X__________________________________________ ______________________________
X__________________________________________
X__________________________________________ ______________________________
Signature Guarantee Stamp
NOTE: For any change in registration, please send us any outstanding
Certificates by Registered Mail.
================================================================================
