o 415 *P2
- -------------------------------------------------------------------------------
SHARE CLASS REDESIGNATION
EFFECTIVE JANUARY 1, 1999
Class A - Formerly Class I
Class B - New Share Class
Class C - Formerly Class II
- -------------------------------------------------------------------------------
SUPPLEMENT DATED JANUARY 1, 1999
TO THE PROSPECTUS OF
TEMPLETON GLOBAL OPPORTUNITIES TRUST
DATED MAY 1, 1998
The prospectus is amended as follows:
I. As of January 1, 1999, the fund offers three classes of shares: Class
A, Class B and Class C. Before January 1, 1999, Class A shares were
designated Class I and Class C shares were designated Class II. All
references in the prospectus to Class I shares are replaced with Class
A, and all references to Class II shares are replaced with Class C.
II. The section "Expense Summary" is replaced with the following:
EXPENSE SUMMARY
This table is designed to help you understand the costs of investing in
the fund. It is based on the fund's historical expenses for the fiscal
year ended December 31, 1997. The fund's actual expenses may vary.
<TABLE>
<CAPTION>
CLASS A/1/ CLASS B/2/ CLASS C/1/
--------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
A. SHAREHOLDER TRANSACTION EXPENSES/3/
Maximum Sales Charge
(as a percentage of Offering Price) 5.75% 4.00% 1.99%
Paid at time of purchase/4/ 5.75% None 1.00%
Paid at redemption/5/ None 4.00% 0.99%
Exchange Fee (per transaction)/6/ None None None
B. ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.80% 0.80% 0.80%
Rule 12b-1 Fees7 0.25% 1.00% 1.00%
Other Expenses 0.32% 0.32% 0.32%
-------------- --------------- ---------------
Total Fund Operating Expenses 1.37% 2.12% 2.12%
--------------- --------------- ---------------
</TABLE>
PAGE
C. EXAMPLE
Assume the annual return for each class is 5%, operating expenses are
as described above, and you sell your shares after the number of years
shown. These are the projected expenses for each $10,000 that you
invest in the fund.
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------- --------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
CLASS A $706/8/ $984 $1,282 $2,127
CLASS B
Assuming you sold your shares at
the end of the period $615 $964 $1,339 $2,261/9/
Assuming you stayed in the fund $215 $664 $1,139 $2,261/9/
CLASS C $411/10/ $757 $1,228 $2,527
</TABLE>
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES
OR RETURNS. ACTUAL EXPENSES AND RETURNS MAY BE MORE OR LESS THAN THOSE
SHOWN. The fund pays its operating expenses. The effects of these
expenses are reflected in the Net Asset Value or dividends of each
class and are not directly charged to your account.
1. Before January 1, 1999, Class A shares were designated Class I and
Class C shares were designated Class II.
2. The fund began offering Class B shares on January 1, 1999. Annual
fund operating expenses are based on the expenses for Class A and C
for the fiscal year ended December 31, 1997. The Rule 12b-1 fees are
based on the maximum fees allowed under Class B's Rule 12b-1 plan.
3. If your transaction is processed through your Securities Dealer,
you may be charged a fee by your Securities Dealer for this service.
4. There is no front-end sales charge if you invest $1 million or more
in Class A shares. Although Class B and C have a lower front-end sales
charge than Class A, their Rule 12b-1 fees are higher. Over time you
may pay more for Class B and C shares. Please see "How Do I Buy
Shares? - Choosing a Share Class."
5. A Contingent Deferred Sales Charge of 1% may apply to Class A
purchases of $1 million or more if you sell the shares within one year
and to any Class C purchase if you sell the shares within 18 months. A
Contingent Deferred Sales Charge of up to 4% may apply to any Class B
purchase if you sell the shares within six years. A Contingent
Deferred Sales Charge may also apply to purchases by certain
retirement plans that qualify to buy Class A shares without a
front-end sales charge. The charge is based on the value of the shares
sold or the Net Asset Value at the time of purchase, whichever is
less. The number in the table shows the charge as a percentage of
Offering Price. While the percentage for Class C is different
depending on whether the charge is shown based on the Net Asset Value
or the Offering Price, the dollar amount you would pay is the same.
See "How Do I Sell Shares? Contingent Deferred Sales Charge" for
details.
6. There is a $5 fee for exchanges by Market Timers.
7. The combination of front-end sales charges and Rule 12b-1 fees
could cause long-term shareholders to pay more than the economic
equivalent of the maximum front-end sales charge permitted under the
NASD's rules.
8. Assumes a Contingent Deferred Sales Charge will not apply.
9. Assumes conversion of Class B shares to Class A shares after eight
years, lowering your annual expenses from that time on.
10. For the same Class C investment, you would pay projected expenses
of $313 if you did not sell your shares at the end of the first year.
Your projected expenses for the remaining periods would be the same.
PAGE
III. The following information is added to the section "Financial Highlights":
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
-----------------------------------------
CLASS A CLASS C
-------------------- --------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period $15.32 $15.17
-------------------- --------------------
Income from investment operations:
Net investment income .25 .18
Net realized and unrealized gains .44 .45
-------------------- --------------------
Total from investment operations .69 .63
-------------------- --------------------
Less distributions from:
Net investment income (.02) (.02)
Net realized gains (.28) (.28)
-------------------- --------------------
Total distributions (.30) (.30)
==================== ====================
Net asset value, end of period $15.71 $15.50
==================== ====================
Total return* 4.52% 4.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $786,405 $39,234
Ratios to average net assets:
Expenses 1.37%** 2.12%**
Net investment income 3.12** 2.38**
Portfolio turnover rate .00% .00%
</TABLE>
* Total return does not reflect sales commissions or the Contingent
Deferred Sales Charge and is not annualized.
**Annualized.
IV. The following is added under "What Are the Risks of Investing in the
Fund?":
YEAR 2000. When evaluating current and potential portfolio positions,
Year 2000 is one of the factors Investment Counsel considers.
Investment Counsel will rely upon public filings and other statements
made by companies about their Year 2000 readiness. Issuers in countries
outside the U.S., particularly in emerging markets, may not be required
to make the same level of disclosure about Year 2000 readiness as is
required in the U.S. Investment Counsel, of course, cannot audit each
company and its major suppliers to verify their Year 2000 readiness.
If a company in which the fund is invested is adversely affected by
Year 2000 problems, it is likely that the price of its security will
also be adversely affected. A decrease in the value of one or more of
the fund's portfolio holdings will have a similar impact on the price
of the fund's shares. Please see "Year 2000 Problem" under "Who Manages
the Fund?" for more information.
PAGE
EURO RISK. On January 1, 1999, the European Monetary Union (EMU) plans
to introduce a new single currency, the euro, which will replace the
national currency for participating member countries. If the fund holds
investments in countries with currencies replaced by the euro, the
investment process, including trading, foreign exchange, payments,
settlements, cash accounts, custody and accounting will be impacted.
The process to establish the euro may result in market volatility. It
is not possible to predict the impact of the euro on the business or
financial condition of European issuers or on the fund. The transition
and the elimination of currency risk among EMU countries may change the
economic environment and behavior of investors, particularly in
European markets. To the extent the fund holds non-U.S. dollar (euro or
other) denominated securities, it will still be exposed to currency
risk due to fluctuations in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all
euro-related changes to enable the Franklin Templeton Funds to process
transactions accurately and completely with minimal disruption to
business activities. While there can be no assurance that the fund will
not be adversely affected, Investment Counsel and its affiliated
service providers are taking steps that they believe are reasonably
designed to address the euro issue.
V. In the section "Who Manages the Fund?",
(a) the following is added after the "Administrative Services" section:
YEAR 2000 PROBLEM. The fund's business operations depend on a worldwide
network of computer systems that contain date fields, including
securities trading systems, securities transfer agent operations and
stock market links. Many of the systems currently use a two digit date
field to represent the date, and unless these systems are changed or
modified, they may not be able to distinguish the Year 1900 from the
Year 2000 (commonly referred to as the Year 2000 problem). In addition,
the fact that the Year 2000 is a non-standard leap year may create
difficulties for some systems.
When the Year 2000 arrives, the fund's operations could be adversely
affected if the computer systems used by Investment Counsel, its
service providers and other third parties it does business with are not
Year 2000 ready. For example, the fund's portfolio and operational
areas could be impacted, including securities trade processing,
interest and dividend payments, securities pricing, shareholder account
services, reporting, custody functions and others. The fund could
experience difficulties in effecting transactions if any of its foreign
subcustodians, or if foreign broker-dealers or foreign markets are not
ready for Year 2000.
PAGE
Investment Counsel and its affiliated service providers are making a
concerted effort to take steps they believe are reasonably designed to
address their Year 2000 problems. Of course, the fund's ability to
reduce the effects of the Year 2000 problem is also very much dependent
upon the efforts of third parties over which the fund and Investment
Counsel may have no control.
(b) the first sentence under "The Rule 12b-1 Plans" is replaced with
the following:
Each class has a separate distribution or "Rule 12b-1" plan under which
the fund shall pay or may reimburse Distributors or others for the
expenses of activities that are primarily intended to sell shares of
the class.
(c) and the following paragraphs are added to the section "The Rule
12b-1 Plans":
Under the Class B plan, the fund pays Distributors up to 0.75% per year
of Class B's average daily net assets to pay Distributors for providing
distribution and related services and bearing certain Class B expenses.
All distribution expenses over this amount will be borne by those who
have incurred them. Securities Dealers are not eligible to receive this
portion of the Rule 12b-1 fees associated with the purchase.
The fund may also pay a servicing fee of up to 0.25% per year of Class
B's average daily net assets under the Class B plan. This fee may be
used to pay Securities Dealers or others for, among other things,
helping to establish and maintain customer accounts and records,
helping with requests to buy and sell shares, receiving and answering
correspondence, monitoring dividend payments from the fund on behalf of
customers, and similar servicing and account maintenance activities.
Securities Dealers may be eligible to receive this portion of the Rule
12b-1 fees from the date of purchase. After 8 years, Class B shares
convert to Class A shares and Securities Dealers may then receive the
Rule 12b-1 fees applicable to Class A.
The expenses relating to the Class B plan are also used to pay
Distributors for advancing the commission costs to Securities Dealers
with respect to the initial sale of Class B shares. Further, the
expenses relating to the Class B plan may be used by Distributors to
pay third party financing entities that have provided financing to
Distributors in connection with advancing commission costs to
Securities Dealers.
VI. Under "How Is the Fund Organized?", the first paragraph is replaced
with the following:
The fund is a diversified, open-end management investment company,
commonly called a mutual fund. It was organized as a Massachusetts
PAGE
business trust on October 2, 1989, and is registered with the SEC. The
fund offers three classes of shares: Templeton Global Opportunities
Trust - Class A, Templeton Global Opportunities Trust Class B and
Templeton Global Opportunities Trust - Class C. Additional series and
classes of shares may be offered in the future.
VII. The second step in the section "How Do I Buy Shares? - Opening Your
Account" is replaced with the following:
2. Determine how much you would like to invest. The fund's minimum
investments are:
- To open a regular, non-retirement account $1,000
- To open an IRA, IRA Rollover, Roth IRA,
or Education IRA $ 250*
- To open a custodial account for a minor
(an UGMA/UTMA account) $ 100
- To open an account with an automatic investment plan $ 50**
- To add to an account $ 50***
* For all other retirement accounts, there is no minimum investment
requirement.
** $25 for an Education IRA.
*** For all retirement accounts except IRAs, IRA Rollovers, Roth IRAs,
or Education IRAs, there is no minimum to add to an account.
For purchases by broker-dealers, registered investment advisors or
certified financial planners who have entered into an agreement with
Distributors for clients participating in comprehensive fee programs,
the minimum initial investment is $250. The minimum initial investment
is $100 for officers, trustees, directors and full-time employees of
the Franklin Templeton Funds or the Franklin Templeton Group, and their
family members, consistent with our then-current policies.
We reserve the right to change the amount of these minimums from time
to time or to waive or lower these minimums for certain purchases. We
also reserve the right to refuse any order to buy shares.
VIII. The sections "Choosing a Share Class" and "Purchase Price of Fund
Shares," found under "How Do I Buy Shares?", are replaced with the
following:
CHOOSING A SHARE CLASS
Each class has its own sales charge and expense structure, allowing you
to choose the class that best meets your situation. Your investment
representative can help you decide.
PAGE
<TABLE>
CLASS A* CLASS B* CLASS C*
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- Front-end sales charge of - No front-end sales charge - Front-end sales charge of 1%
5.75% or less
- Contingent Deferred Sales - Contingent Deferred Sales Charge - Contingent Deferred Sales Charge
Charge of 1% on purchases of of 4% or less on shares you sell of 1% on shares you sell within 18
$1 million or more sold within six years months
within one year
- Lower annual expenses than - Higher annual expenses than Class - Higher annual expenses than Class
Class B or C due to lower A (same as Class C) due to higher A (same as Class B) due to higher
Rule 12b-1 fees Rule 12b-1 fees. Automatic Rule 12b-1 fees. No conversion to
conversion to Class A shares to Class A shares, so annual
after eight years, reducing expenses do not decrease.
future annual expenses.
- No maximum purchase amount - Maximum purchase amount of - Maximum purchase amount of
$249,999. We invest any $999,999. We invest any investment
investment of $250,000 or of $1 million or more in Class A
more in Class A shares, since shares, since there is no front-
a reduced front-end sales end sales charge and Class A's annual
charge is available and Class expenses are lower.
A's annual expenses are lower.
</TABLE>
*Before January 1, 1999, Class A shares were designated Class I and
Class C shares were designated Class II. The fund began offering Class
B shares on January 1, 1999. Class B shares are not available to all
retirement plans. Class B shares are only available to IRAs (of any
type), Trust Company 403(b) plans, and Trust Company qualified plans
with participant or earmarked accounts.
PURCHASE PRICE OF FUND SHARES
For Class A shares, the sales charge you pay depends on the dollar
amount you invest, as shown in the table below. The sales charge for
Class C shares is 1% and, unlike Class A, does not vary based on the
size of your purchase. There is no front-end sales charge for Class B
shares.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE AMOUNT PAID TO
AS A PERCENTAGE OF DEALER AS A
---------------------------
AMOUNT OF PURCHASE OFFERING NET AMOUNT PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A
Under $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 None
PAGE
CLASS B* None None None
CLASS C
Under $1,000,000* 1.00% 1.01% 1.00%
</TABLE>
*A Contingent Deferred Sales Charge of 1% may apply to Class A
purchases of $1 million or more and any Class C purchase. A Contingent
Deferred Sales Charge of up to 4% may apply to any Class B purchase.
Please see "How Do I Sell Shares? - Contingent Deferred Sales Charge."
Please also see "Other Payments to Securities Dealers" below for a
discussion of payments Distributors may make out of its own resources
to Securities Dealers for certain purchases.
IX. In the section "Sales Charge Waivers," found under "How Do I Buy
Shares? - Sales Charge Reductions and Waivers,"
(a) the first paragraph is replaced with the following:
SALES CHARGE WAIVERS. If one of the following sales charge waivers
applies to you or your purchase of fund shares, you may buy shares of
the fund without a front-end sales charge or a Contingent Deferred
Sales Charge. All of the sales charge waivers listed below apply to
purchases of Class A shares only, except for items 1 and 2 which also
apply to Class B and C purchases.
(b) the second waiver category is replaced with the following:
2. Redemption proceeds from the sale of shares of any Franklin
Templeton Fund. The proceeds must be reinvested in the same
class of shares, except proceeds from the sale of Class B
shares will be reinvested in Class A shares.
If you paid a Contingent Deferred Sales Charge when you sold
your Class A or C shares, we will credit your account with the
amount of the Contingent Deferred Sales Charge paid but a new
Contingent Deferred Sales Charge will apply. For Class B
shares reinvested in Class A, a new Contingent Deferred Sales
Charge will not apply, although your account will not be
credited with the amount of any Contingent Deferred Sales
Charge paid when you sold your Class B shares. If you own both
Class A and B shares and you later sell your shares, we will
sell your Class A shares first, unless otherwise instructed.
Proceeds immediately placed in a Franklin Bank CD also may be
reinvested without a front-end sales charge if you reinvest
them within 365 days from the date the CD matures, including
any rollover.
This waiver does not apply to shares you buy and sell under
our exchange program. Shares purchased with proceeds from a
money fund may be subject to a sales charge.
(c) the following new category 7 is added to the end of the first list
of sales charge waiver categories:
PAGE
7. Redemption proceeds from a repurchase of shares of Franklin
Floating Rate Trust, if the shares were continuously held for at
least 12 months.
If you immediately placed your redemption proceeds in a Franklin
Bank CD or a Franklin Templeton money fund, you may reinvest them
as described above. The proceeds must be reinvested within 365
days from the date the CD matures, including any rollover, or the
date you redeem your money fund shares.
(d) and the following new category 12 is added to the end of the second
list of sales charge waiver categories:
12. Qualified registered investment advisors who buy through a
broker-dealer or service agent who has entered into an agreement
with Distributors
X. The section "How Do I Buy Shares in Connection with Retirement Plans?",
found under "How Do I Buy Shares?", is replaced with the following:
HOW DO I BUY SHARES IN CONNECTION WITH RETIREMENT PLANS?
Your individual or employer-sponsored retirement plan may invest in the
fund. Plan documents are required for all retirement plans. Trust
Company can provide the plan documents for you and serve as custodian
or trustee.
Trust Company can provide you with brochures containing important
information about its plans. These plans require separate applications
and their policies and procedures may be different than those described
in this prospectus. For more information, including a free retirement
plan brochure or application, please call Retirement Plan Services.
Please consult your legal, tax or retirement plan specialist before
choosing a retirement plan. Your investment representative or advisor
can help you make investment decisions within your plan.
XI. The section "How Do I Buy Shares? - Other Payments to Securities
Dealers" is replaced with the following:
OTHER PAYMENTS TO SECURITIES DEALERS
The payments described below may be made to Securities Dealers who
initiate and are responsible for Class B and C purchases and certain
Class A purchases made without a sales charge. The payments are subject
to the sole discretion of Distributors, and are paid by Distributors or
one of its affiliates and not by the fund or its shareholders.
PAGE
1. Class A purchases of $1 million or more - up to 1% of the amount
invested.
2. Class B purchases - up to 4% of the amount invested.
3. Class C purchases - up to 1% of the purchase price.
4. Class A purchases made without a front-end sales charge by
certain retirement plans described under "Sales Charge
Reductions and Waivers - Retirement Plans" above - up to 1% of
the amount invested.
5. Class A purchases by trust companies and bank trust
departments, Eligible Governmental Authorities, and
broker-dealers or others on behalf of clients participating in
comprehensive fee programs - up to 0.25% of the amount
invested.
6. Class A purchases by Chilean retirement plans - up to 1% of the
amount invested.
A Securities Dealer may receive only one of these payments for each
qualifying purchase. Securities Dealers who receive payments in
connection with investments described in paragraphs 1, 3 or 6 above or
a payment of up to 1% for investments described in paragraph 4 will be
eligible to receive the Rule 12b-1 fee associated with the purchase
starting in the thirteenth calendar month after the purchase.
FOR BREAKPOINTS THAT MAY APPLY AND INFORMATION ON ADDITIONAL
COMPENSATION PAYABLE TO SECURITIES DEALERS IN CONNECTION WITH THE SALE
OF FUND SHARES, PLEASE SEE "HOW DO I BUY, SELL AND EXCHANGE SHARES? -
OTHER PAYMENTS TO SECURITIES DEALERS" IN THE SAI.
XII. The second and third paragraphs under "May I Exchange Shares for Shares
of Another Fund?" are replaced with the following:
If you own Class A shares, you may exchange into any of our money funds
except Franklin Templeton Money Fund. Franklin Templeton Money Fund is
the only money fund exchange option available to Class B and C
shareholders. Unlike our other money funds, shares of Franklin
Templeton Money Fund may not be purchased directly and no drafts
(checks) may be written on Franklin Templeton Money Fund accounts.
Before making an exchange, please read the prospectus of the fund you
are interested in. This will help you learn about the fund, its
investment goal and policies, and its rules and requirements for
exchanges. For example, some Franklin Templeton Funds do not accept
exchanges and others may have different investment minimums. Some
Franklin Templeton Funds do not offer Class B or C shares.
PAGE
XIII. The first paragraph under "May I Exchange Shares for Shares of Another
Fund? - Will Sales Charges Apply to My Exchange?" is replaced with the
following:
You generally will not pay a front-end sales charge on exchanges. If
you have held your shares less than six months, however, you will pay
the percentage difference between the sales charge you previously paid
and the applicable sales charge of the new fund, if the difference is
more than 0.25%. If you have never paid a sales charge on your shares
because, for example, they have always been held in a money fund, you
will pay the fund's applicable sales charge no matter how long you have
held your shares. These charges may not apply if you qualify to buy
shares without a sales charge.
XIV. In the section "Contingent Deferred Sales Charge," found under "May I
Exchange Shares for Shares of Another Fund? - Will Sales Charges Apply
to My Exchange?",
(a) the following sentence is added to the end of the first paragraph:
The purchase price for determining a Contingent Deferred Sales Charge
on exchanged shares will be the price you paid for the original shares.
(b) and the third paragraph is replaced with the following:
If you exchange Class A shares into one of our money funds, the time
your shares are held in that fund will not count towards the completion
of any Contingency Period. If you exchange your Class B or C shares for
the same class of shares of Franklin Templeton Money Fund, however, the
time your shares are held in that fund will count towards the
completion of any Contingency Period.
XV. In the section "Exchange Restrictions," found under "May I Exchange
Shares for Shares of Another Fund?",
(a) the first and second bulleted items are replaced with the
following:
- You may only exchange shares within the same class, except as
noted below. If you exchange your Class B shares for the same
class of shares of another Franklin Templeton Fund, the time your
shares are held in that fund will count towards the eight year
period for automatic conversion to Class A shares.
- Generally exchanges may only be made between identically
registered accounts, unless you send written instructions with a
signature guarantee. You may, however, exchange shares from a fund
account requiring two or more signatures into an identically
registered money fund account requiring only one signature for all
transactions. PLEASE NOTIFY US IN WRITING IF YOU DO NOT WANT THIS
OPTION TO BE AVAILABLE ON YOUR ACCOUNT. Additional procedures may
apply. Please see "Transaction Procedures and Special
Requirements."
PAGE
(b) and the following new item is added:
- You must meet the applicable minimum investment amount of the
fund you are exchanging into, or exchange 100% of your fund
shares.
XVI. In the "By Phone" section of the chart under "How Do I Sell Shares?",
(a) the first bulleted item is replaced with the following:
- If the request is $100,000 or less. Institutional accounts may
exceed $100,000 by completing a separate agreement. Call
Institutional Services to receive a copy.
(b) and the third bulleted item is deleted.
XVII. In the section "Contingent Deferred Sales Charge," found under
"How Do I Sell Shares?",
(a) the following is added after the second paragraph:
For Class B shares, there is a Contingent Deferred Sales Charge if you
sell your shares within six years, as described in the table below. The
charge is based on the value of the shares sold or the Net Asset Value
at the time of purchase, whichever is less.
<TABLE>
<CAPTION>
IF YOU SELL YOUR CLASS B SHARES THIS % IS DEDUCTED FROM YOUR PROCEEDS AS
WITHIN THIS MANY YEARS AFTER BUYING THEM A CONTINGENT DEFERRED SALES CHARGE
----------------------------------------- -------------------------------------------
<S> <C>
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
</TABLE>
(b) and the section "Waivers" is replaced with the following:
WAIVERS. We waive the Contingent Deferred Sales Charge for:
- Account fees
- Sales of Class A shares purchased without a front-end sales
charge by certain retirement plan accounts if (i) the account was
opened before May 1, 1997, or (ii) the Securities Dealer of record
received a payment from Distributors of 0.25% or less, or (iii)
PAGE
Distributors did not make any payment in connection with the
purchase, or (iv) the Securities Dealer of record has entered into
a supplemental agreement with Distributors
- Redemptions by the fund when an account falls below the minimum
required account size
- Redemptions following the death of the shareholder or beneficial
owner
- Redemptions through a systematic withdrawal plan set up before
February 1, 1995
- Redemptions through a systematic withdrawal plan set up on or
after February 1, 1995, up to 1% monthly, 3% quarterly, 6%
semiannually or 12% annually of your account's Net Asset Value
depending on the frequency of your plan
- Redemptions by Trust Company employee benefit plans or employee
benefit plans serviced by ValuSelect(R) (not applicable to Class
B)
- Distributions from IRAs due to death or disability or upon
periodic distributions based on life expectancy (for Class B, this
applies to all retirement plan accounts, not only IRAs)
- Returns of excess contributions (and earnings, if applicable) from
retirement plan accounts
- Participant initiated distributions from employee benefit plans
or participant initiated exchanges among investment choices in
employee benefit plans (not applicable to Class B)
XVIII. The second paragraph under "What Distributions Might I Receive From the
Fund?" is replaced with the following:
Dividends and capital gains are calculated and distributed the same
way for each class. The amount of any income dividends per share will
differ, however, generally due to the difference in the Rule 12b-1
fees of each class.
XIX. Distribution option 3 and the paragraph following it in the section
"What Distributions Might I Receive From the Fund? - Distribution
Options" is replaced with the following:
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive capital gain
distributions, dividend distributions, or both in cash. If you have the
money sent to another person or to a checking or savings account, you
may need a signature guarantee. If you send the money to a checking or
savings account, please see "Electronic Fund Transfers" under "Services
to Help You Manage Your Account."
PAGE
Distributions may be reinvested only in the same class of shares,
except as follows: (i) Class C shareholders who chose to reinvest their
distributions in Class A shares of the fund or another Franklin
Templeton Fund before November 17, 1997, may continue to do so; and
(ii) Class B and C shareholders may reinvest their distributions in
shares of any Franklin Templeton money fund.
XX. Under "Transaction Procedures and Special Requirements,"
(a) the section "Joint Accounts" is replaced with the following:
JOINT ACCOUNTS. For accounts with more than one registered owner, the
fund accepts written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone.
For all other transactions and changes, all registered owners must sign
the instructions.
Please keep in mind that if you have previously told us that you do not
want telephone exchange or redemption privileges on your account, then
we can only accept written instructions to exchange or redeem shares if
they are signed by all registered owners on the account.
(b) the reference to $50,000 in the section "Signature Guarantees" is
replaced with $100,000.
(c) the section "Trust Company Retirement Plan Accounts," found under
"Telephone Transactions," is deleted.
(d) and the section "Keeping Your Account Open" is replaced with the
following:
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may
close your account if the value of your shares is less than $250, or
less than $50 for employee accounts and custodial accounts for minors.
We will only do this if the value of your account fell below this
amount because you voluntarily sold your shares and your account has
been inactive (except for the reinvestment of distributions) for at
least six months. Before we close your account, we will notify you and
give you 30 days to increase the value of your account to $1,000, or
$100 for employee accounts and custodial accounts for minors. These
minimums do not apply to IRAs and other retirement plan accounts or to
accounts managed by the Franklin Templeton Group.
XXI. Under "Services to Help You Manage Your Account,"
(a) the second sentence in the section "Automatic Investment Plan" is
replaced with the following:
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Under the plan, you can have money transferred automatically from your
checking or savings account to the fund each month to buy additional
shares.
(b) the second paragraph under "Systematic Withdrawal Plan" is replaced
with the following:
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the account
application included with this prospectus and indicate how you would
like to receive your payments. You may choose to direct your payments
to buy the same class of shares of another Franklin Templeton Fund or
have the money sent directly to you, to another person, or to a
checking or savings account. If you choose to have the money sent to a
checking or savings account, please see "Electronic Fund Transfers"
below. Once your plan is established, any distributions paid by the
fund will be automatically reinvested in your account.
(c) the following new section is added after the section "Systematic
Withdrawal Plan":
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or
payments under a systematic withdrawal plan sent directly to a checking
or savings account. If the account is with a bank that is a member of
the Automated Clearing House, the payments may be made automatically by
electronic funds transfer. If you choose this option, please allow at
least fifteen days for initial processing. We will send any payments
made during that time to the address of record on your account.
(d) the third bulleted item in the section "TeleFACTS(R)" is replaced
with the following:
- exchange shares (within the same class) between identically
registered Franklin Templeton Class A, B or C accounts; and
(e) and the last sentence is replaced with the following:
The code number is 415 for Class A, 915 for Class B and 515 for
Class C.
XXII. In the "Useful Terms and Definitions" section,
(a) the definition of "Class and Class II" is replaced with the
following:
CLASS A, CLASS B AND CLASS C - The fund offers three classes of shares,
designated "Class A," "Class B" and "Class C." The three classes have
proportionate interests in the fund's portfolio. They differ, however,
primarily in their sales charge structures and Rule 12b-1 plans.
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(b) and the following definitions are revised:
CONTINGENCY PERIOD - For Class A shares, the 12 month period during
which a Contingent Deferred Sales Charge may apply. The contingency
period is six years for Class B shares and 18 months for Class C
shares. The holding period begins on the day you buy your shares. For
example, if you buy shares on the 18th of the month, they will age one
month on the 18th day of the next month and each following month.
CONTINGENT DEFERRED SALES CHARGE (CDSC) - A sales charge of 1% that may
apply if you sell your Class A or C shares within the Contingency
Period. For Class B, the maximum CDSC is 4% and declines to 0% after
six years.
OFFERING PRICE - The public offering price is based on the Net Asset
Value per share of the class and includes the front-end sales charge.
The maximum front-end sales charge is 5.75% for Class A and 1% for
Class C. There is no front-end sales charge for Class B. We calculate
the offering price to two decimal places using standard rounding
criteria.
Please keep this supplement for future reference.
