o
SUPPLEMENT DATED JANUARY 1, 1999
TO THE PROSPECTUS OF
TEMPLETON INSTITUTIONAL FUNDS, INC.
dated May 1, 1998
The prospectus is amended as follows:
I. The following is added to the end of the section "Foreign Currency Exchange,"
found under "What Are the Risks of Investing in the Funds?":
Euro. 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 funds hold 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 funds. 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 a 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 funds will not be adversely affected, the
Investment Managers and their affiliated service providers are taking steps that
they believe are reasonably designed to address the euro issue.
II. The following is added to the end of the section, "What Are the Risks of
Investing in the Funds?":
YEAR 2000. When evaluating current and potential portfolio positions, Year 2000
is one of the factors the Investment Managers consider.
The Investment Managers 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. The
Investment Managers, of course, cannot audit each company and its major
suppliers to verify their Year 2000 readiness.
PAGE
If a company in which a fund invests 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 a fund's portfolio holdings
will have a similar impact on the price of such fund's shares. Please see "Year
2000 Problem" under "Who Manages the Funds?" for more information.
III. The third paragraph of the section "Portfolio Management," found
under "Who Manages the Funds?" is replaced with the following:
The portfolio manager of the Emerging Fixed Income Markets Series is Umran
Demirors who has served as a portfolio manager for this Series since its
inception. Dr. Demirors is vice president of Templeton Global Bond Managers
("TGBM"), a division of Investment Counsel. He holds a Ph.D. and an MA in
economics from New York University, and a BA in economics from Bursa Academy of
Economics and Business Administration in Turkey. Prior to joining the Templeton
organization in 1996, Dr. Demirors was a principal and portfolio manager for
Socimer Advisory Inc. in New York. Before joining Socimer Advisory Inc., Dr.
Demirors was the head of research and strategy at VestcorPartners Group in Miami
from 1992 through 1994. Currently, Dr. Demirors manages several emerging markets
fixed income portfolios, and directs the TGBM emerging markets group.
IV. The following is added after the "Administrative Services" section of "Who
Manages the Funds?":
YEAR 2000 PROBLEM. The funds' 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, a fund's operations could be adversely affected if
the computer systems used by the Investment Managers, their service providers
and other third parties they do business with are not Year 2000 ready. For
example, a 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 funds
could experience difficulties in effecting transactions if any of their foreign
subcustodians, or if foreign broker-dealers or foreign markets are not ready for
Year 2000.
The Investment Managers and their 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 funds' ability to reduce the effects of
the Year 2000 problem is also very much dependent upon the efforts of third
parties over which the funds and the Investment Managers may have no control.
PAGE
V. The fifth sentence of the first paragraph under "How is the Company
Organized?" is replaced with the following:
Shares of each fund are considered Class A shares for redemption, exchange and
other purposes.
All references in the prospectus to Class I shares are replaced with Class A.
VI. In the section "Exchange Restrictions," found under "May I Exchange Shares
for Shares of Another Fund?", the second bulleted item is replaced with the
following:
/bullet/ 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."
VII. 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.
VIII. The third bulleted item in the section "TeleFACTS(R)" found under
"Services to Help You Manage Your Account," is replaced with the following:
/bullet/ exchange shares (within the same class) between identically
registered Franklin Templeton Class A, B or C accounts;
IX. In the "Useful Terms and Definitions" section found under "Glossary," the
definition of "Class I and Class II" is replaced with the following:
PAGE
CLASS A, CLASS B, AND CLASS C - Certain funds in the Franklin Templeton Funds
offer multiple classes of shares. The different classes have proportionate
interests in the same portfolio of investment securities. They differ, however,
primarily in their sales charge structures and Rule 12b-1 plans. Shares of the
funds are considered Class A shares for redemption, exchange and other purposes.
Please keep this supplement for future reference.
