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TEMPLETON
CAPITAL ACCUMULATION
PLANS
[LOGO OF MAP APPEARS HERE]
PROSPECTUS
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JANUARY 1, 1996
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PROSPECTUS
TEMPLETON CAPITAL ACCUMULATION PLANS
Templeton Capital Accumulation Plans (the "Plans") for the accumulation of
shares of Templeton Capital Accumulator Fund, Inc. (the "Fund") are offered by
Franklin Templeton Distributors, Inc., the Sponsor and Principal Underwriter
("FTD" or "Sponsor"). A Plan calls for fixed monthly investments for 15 years
(180 investments), with the Planholder having the option to make additional
monthly investments for up to a total of 25 years (300 investments). The ratio
of Sales and Creation Charges to total investments on 15-year Plans ranges
from 9.00% on $16,875 Plans ($93.75 per month) to .75% on $1,800,000 Plans
($10,000 per month) and the ratio of Sales and Creation Charges to net
investments on 15-year Plans ranges from 9.89% to .76%. On Plans extended to
25 years, the Sales and Creation Charges range from 8.49% (on $28,125 Plans)
to .56% (on $1,800,000 Plans) of the net amount invested.
Investments under a Plan are applied, after authorized deductions, to the
purchase of Fund shares at net asset value. These shares should be considered
a long term investment and are not suitable for investors seeking quick
profits or who might be unable to complete a Plan. The Sales and Creation
Charges for the first year of a Plan can amount to 50% of the total amount
paid during that year. Since a major portion of the entire Sales and Creation
Charge is deducted from the first year's investments, withdrawal or
termination of an investment in the early years of a Plan will probably result
in a loss. For example, on a $16,875 Plan ($93.75 per month), deductions
amount to 9.00% of the investments made if the Plan is completed. However,
even after the application of the refund privilege described on page 8, total
deductions would amount to 15% of total investments if the Plan were
terminated at any time between two months and 18 months. Moreover, if the Plan
were continued for 19 months, total deductions would amount to 33.82% of the
total invested; deductions would amount to 28.04% if the Plan were continued
for two years and then redeemed. A detailed description of all deductions
appears on page 11.
The value of a Plan is subject to fluctuations in the value of the
securities in the Fund's portfolio. A Plan calls for monthly investments at
regular intervals regardless of the price level of the Fund's shares.
Investors should therefore consider their financial ability to continue a
Plan. A Plan offers no assurance against loss in a declining market.
Terminating a Plan at a time when the value of the shares then held is less
than their cost will result in a loss.
SHARES OF THE FUND ARE OFFERED TO THE GENERAL PUBLIC ONLY THROUGH TEMPLETON
CAPITAL ACCUMULATION PLANS. The Fund seeks long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments of any nation, developed or underdeveloped. As an operating
policy, which may be changed without shareholder approval, the Fund may not
invest more than 5% of its assets in lower rated debt securities. As a
fundamental policy, which may not be changed without shareholder approval, the
Fund may not invest more than 10% of its assets in illiquid securities,
including defaulted debt securities.
Shares of certain other mutual funds managed or advised by the Fund's
investment manager, Templeton Investment Counsel, Inc. ("TICI" or "Investment
Manager") and its affiliates, which have investment objectives similar in many
respects to those of the Fund, may be acquired with a sales charge for the
minimum initial investment of $100, and subsequent investments of a minimum of
$25 (which may be made automatically by means of pre-authorized bank debits),
and, compared to the earlier years of a Plan, would involve a lesser sales
charge, thereby decreasing the possibility of loss in the event of early
termination.
AN INVESTOR HAS THE RIGHT TO A 45 DAY REFUND OF HIS OR HER INVESTMENT, AS
WELL AS CERTAIN OTHER LIMITED REFUND RIGHTS FOR CERTAIN PERIODS OF TIME AND
UNDER THE CONDITIONS DESCRIBED IN MORE DETAIL UNDER THE HEADING "CANCELLATION
AND REFUND RIGHTS" ON PAGE 8.
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.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUS OF TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
1
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TABLE OF CONTENTS
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<S> <C>
Introductory Statement..................................................... 3
Allocation of Investments and Deductions................................... 3
15-Year Plans -- Allocation of Investments and Deductions.................. 4
Total 25-Year Allocations and Deductions When Extended Investment Option is
Used...................................................................... 4
A Typical $100 Monthly Investment Plan..................................... 5
Investment Objective -- What You Seek From Your Plan....................... 5
How a Templeton Capital Accumulation Plan Can Help You Meet Your Objective. 5
How to Start Your Templeton Capital Accumulation Plan...................... 6
Automatic Investment Plan.............................................. 6
Your Rights and Privileges Under the Plan.................................. 6
Dividends and Distributions............................................ 6
How You Can Withdraw or Redeem Some of Your Shares Without Terminating
Your Plan............................................................. 6
You May Transfer or Assign Your Rights in the Plan..................... 8
Cancellation and Refund Rights......................................... 8
You May Terminate Your Plan and Withdraw Your Shares................... 8
Replacement Privilege on Termination................................... 9
You Retain Full Voting Rights in Your Fund Shares...................... 9
You May Make Investments Ahead of Schedule to Complete Your Plan Early. 9
You May Withdraw a Fixed Amount Monthly or Quarterly -- When You Have
Completed Your Plan................................................... 9
You May Continue Investments After Completing a 15-Year Plan --
Extended Investment Option........................................... 10
Individual Retirement Accounts (IRAs)...................................... 10
Sales and Creation Charges................................................. 11
The Custodian -- Templeton Funds Trust Company............................. 12
The Sponsor -- Franklin Templeton Distributors, Inc. ...................... 13
Taxes...................................................................... 14
Substitution of the Underlying Investment.................................. 14
Termination of Your Plan................................................... 14
General.................................................................... 15
Illustration of a Hypothetical $93.75 Monthly Templeton Capital
Accumulation Plan......................................................... 15
Financial Statements:
Templeton Capital Accumulation Plans................................... 17
Franklin Templeton Distributors, Inc. ................................. 22
Templeton Capital Accumulator Fund, Inc. Prospectus........................ P-1
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No salesman, dealer or other person is authorized by the Sponsor, the Plans,
or the Fund, to give any information or make any representation other than
those contained in this Prospectus or in the prospectus and Statement of
Additional Information of Templeton Capital Accumulator Fund, Inc., or in any
other printed or written material issued under the name of Franklin Templeton
Distributors, Inc. or Templeton Capital Accumulator Fund, Inc. No person
should rely upon any information not contained in these materials.
2
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INTRODUCTORY STATEMENT
You should consider the following aspects of the Plans before making an
investment:
1. A Plan represents an agreement between you, the Sponsor, and Templeton
Funds Trust Company ("TFTC" or "Custodian") under which investments (after
deduction of "Sales and Creation Charges") are used to purchase shares of the
Fund. It is not required that the Sponsor notify you or seek your approval
prior to replacing the Custodian. However, the terms of the Custodian
Agreement cannot be amended to adversely affect your rights and privileges
without obtaining your written consent.
2. Investments made through the Plans will not constitute direct ownership
of Fund shares, but rather an interest in a trust which will have direct
ownership of Fund shares. You will have only a beneficial interest in the
underlying Fund shares. This beneficial interest is expressed in the Plan as
"Plan shares"; one Plan share always equals one share of the underlying Fund.
You will, however, retain full voting rights in the underlying Fund shares.
The Custodian will vote the shares held for your account in accordance with
your instructions.
3. Unlike most other plans of this type, the primary issuer--Templeton
Capital Accumulator Fund, Inc.--does not sell its shares directly to the
public. Investments in the Fund may be made only through the arrangements
provided by the Plans.
4. The Plans are available for purchase in conjunction with certain
Individual Retirement Accounts (IRAs) and there is an annual service fee
(currently $10) for maintenance of an individual's IRA.
5. The Plans contain a Sales and Creation Charge which is sometimes called a
"front-end load." The effect of a "front-end load" is that if you terminate
your Plan between the second and eighteenth month, total deductions may amount
to as much as 15% of your total payments made up to that date. Accordingly,
the Plans are not suited for short-term investment. See the tables on page 4,
and the description thereof.
6. A Plan may be terminated by the Custodian or Sponsor if you fail to make
investments under your Plan for a period of 12 months or if Fund shares are
not available and a substitution is not made. See "Termination of Your Plan"
on page 14. Planholders must be notified and approve any substitution of the
Plan's underlying investment. See "Substitution of the Underlying Investment"
on page 14.
7. The dealer firm of record has proprietary rights to all commissions
earned during the duration of your Plan. It is also under no obligation to
transfer your Plan to another dealer firm as long as its dealer agreement with
the Plan Sponsor, Franklin Templeton Distributors, Inc., remains active. If
the dealer firm of record chooses to release your Plan to a new dealer firm,
it must first complete, sign, and signature guarantee a release form that can
be obtained from the Plan Sponsor. This form must be returned to and accepted
by the Custodian, Templeton Funds Trust Company, before any dealer change can
be effected.
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
The following tables show the range of available Plans, the Monthly
Investment Units to be made, total investments to be made and the Sales and
Creation Charges that will be charged as to each Monthly Investment Unit. The
total charges as a percentage of the total amount invested and as a percentage
of the net amount invested are also shown. This information is based solely on
investments made under a Plan and does not reflect any investment experience,
dividend or income of the Fund over the 15-year period of a Plan.
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15-YEAR PLANS
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
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SALES AND CREATION CHARGES
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% OF % OF
MONTHLY PER PER CHARGES CHARGES MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL TO TOTAL TO NET INVESTMENT
UNIT INVESTMENT 1 THRU 12 13 THRU 180 CHARGES INVESTMENT INVESTMENT UNIT
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<S> <C> <C> <C> <C> <C> <C> <C>
$ 93.75 $ 16,875.00 $ 46.87 $ 5.69 $ 1,518.36 9.00% 9.89% $ 93.75
100.00 18,000.00 50.00 6.07 1,619.76 9.00 9.89 100.00
125.00 22,500.00 62.50 7.58 2,023.44 8.99 9.88 125.00
150.00 27,000.00 75.00 7.50 2,160.00 8.00 8.70 150.00
166.66 29,998.80 83.33 8.15 2,369.16 7.90 8.57 166.66
200.00 36,000.00 100.00 9.46 2,789.28 7.75 8.40 200.00
250.00 45,000.00 125.00 11.42 3,418.56 7.60 8.22 250.00
300.00 54,000.00 150.00 6.96 2,969.28 5.50 5.82 300.00
350.00 63,000.00 175.00 6.92 3,262.56 5.18 5.46 350.00
400.00 72,000.00 200.00 6.62 3,512.16 4.88 5.13 400.00
500.00 90,000.00 225.00 6.96 3,869.28 4.30 4.49 500.00
750.00 135,000.00 300.00 10.31 5,332.08 3.95 4.11 750.00
1,000.00 180,000.00 350.00 13.57 6,479.76 3.60 3.73 1,000.00
1,500.00 270,000.00 375.00 19.82 7,829.76 2.90 2.99 1,500.00
2,000.00 360,000.00 440.00 20.00 8,640.00 2.40 2.46 2,000.00
3,000.00 540,000.00 450.00 28.92 10,258.56 1.90 1.94 3,000.00
5,000.00 900,000.00 500.00 20.53 9,449.04 1.05 1.06 5,000.00
10,000.00 1,800,000.00 750.00 26.78 13,499.04 .75 .76 10,000.00
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TOTAL 25-YEAR ALLOCATIONS AND DEDUCTIONS WHEN
EXTENDED INVESTMENT OPTION IS USED
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<CAPTION>
SALES AND CREATION CHARGES
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% OF % OF
MONTHLY PER PER CHARGES CHARGES MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL TO TOTAL TO NET INVESTMENT
UNIT INVESTMENT 1 THRU 12 13 THRU 300 CHARGES INVESTMENT INVESTMENT UNIT
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<S> <C> <C> <C> <C> <C> <C> <C>
$ 93.75 $ 28,125.00 $ 46.87 $ 5.69 $ 2,201.16 7.83% 8.49% $ 93.75
100.00 30,000.00 50.00 6.07 2,348.16 7.83 8.49 100.00
125.00 37,500.00 62.50 7.58 2,933.04 7.82 8.49 125.00
150.00 45,000.00 75.00 7.50 3,060.00 6.80 7.30 150.00
166.66 49,998.00 83.33 8.15 3,347.16 6.69 7.17 166.66
200.00 60,000.00 100.00 9.46 3,924.48 6.54 7.00 200.00
250.00 75,000.00 125.00 11.42 4,788.96 6.39 6.83 250.00
300.00 90,000.00 150.00 6.96 3,804.48 4.23 4.41 300.00
350.00 105,000.00 175.00 6.92 4,092.96 3.90 4.06 350.00
400.00 120,000.00 200.00 6.62 4,306.56 3.59 3.72 400.00
500.00 150,000.00 225.00 6.96 4,704.48 3.14 3.24 500.00
750.00 225,000.00 300.00 10.31 6,569.28 2.92 3.01 750.00
1,000.00 300,000.00 350.00 13.57 8,108.16 2.70 2.78 1,000.00
1,500.00 450,000.00 375.00 19.82 10,208.16 2.27 2.32 1,500.00
2,000.00 600,000.00 440.00 20.00 11,040.00 1.84 1.87 2,000.00
3,000.00 900,000.00 450.00 28.92 13,728.96 1.53 1.55 3,000.00
5,000.00 1,500,000.00 500.00 20.53 11,912.64 .79 .80 5,000.00
10,000.00 3,000,000.00 750.00 26.78 16,712.64 .56 .56 10,000.00
</TABLE>
4
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A TYPICAL $100 MONTHLY INVESTMENT PLAN
(Assuming that all investments are made in accordance with the terms of the
Plan)
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<CAPTION>
AT THE END OF AT THE END OF AT THE END OF
6 MONTHS 1 YEAR 2 YEARS
AGGREGATE AMOUNT (6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
--------------------- ----------------- ----------------- --------------------
% OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL
INVEST- INVEST- INVEST- INVEST-
AMOUNT MENTS AMOUNT MENTS AMOUNT MENTS AMOUNT MENTS
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
15 YEARS (180 INVEST-
MENTS)
Total Investments....... $18,000 100% $600 100% $1,200 100% $2,400 100%
Deduct:
Creation and Sales
Charge................ $ 1,619.76 9% $300 50% $ 600 50% $ 672.84 28%
Net Amount Invested Un-
der Plan............... $16,380.24 91% $300 50% $ 600 50% $1,727.16 72%
25 YEARS (300 INVEST-
MENTS)
Total Investments....... $30,000 100% $600 100% $1,200 100% $2,400 100%
Deduct:
Creation and Sales
Charge................ $ 2,348.16 7.8% $300 50% $ 600 50% $ 672.84 28%
Net Amount Invested Un-
der Plan............... $27,651.84 92.2% $300 50% $ 600 50% $1,727.16 72%
</TABLE>
NOTES:
(1) Dividends and distributions received on Fund shares, during the periods
shown, have not been included or reflected in any way in the foregoing
figures.
(2) The 25-year investment schedule reflects the charges applicable to a 15-
year Plan which is continued under the Extended Investment Option.
After the first 12 monthly investments have been made, the Creation and
Sales Charge deducted from any subsequent monthly investment will not exceed
6.1% of the net investment in Fund shares.
INVESTMENT OBJECTIVE--WHAT YOU SEEK FROM YOUR PLAN
As you will see in the attached prospectus, the objective of Templeton
Capital Accumulator Fund, Inc. (the "Fund") is long-term capital growth. The
Fund is an open-end, diversified investment company (usually referred to as
"mutual fund"). The Fund seeks to meet its objective through investment in
common stocks and other classes of securities which management believes will
contribute to the attainment of such investment objective. Accordingly,
selection of securities for the portfolio of the Fund is based almost entirely
of their potential capital growth possibilities. Most of the portfolio
securities will pay little, if any, income. Whatever income may be received
will be entirely incidental to the objective of capital growth. The Fund's
investments are selected and supervised by TICI. Reference is made to the
attached Templeton Capital Accumulator Fund, Inc. prospectus for a description
of the Fund's investment policies and operating expenses, and the business
experience of its management. A Statement of Additional Information about
Templeton Capital Accumulator Fund, Inc., which is incorporated by reference
in the prospectus for the Fund, is available at no charge by writing Franklin
Templeton Distributors, Inc., Dealer Main Office Services, 700 Central Avenue,
St. Petersburg, Florida 33701-3628 or by calling the Shareholder Services
Department at 1-800-632-2301.
HOW A TEMPLETON CAPITAL ACCUMULATION PLAN
CAN HELP YOU MEET YOUR OBJECTIVE
Many people who want to build an investment portfolio find it difficult to
save the money necessary to make periodic stock purchases. Templeton Capital
Accumulation Plans are designed to help such people.
5
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These Plans make it possible to build equity over a period of years by
investing a modest sum each month in mutual fund shares. The mutual fund
principle is an attempt to reduce the risk inherent in any investment by
diversification and professional management.
The value of Plan shares is subject to the fluctuations in the value of the
securities in the Fund's portfolio. A Plan calls for monthly investments at
regular intervals regardless of the price level of the shares. You should
therefore consider your financial ability to continue a Plan. A Plan offers no
assurance against loss in a declining market and does not eliminate the risk
inherent in the ownership of any security. Terminating your Plan at a time
when the value of Plan shares you acquired is less than their cost will result
in a loss.
Other features of a Plan are the services rendered by the Custodian, which
performs certain bookkeeping and administrative services for the Plans. Acting
as your agent, the Custodian assumes the responsibility for many details of
the Plan. A description of the Custodian's services appears on page 12.
HOW TO START YOUR TEMPLETON CAPITAL ACCUMULATION PLAN
To start your Plan, complete the attached application and have your
investment dealer mail it to the Sponsor, together with a check made out to
Templeton Funds Trust Company. After your application is accepted by the
Sponsor, you will receive a confirmation statement showing the number of whole
and fractional shares purchased for your account.
You should then send investments in one or more multiples of the monthly
amount of your Plan directly to the Custodian. Investments, after applicable
deductions, will be applied toward the purchase of the Plan shares at the net
asset value. Investments in partial monthly amounts cannot be accepted, except
as identified in the discussion on Individual Retirement Accounts (page 10).
You may terminate your participation in the Plan, either completely or
partially, as provided on pages 6-8 ("How You Can Withdraw or Redeem Some of
Your Shares Without Terminating Your Plan") and page 8 ("You May Terminate
Your Plan and Withdraw Your Shares"). Any correspondence regarding the Plans
should be addressed to Franklin Templeton Distributors, Inc., Dealer Main
Office Services, 700 Central Avenue, St. Petersburg, Florida 33701-3628.
AUTOMATIC INVESTMENT PLAN
You may accumulate shares regularly each month by means of automatic debits
to your checking account. Forms for this purpose are in the attached
application. Such a plan is voluntary and may be discontinued by written
notice to the Sponsor, which must be received at least 10 days prior to the
collection date, or by the Sponsor upon written notice to you at least 30 days
prior to the collection date.
YOUR RIGHTS AND PRIVILEGES UNDER THE PLAN
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions will be automatically reinvested on the
payment date in additional Plan shares at net asset value on the ex-dividend
date of the dividend or distribution, unless you elect to receive cash. Net
asset value will be calculated according to the method described in the Fund's
prospectus under the heading "How to Buy Shares of the Fund".
Dividends or distributions received shortly after an investment is made may
be considered a partial return of such an investment. Dividends and capital
gains, if any, will normally be paid by the Fund at least annually and
generally will be taxable to Planholders for income tax purposes. See "Taxes"
on page 14.
The net asset value per share will decrease by the amount of the dividend
payment and capital gains distributions on the ex-dividend date of the
distributions.
HOW YOU CAN WITHDRAW OR REDEEM SOME OF YOUR SHARES WITHOUT TERMINATING YOUR
PLAN
While a redemption of all of your Plan shares will normally terminate your
Plan, you may redeem less than all of your shares without terminating the
Plan.
6
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If you have owned your Plan for at least 45 days, you may withdraw up to 90%
of your shares from your account or you may direct the Custodian, as your
agent, to redeem up to 90% of your shares and pay the proceeds to you. Any
partial redemption must involve at least $100 and cannot exceed 90% of the
value of the shares. Redemption requests that exceed 90% of the net asset
value of the shares and which leave less than $100 in the Plan will
automatically result in a full redemption of the entire balance in the Plan.
After a partial cash withdrawal, you may reinvest an amount equal to or less
than the amount withdrawn. Upon timely exercise of this reinvestment
privilege, your investment will be restored at the then current net asset
value, at no sales charge, as is prescribed by the National Association of
Securities Dealers ("NASD"). Any repayment of a partial redemption cannot be
made before 90 days from the date of redemption except for IRAs, which can be
restored after 45 days. (This allows the return of IRA assets before the 60-
day Internal Revenue Service ("IRS") deadline.) There is no limit to the
number of redemptions that can be made, each of which must be for a minimum of
$100. Full reinstatement of a partial redemption need not be made in one
transaction if the amount redeemed exceeds $500. However, any reinvestment
must be made in increments equal to the amount redeemed or $500, whichever is
less.
Redemption or withdrawal of Plan shares held in an IRA must conform to the
requirements of the IRA and the Plan's withdrawal and redemption requirements.
Distributions from such IRAs are subject to additional requirements under the
Internal Revenue Code of 1986, as amended (the "Code"), and certain documents
(available from the Custodian) must be completed before the distribution may
be made. Distributions from IRAs are subject to withholding requirements under
the Code, and the IRS Form W-4P (available from the Custodian) may be required
to be submitted to the Custodian with the distribution request, or the
distribution will be delayed. The Custodian and the Sponsor assume no
responsibility to determine whether a distribution satisfies the conditions of
applicable tax laws and will not be responsible for any penalties assessed.
All requests for withdrawal must be made in writing and signed by all
registered Planholders. Proceeds of redemptions will be mailed to the address
of record unless instructions to the contrary are received with Planholders'
signatures guaranteed. In the case of a cash withdrawal, the Custodian or the
Sponsor may require additional documentation. Reinvested redemptions will be
applied to the purchase of Plan shares at the next determined net asset value.
No partial withdrawal or redemption shall affect the total number of monthly
investments to be made or the unpaid balance of monthly investments. No charge
will be made for each partial withdrawal, redemption or restoration, but you
will be liable for any transfer taxes that may be required. Replacements of
partial withdrawals must be clearly identified as such in order to distinguish
them from regular monthly investments. A gain or loss for tax purposes may be
realized by the Planholder upon any cash withdrawal. Depending on your
circumstances, the deduction for a loss may be limited.
If the cash withdrawal is more than $50,000, is made payable to an
individual other than the Planholder of record, or is to be sent to an address
other than the address of record, a letter of instruction will be required,
signed by all Planholders with signatures 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. A signature guarantee is
not required for cash withdrawals of $50,000 or less, requested by and payable
to all Planholders of record, to be sent to the address of record for that
account. However, the Sponsor reserves the right to require signature
guarantees on all cash withdrawals. A signature guarantee is required in
connection with any request for transfer of Plan shares. Also, a signature
guarantee is required if the Sponsor or the Custodian believes that a
signature guarantee would protect against potential claims based on the
withdrawal 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 Custodian, (c)
the Custodian has been notified of an adverse claim, (d) the instructions
received by the Custodian are given by an agent, not the actual registered
owner, (e) the Custodian 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 Custodian.
All documents must be in proper order before any withdrawals or redemptions
can be executed. The redemption price will be the net asset value next
determined after such documents have been received in good order. Your request
should be sent to Templeton Funds Trust Company, P.O. Box 33030, St.
Petersburg, Florida 33733-8030.
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Ordinarily you will receive cash as a result of redeeming your shares under
this or any of the options described below within seven days after your
request is received by the Custodian. However, the Custodian will not mail
redemption proceeds until checks received for the shares purchased have
cleared. The payment period may be extended if the Custodian's right to redeem
shares of the Fund has been suspended or restricted. This will only happen if
the New York Stock Exchange is closed, other than for customary weekends or
holidays, if trading is restricted on the Exchange, or if any emergency is
deemed to exist by the Securities and Exchange Commission.
YOU MAY TRANSFER OR ASSIGN YOUR RIGHTS IN THE PLAN
You may transfer your rights to another person; for example, a relative,
charitable institution, or trust. You can do this in several ways:
(1) You can transfer your right, title and interest to another person whose
only right shall be the privilege of complete and prompt withdrawal from the
Plan.
(2) You can transfer your entire right, title and interest to another
person, trustee or custodian acceptable to the Sponsor, who has made
application to the Sponsor for a similar Plan.
The Custodian will provide you with the appropriate assignment form.
Transfers may be subject to income and other taxes.
CANCELLATION AND REFUND RIGHTS
You have certain rights of cancellation. Within 60 days after you purchase a
Plan (which, for this purpose, is the date appearing on the confirmation
statement you will receive following your initial payment), the Custodian will
send a notice to you regarding your cancellation rights. If you elect to
cancel within 45 days of the mailing date of that notice, you will receive a
cash refund equal to the sum of (1) the total net asset value of the Plan
shares credited to your account on the date that your cancellation request is
received by the Custodian and (2) an amount equal to the difference between
the gross amount invested and the net amount invested in Plan shares.
In addition, you may surrender your Plan at any time within an eighteen-
month period beginning on the purchase date of your Plan and receive from the
Custodian a cash payment equal to the sum of (1) the total net asset value of
the Plan shares credited to your account on the date of the surrender plus (2)
a refund of all sales charges paid to the date of surrender minus 15% of the
gross amount you have invested as of that date. Planholders who execute their
Plans in certain states may have up to twenty-eight months to exercise this
refund right. In order to receive the above payment, your request should be
sent in writing to Templeton Funds Trust Company, P.O. Box 33030, St.
Petersburg, Florida 33733-8030. In addition, a cancellation request involving
more than $50,000 will require a signature guarantee for all registered owners
as described above.
If you surrender your Plan under this cancellation and refund privilege, you
may not reinstate your Plan at net asset value. In addition, under the so-
called "wash sale rule," Federal tax laws presently do not permit the
recognition of a loss when an individual sells and re-acquires the same
securities within a 30-day time period before or after the loss is incurred.
Gains, however, are recognized for tax purposes at the time of redemption.
The Custodian will send you a written notice of your eighteen-month rights
of cancellation if one or the other of the following occur:
(1) If, after fifteen months from the date of establishment, you have missed
three investments or more, or
(2) If you miss one investment or more after the expiration of the fifteen-
month period but prior to the expiration of the eighteen-month period. (If the
Custodian has already sent a notice at 15 months, a second notice will not be
required even if additional investments are missed.)
These notices will inform you of your rights of cancellation as set forth in
the preceding paragraph, of the value of your account at the time the notice
is sent, and of the amount to which you are entitled pursuant to the
provisions of the preceding paragraph.
YOU MAY TERMINATE YOUR PLAN AND WITHDRAW YOUR SHARES
A Plan may be terminated at any time by a written request to the Custodian.
In terminating your Plan, you may request the Custodian to withdraw your
shares, redeem them and send you the proceeds. If the amount of the redemption
is more than $50,000, is made payable to an individual other than the
Planholder of record, or is to be sent to an address other than the address of
record, your request, signed by all registered owners, must be signature
8
<PAGE>
guaranteed as described above. All documents must be in good order before a
redemption can be executed. The redemption price will be the net asset value
next determined after such documents have been received.
If you choose to receive Fund shares instead of cash, the Plan shares may be
exchanged for shares of the Fund and then further exchanged for shares of
certain other funds for which TICI or an affiliate is the investment manager.
The Exchange Privilege is more fully described in the Fund prospectus under
the caption "Exchange Privilege." You should note that if you elect to
exchange your shares of the Fund for shares of other funds in the Franklin
Group of Funds (R) or the Templeton Funds, the shares of such other funds
cannot thereafter be exchanged back into shares of the Fund.
The right of redemption of shares of the Templeton Capital Accumulation Plan
and the underlying Fund may be suspended at times when trading on the New York
Stock Exchange is restricted or such Exchange is closed for other than
weekends and holidays or any emergency is deemed to exist by the Securities
and Exchange Commission. As long as the right of redemption of shares of the
Fund is suspended, no shares may be redeemed, and therefore no cash withdrawal
may be made during that period.
REPLACEMENT PRIVILEGE ON TERMINATION
If you have terminated your Plan, you may exercise a replacement privilege
which allows you to reinvest an amount equal to but not less than 10% of the
net asset value of the redeemed shares without any sales charge in a re-opened
identically registered Templeton Capital Accumulation Plan. Reinvestment is
made at the net asset value per share next determined following the timely
receipt by the Custodian of a replacement order and payment. Replacement must
be made within 60 days following the date of termination of the Plan; however,
while you may be required to recognize a gain on a termination, you may not
recognize a loss for Federal tax purposes to the extent you reinvest the
proceeds in a Templeton Capital Accumulation Plan within 30 days or less.
The replacement privilege is available to you only if you have not
previously exercised the privilege as to your Plan. The replacement privilege
does not abrogate the partial withdrawal without termination privilege
described on pages 6-8. If you have redeemed your Plan shares under the
procedures described under "Cancellation and Refund Rights" on page 8, you may
not reinstate at net asset value the proceeds from such a cancellation or
refund until all refunded Sales and Creation Charges have been deducted from
the amount offered for the reinstatement.
YOU RETAIN FULL VOTING RIGHTS IN YOUR FUND SHARES
You will receive a notice at least 10 days before any matter is submitted to
a vote of the stockholders of the Fund. The Custodian will vote the shares
held for your account in accordance with your instructions. In the absence of
such instructions, the Custodian will vote your shares in the same proportion
as it votes the shares for which it has received instructions from other
Planholders.
If you wish to attend any meetings at which shares may be voted, you may
request the Custodian to furnish you with a proxy or otherwise arrange for you
to exercise your voting rights.
YOU MAY MAKE INVESTMENTS AHEAD OF SCHEDULE TO COMPLETE YOUR PLAN EARLY
You may complete your Templeton Capital Accumulation Plan ahead of schedule
by making investments in advance of their due date, but not more than 24
monthly investments may be made in one calendar year. In addition to such
advance investments, you may also prepay up to 24 monthly units at any time
during the life of your Plan. Monthly investment units may be accrued and paid
in a lump sum. There is no reduction in the Sales and Creation Charge for
advance investments. These prepayment rules shall be waived only to make a
Plan that is in arrears current (as defined in the section titled "You May
Qualify for Reduced Sales Charges" on page 11) or for the transfer or rollover
into an IRA.
In the event of death of the Planholder, these advance investment
restrictions will be waived to allow the Plan to be completed at one time by
survivors of the Planholder or representatives of the estate.
YOU MAY WITHDRAW A FIXED AMOUNT MONTHLY OR QUARTERLY--WHEN YOU HAVE COMPLETED
YOUR PLAN
When you complete all regularly scheduled investments, you may elect a
Systematic Cash Withdrawal Program. Under this Program, the Custodian, as your
agent, will redeem sufficient shares from your account to provide regular cash
withdrawal payments of $50 or more each month or quarter, as you elect.
9
<PAGE>
A Systematic Cash Withdrawal Program may also be elected from an incomplete
Plan if the Plan is part of an IRA and you have reached age 70 1/2. Under this
program, the Custodian, as your agent, will redeem as of the twenty-fifth day
of each month (or the first business date after that date) sufficient shares
from your account to provide a regular cash withdrawal payment of $50 or more
each month or quarter, as you elect.
Except for the $50 minimum, there is no limitation on the size of your
withdrawals. The $50 amount is, however, only a minimum established for
administrative convenience and should not be considered as a recommendation.
You have the right to change the dollar amount of your withdrawal or
discontinue your Systematic Cash Withdrawal Program at any time.
You should realize that withdrawals in excess of dividends and distributions
will be made from principal and may eventually exhaust your account. For this
reason, these withdrawals cannot be considered as income on your investment.
Also, a gain or loss for tax purposes may be realized by you on each
withdrawal payment.
If you purchase two or more Plans, it is ordinarily disadvantageous to
participate in the Systematic Cash Withdrawal Program on a completed Plan
while still making regular payments on the uncompleted Plan. If you are
participating in a Systematic Cash Withdrawal Program, you should not start
another Templeton Capital Accumulation Plan. There are no charges made for any
regular withdrawals under a Systematic Cash Withdrawal Program.
The Plan will remain in full force and effect with all rights and privileges
until all shares have been withdrawn from your account. While the Systematic
Cash Withdrawal Program is in force, you may not elect to receive dividends
and distributions in cash.
While FTD does not contemplate doing so, it reserves the right to
discontinue offering the Systematic Cash Withdrawal Program at any time after
90 days' notification to all Planholders who have not elected to participate
in such program. Those who are already participating will be allowed to
continue.
YOU MAY CONTINUE INVESTMENTS AFTER COMPLETING A 15-YEAR PLAN--EXTENDED
INVESTMENT OPTION
Under the Extended Investment Option, you may continue making monthly
investments after completing all scheduled investments in your 15-year Plan.
Investments under this option are subject to the same sales charges as applied
to your last scheduled investment.
If under this option you fail to make regularly scheduled investments for
six consecutive months, after being credited for any advance made under the
option, you forfeit your right to make such additional investments. All
Extended Investment Options will terminate on the earlier of 25 years after
the date of establishment of the original Plan or the date the 300th monthly
investment is made under your Plan.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Under current tax laws you may be eligible to establish an IRA. An IRA
Agreement is available through Franklin Templeton Trust Company (FTTC), an
affiliate of TFTC. The Agreement provides for investments in the Plans. It
also provides that FTTC shall furnish custodial services to the participant
for service fees chargeable to the participant. FTTC presently deducts an
annual service fee of $10.00 for maintenance of the account, unless it is paid
separately. FTTC is qualified under IRS regulations to act as an IRA
custodian.
An individual may initiate an account by executing the IRA Application and
by making the initial Plan investment. Under current law, a participant's
maximum annual contribution is limited to the lesser of 100% of compensation
or $2,000. If a second account is established with a non-working spouse the
total contribution for both accounts would be a maximum of $2,250.
Contributions to an IRA by an individual who participates, or whose spouse
participates, in a tax-qualified or government-approved retirement plan may or
may not be deductible depending on their income. Contributions in excess of
these limits, premature distributions, and/or insufficient withdrawals after
age 70 1/2 may result in substantial adverse tax consequences. "Rollover
contributions," as defined in IRS regulations, are also allowed.
10
<PAGE>
In addition to the regular monthly investment schedules, you may once each
year invest an odd amount not equal to the monthly plan amount in order to
complete exact contributions totals authorized by the IRS for the IRA being
used. Such odd amounts should be specifically identified to the Custodian,
when forwarded, in order to prevent rejection. Odd amounts, not in exact
multiples of the monthly investment unit, will be accepted for all rollovers
and transfers into IRAs.
All contributions are invested on the day of receipt by the Custodian. If
revocation of the account is requested in writing within seven days after
payment of an initial contribution, the individual will receive the greater of
the net asset value of his account or the amount contributed (including the
Sales and Creation Charge).
SALES AND CREATION CHARGES
The Sponsor receives a Sales and Creation Charge to compensate it for
creating your Plan and for selling expenses and commissions to dealers, which
is deducted from each investment. For example, on a $100 a month Plan, $50 is
deducted from each of the 12 monthly investment units made during the first
year. After the 12th payment, the charge drops to $6.07 on each subsequent
monthly unit. Deductions decrease proportionately on certain larger plans. See
"Allocation of Investments and Deductions" on page 3.
PURCHASING TWO OR MORE PLANS
The face amounts of two or more Plans purchased at one time by "any person"
may be combined to take advantage of the lower Sales and Creation Charges
available on large purchases.
The term "any person" includes an individual, his or her spouse, their
children under the age of 21 and their grandchildren under age 21 who are
beneficiaries of a Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act account in which the Planholder serves as custodian, or a trustee or other
fiduciary of a single trust estate or single fiduciary account (including a
pension, profit-sharing or other employee benefit trust created pursuant to a
Plan qualified under Section 401 of the Code). To qualify for these savings,
all of the applications for the Plans involved must be submitted
simultaneously with a covering letter requesting that the face amount of such
Plans be combined for the purpose of determining the applicable Sales and
Creation Charge as shown on page 4.
In the event investments are discontinued on one or more of the Plans which
have been combined under the foregoing provisions, the remaining Sales and
Creation Charge for the Plans that are continued will be changed to reflect
the charges applicable to such Plans.
YOU MAY QUALIFY FOR REDUCED SALES CHARGES
When purchasing any new Plan(s) or increasing the face amount of any
existing Plan(s), "any person" as defined above may qualify for a reduced
sales charge on the new purchase by combining the face amount of any existing
Plan(s) on which investments are current with the face amount of the new
purchase. A new purchase includes the face amount of new Plans and the face
amount of Plans on which an increase in Plan size is requested. For rights of
accumulation, a Plan is considered to be current if: (1) it has been completed
and not redeemed; (2) it has not been completed but has at least as many
investments recorded as there are months since the establishment date or since
a plan size increase date; or (3) it is a tax qualified plan or an IRA.
Further spousal IRA Plans at $93.75 per month and individual IRA Plans at
$166.66 per month may become eligible for lower sales charges if such Plans
are included as part of the basis for reduced sales charges on new Plans or
Plan size increases on existing Plans. In addition, the Sponsor must be
notified by the dealer or the purchaser at the time of the placing of the
order that the purchaser qualifies for the reduced Sales and Creation Charge.
CHANGING THE FACE AMOUNT OF YOUR PLAN
The face amount of your Plan may be changed under the following
circumstances:
(1) The face amount of a Plan may be increased at any time, provided the new
Plan size is a denomination offered.
(2) The face amount of a new Plan may be decreased by 50% within six months
of the commencement of your original Plan or within six months following a
face change increase on an existing Plan. If a decrease is to occur on an
existing Plan, the decrease cannot retreat lower than the original Plan from
which the increase occurred.
11
<PAGE>
Both increases and decreases can be made by a written notice to the Sponsor,
accompanied by a new completed Plan application. The Sales and Creation
Charges already paid on the existing Plan will be recomputed to reflect a new
Plan denomination.
The Sales and Creation Charges already paid on the existing Plan will be
credited to the Sales and Creation Charge applicable to the new denomination.
Excess Sales and Creation Charges will be invested at net asset value on the
day the change occurs while amounts still due will be deducted as an expense
to the new Plan account.
THE CUSTODIAN--TEMPLETON FUNDS TRUST COMPANY
THE PLAN
The organization, management and investment policies of Templeton Capital
Accumulator Fund, Inc. are fully described in the attached Fund prospectus and
a Statement of Additional Information which is available on request from the
Sponsor. If practicable, shares of the Plan are credited to accounts at net
asset value after applicable deductions are made on the date the Custodian
receives Plan investments.
Dividends and distributions received on Fund shares will be reinvested by
the Custodian in additional Plan shares at the then current net asset value,
unless you elect to receive cash.
THE PLAN CUSTODIAN--THE THIRD PARTY WORKING TO RELIEVE YOU OF THE DAY-TO-DAY
DETAILS OF INVESTING
Templeton Funds Trust Company, organized as a trust company under the laws
of the State of Florida, is the Custodian for the Plans under a Custodian
Agreement with the Sponsor dated June 1, 1993 and maintains custody of the
assets of the Plans. The Plan Custodian Agreement is governed by Florida law,
except in the event, and to the extent, that such law is determined to
conflict with the Investment Company Act of 1940.
Investments under your Plan should be payable to and sent to the Custodian.
After making authorized deductions, the Custodian applies the remaining
balance to the purchase of Plan shares. The Custodian holds these shares in
its custody, receiving dividends and distributions which are automatically
reinvested in additional Plan shares at no charge, unless you elect to receive
cash.
The Custodian has assumed only those obligations specifically imposed on it
under its Custodian Agreement with the Sponsor. These obligations do not
include the duties of investment ordinarily imposed upon a trustee. The
Custodian has no responsibility for the choice of the underlying investment,
for the investment policies and practices of Templeton Capital Accumulator
Fund, Inc., or for the acts or omissions of the Sponsor or the Investment
Manager.
The Custodian Agreement cannot be amended to adversely affect the rights and
privileges of the Planholders without their written consent. Neither may the
Custodian resign unless a successor has been designated and has accepted the
Custodianship. Such successor must be a bank or trust company having capital,
surplus and undivided profits totalling at least $2,000,000. The Custodian may
be changed without notice to, or approval of, Planholders. The Custodian may
terminate its obligation to accept new Plans for custodianship if the Sponsor
fails to perform certain activities it is required to perform under the
Custodian Agreement or if the Custodian terminates the Agreement upon 90 days'
notice to the Sponsor. The Custodian Agreement provides that the Sponsor shall
indemnify and hold the Custodian harmless from all liability which may arise
from the failure of the Sponsor to comply with any law, rule, regulation, or
order of the United States, any state, or other jurisdiction relating to the
sale, registration, or qualification of securities.
THE SPONSOR--FRANKLIN TEMPLETON DISTRIBUTORS, INC.
The Sponsor, a New York corporation organized on November 19, 1947, is a
wholly owned subsidiary of Franklin Resources, Inc. It is a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the NASD.
The Sponsor is the principal underwriter of the investment companies in the
Franklin Group of Funds (R) and the Templeton Funds. The following sets forth
the directors and executive officers of the Sponsor:
12
<PAGE>
Charles B. Johnson, Chairman of the Board, is Director, President and Chief
Executive Officer of Franklin Resources, Inc. ("Franklin Resources") and
Chairman of the Board of Franklin Advisers, Inc. ("Franklin Advisers").
Gregory E. Johnson, President, is Vice President of Franklin Advisers.
Rupert H. Johnson, Jr., Director and Executive Vice President, is Director
and Executive Vice President of Franklin Resources, Director and President of
Franklin Advisers, and Chairman of the Board of Franklin Management, Inc.
("Franklin Management").
Harmon E. Burns, Director and Executive Vice President, is Director,
Executive Vice President and Secretary of Franklin Resources and Executive
Vice President of Franklin Advisers.
Kenneth V. Domingues, Senior Vice President, is Senior Vice President of
Franklin Resources and Franklin Advisers.
Kenneth A. Lewis, Treasurer.
William J. Lippman, Senior Vice President, is Senior Vice President of
Franklin Resources, Franklin Advisers, and Franklin Management.
Loretta Fry, Vice President, is Vice President of Franklin Resources and
Franklin Advisers.
Deborah R. Gatzek, Senior Vice President and Assistant Secretary, is Senior
Vice President and Assistant Secretary of Franklin Resources and Vice
President and Assistant Secretary of Franklin Advisers.
Charles E. Johnson, Senior Vice President, is Senior Vice President of
Franklin Resources and Vice President of Franklin Advisers.
Leslie M. Kratter, Secretary, is Vice President and Assistant Secretary of
Franklin Resources and Secretary of Franklin Advisers and Franklin Management.
Richard C. Stoker, Senior Vice President, is Vice President of Franklin
Management.
Philip J. Kearns, Vice President, is Vice President of Franklin Agency, Inc.
Jack Lemein, Vice President, is Senior Vice President of Franklin Advisers
and Vice President of Franklin Management.
Thomas M. Mistele, Vice President, is Senior Vice President of Templeton
Global Investors, Inc. and Secretary of the Templeton Funds.
Harry G. Mumford, Jr., Vice President, is Executive Vice President of
Franklin Institutional Services Corporation.
Vivian J. Palmieri, Vice President, is Vice President of Franklin Advisers.
Other Senior Vice Presidents of the Sponsor include Edward V. McVey.
Other Vice Presidents of the Sponsor include, James K. Blinn, Richard O.
Conboy, Jimmy A. Escobedo, Robert N. Geppner, Mike Hackett, Peter Jones, Ken
Leder, John R. McGee, Kent P. Strazza.
All officers and employees of the Sponsor are covered by a blanket bond in
the amount of $130,000,000.
13
<PAGE>
TAXES
For Federal income tax purposes, Planholders are treated as directly owning
the Fund's shares. Designated capital gain distributions, which are
automatically reinvested in additional shares, are treated as long-term
capital gains. The tax cost of the shares acquired is the amount paid for
those shares, including the Sales and Creation Charge.
As more fully described under "Federal Tax Information" in the prospectus of
the Fund, dividends and distributions are taxable to you individually. Gains
realized on cash withdrawals also generally will be subject to tax; the
ability to deduct losses from such withdrawals may be limited. An appropriate
notice regarding taxes will be sent to you each year.
Any taxes payable with respect to any of the profits realized on sales or
transfers by the Custodian or the Sponsor of Plan shares or other property
credited to your account in accordance with the provisions of your Plan and
any taxes levied or assessed with respect to Plan shares or the income
therefrom shall be borne by you individually and not by the Custodian or the
Sponsor.
SUBSTITUTION OF THE UNDERLYING INVESTMENT
The Sponsor may substitute the shares of one other investment medium as the
underlying investment if it deems such action to be in the best interests of
Planholders. Such substituted shares shall be generally comparable in
character and quality to the present Fund shares, and shall be registered with
the Securities and Exchange Commission under the Securities Act of 1933.
Before any substitution can be effected, the Sponsor must:
(1) obtain an order from the Securities and Exchange Commission approving
such substitution under the provisions of Section 26(b) of the
Investment Company Act of 1940, as amended;
(2) give written notice of the proposed substitution to the Custodian;
(3) give written notice of the proposed substitution to each Planholder,
giving a reasonable description of the new Fund shares, with the advice
that, unless the Plan is surrendered within 30 days of the date of
mailing such notice, the Planholder will be considered to have
consented to the substitution and to have agreed to bear his pro rata
share of expenses and taxes in connection with it; and
(4) provide the Custodian with a signed certificate stating that such
notice has been given to Planholders.
If your Plan account is not surrendered within 30 days from the date of such
notice, the Sponsor shall purchase the new shares for your account with the
proceeds of any Plan payments and any dividends or distributions which may be
reinvested for your account. If the new shares are also to be substituted for
the shares already held, the Sponsor must arrange to have the Custodian
furnished, without payment of a sales charge or fees of any kind, with new
shares having an aggregate value equal to the value of the shares for which
they are to be exchanged. A substitution may be a taxable event for
Planholders.
If the Fund shares are not available for purchase for a period of 120 days
or longer, and the Sponsor fails to substitute other shares, the Custodian
may, but is not required to, select another underlying investment. If the
Custodian selects a substitute investment, it shall first obtain an order from
the Securities and Exchange Commission approving such substitution as
specified above and then shall notify the Planholder, and if, within 30 days
after mailing such notice, the Planholder gives his written approval of the
substitution and agrees to bear his pro rata share of actual expenses,
including tax liability sustained by the Custodian, the Custodian may
thereafter purchase such substituted shares. The Planholder's failure to give
such written approval within the 30-day period shall give the Sponsor the
authority to terminate the Plan.
If the Fund shares are not available for purchase for a period of 120 days
or longer, and neither the Sponsor nor the Custodian substitutes other shares,
the Custodian shall have authority, without further action on its part, to
terminate the Plan.
TERMINATION OF YOUR PLAN
Although your Plan may call for regular investments over a 15-year period,
neither the Sponsor nor the Custodian can elect to terminate your Plan until
300 investments have been made unless it has been in default for more than six
months or unless shares of the Plan are not obtainable and a substitution is
not made.
14
<PAGE>
The period of default will not start until you have been given full credit
for a period equal to the amount of any advance investments you have made.
Under current policies, for all Plans established subsequent to January 1,
1995, only one investment is required during each six month period to prevent
your Plan from being terminated. For Plans in existence prior to January 1,
1995, only one investment is required during each 12-month period to prevent
your Plan from being terminated.
After 300 investments, or if other events justify termination, the Sponsor
or the Custodian has the right to terminate your Plan 60 days after mailing a
written notice to you.
On termination, the Custodian (as your agent) may surrender for liquidation
all of the Plan shares credited to your account, or sufficient Plan shares to
pay all authorized deductions and leave no fractional shares. The shares
and/or cash, after paying all authorized deductions, will be held by the
Custodian for delivery to you against the surrender of your Plan.
No interest will be paid by the Custodian on any such cash balances. If the
Plan is not surrendered within 60 days after the notice of termination, the
Custodian, at its discretion, may at any time thereafter fully discharge its
obligations by mailing the shares or its check, drawn in accordance with the
terms of your account, to the address noted in the account. You will then have
no further rights under the Plan except that if the check or shares are
returned to the Custodian undelivered, the Custodian will continue to hold
these assets for the benefit of your account, subject only to escheat laws.
GENERAL
The Plan is considered to be a unit investment trust under the Investment
Company Act of 1940, and is so registered with the Securities and Exchange
Commission. Such registration does not imply supervision of management or
investment practices or policies by the Commission.
Commissions ranging from 75% to 95% of the total Sales and Creation Charges
will be paid to authorized investment brokers and mutual fund dealers who are
members of the NASD, and who have executed a dealer's agreement with the
Sponsor. The Sponsor, acting as Principal Underwriter, may from time to time
pay a bonus or other incentive to dealers which employ registered
representatives who sell a specified minimum dollar amount of the Plans and/or
of certain other mutual funds managed by the Investment Manager and its
affiliates during a specified period of time. Such bonus or other incentives
may take the form of payment for travel expenses, including lodging, incurred
in connection with trips taken by qualifying registered representatives and
members of their families to places within or without the United States. In no
event will the value of such bonus or incentive paid by the Sponsor to the
dealer exceed the difference between the Sales and Creation Charges and the
amount reallowed to dealers in respect of such amounts sold by the qualifying
registered representative of such dealer. A dealer receiving such bonus or
incentive may be deemed to be an "underwriter" under the Securities Act of
1933. These dealers and investment brokers are independent contractors.
Nothing herein or in other literature and confirmations issued by the Sponsor
or the Custodian, including the words "representative" or "commission," shall
constitute any broker-dealer or investment broker a partner, employee or agent
of the Sponsor or the Custodian. Neither the Sponsor nor the Custodian shall
be liable for any acts or obligations of any such dealer or investment broker.
Plans are offered in all states where it is lawful to do so.
ILLUSTRATION OF A HYPOTHETICAL $93.75 MONTHLY TEMPLETON CAPITAL ACCUMULATION
PLAN
WITH INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS REINVESTED IN ADDITIONAL
SHARES
The table below covers the period from March 29, 1991 to August 31, 1995
<TABLE>
<CAPTION>
AMOUNT OF PAYMENT AMOUNT INVESTED
FISCAL ------------------------ ------------------------
PERIOD DURING FISCAL SALES DURING FISCAL SHARES SHARES PURCHASED TOTAL SHARES TOTAL VALUE
ENDED PERIOD CUMULATIVE CHARGES(A) PERIOD CUMULATIVE PURCHASED THROUGH REINVESTMENT PURCHASED OF SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/31/91(b) $ 562.50 $ 562.50 $281.22 $ 281.28 $ 281.28 27.662 -- 27,662 $ 288.24
8/31/92 1,125.00 1,687.50 315.36 809.64 1,090.92 74.322 0.618 102,602 1,123.49
8/31/93 1,125.00 2,812.50 68.28 1,056.72 2,147.64 89.979 3.123 195,704 2,802.89
8/31/94 1,125.00 3,937.50 68.28 1,056.72 3,204.36 70.372 4.523 270,599 4,386.41
8/31/95 1,125.00 5,062.50 68.28 1,056.72 4,261.08 68.956 6.444 345,999 5,515.22
</TABLE>
(a) Under the terms of this Plan, out of an investment of $93.75 made during
the first year of the Plan, $46.87 is deducted as a sales charge.
Thereafter, the sales charge on such amount is reduced to $5.69.
(b) Period from March 29, 1991 (commencement of operations) through August 31,
1991.
15
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Franklin Templeton Distributors, Inc., Sponsor
and the Planholders of Templeton Capital
Accumulation Plans
We have audited the accompanying statement of assets and liabilities of
Templeton Capital Accumulation Plans as of August 31, 1995 and the related
statements of operations and changes in net assets for each of the three years
in the period then ended. These financial statements are the responsibility of
the management of the Plan's Sponsor. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation from the custodian of shares of Templeton
Capital Accumulator Fund, Inc. held for planholders as of August 31, 1995. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Templeton Capital
Accumulation Plans as of August 31, 1995, and the results of its operations
and the changes in its net assets for the periods indicated, in conformity
with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
September 29, 1995
16
<PAGE>
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
<TABLE>
<S> <C>
ASSETS:
Templeton Capital Accumulator Fund, Inc. shares, at value (average
cost, $30,012,846).............................................. $64,558,379
LIABILITIES: --
-----------
NET ASSETS:
Net assets (equivalent to $15.94 per share based on 4,049,832 Plan
shares held for outstanding Plans).............................. $64,558,379
===========
</TABLE>
STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Distributions received on shares of
Templeton Capital Accumulator Fund Inc.
from:
Net investment income..................... $ 503,913 $ 205,500 $ 189,418
Realized gains............................ 1,511,116 266,694 59,816
---------- ---------- ----------
$2,015,029 $ 472,194 $ 249,234
---------- ---------- ----------
Expenses.................................... -- -- --
---------- ---------- ----------
Net investment income..................... $2,015,029 $ 472,194 $ 249,234
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on complete and partial
terminations, including Fund Shares
withdrawn at market value.................. $ 205,940 $ 343,272 $ 48,885
Unrealized appreciation during the period... 217,321 4,284,121 3,159,959
---------- ---------- ----------
Net gain on investments................... $ 423,261 $4,627,393 $3,208,844
---------- ---------- ----------
Net increase in net assets from operations.. $2,438,290 $5,099,587 $3,458,078
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED AUGUST 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
Operations:
Net investment income................. $ 2,015,029 $ 472,194 $ 249,234
Net realized gain on investments...... 205,940 343,272 48,885
Unrealized appreciation for the peri-
od................................... 217,321 4,284,121 3,159,959
----------- ----------- -----------
Net increase in net assets from op-
erations........................... 2,438,290 5,099,587 3,458,078
Distributions to planholders.......... (2,015,029) (472,194) (249,234)
Transactions in Fund shares (Note 2).. 26,322,220 15,029,076 6,424,111
----------- ----------- -----------
Net increase in net assets.......... 26,745,481 19,656,469 9,632,955
NET ASSETS:
Beginning of period................... 37,812,898 18,156,429 8,523,474
----------- ----------- -----------
End of period......................... $64,588,379 $37,812,898 $18,156,429
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
Templeton Capital Accumulation Plans (the "Plan") is a unit investment trust
registered under the Investment Company Act of 1940. The Plan invests only in
shares of Templeton Capital Accumulator Fund, Inc. (the "Fund"). The following
is a summary of the significant accounting policies followed in the
preparation of its financial statements.
a. VALUATION OF SECURITIES. The Plan's investments in the Fund are valued
at the net asset value of Fund shares held.
b. INCOME TAXES. No provision is made for Federal income taxes. The
Internal Revenue Code provides that the Plan is not treated as a
separate taxable entity; rather the Planholders are treated as directly
owning the Fund's shares accumulated in their accounts.
c. OTHER. Share transactions are recorded on the trade date. Dividend
income and capital gain distributions are recorded on the ex-dividend
date. The cost of the Plan's investment in Fund shares is computed using
the average cost method and gain or loss on redemption of Fund shares is
computed using this method.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 2. TRANSACTIONS IN FUND SHARES
As of August 31, 1995, the Plan held 4,049,832 shares of the Fund.
Transactions in Fund shares for the years ended August 31, 1995, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------------------- ---------------------- --------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
----------- --------- ----------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Planholder payments..... $33,284,142 $19,886,896 $9,966,867
Less-sales charges...... 6,526,442 3,832,783 2,184,173
----------- --------- ----------- ----------
Balance invested in Fund
shares................. 26,757,700 1,748,783 16,054,113 1,072,509 7,782,694 666,832
Distributions reinvested
in Fund shares......... 2,015,029 133,499 472,194 33,224 249,234 23,430
Redemption and
withdrawals in Fund
shares................. (2,450,509) (165,571) (1,497,231) (94,041) (1,607,817) (147,232)
----------- --------- ----------- --------- ---------- --------
$26,322,220 1,716,711 $15,029,076 1,011,692 $6,424,111 543,030
=========== ========= =========== ========= ========== ========
</TABLE>
NOTE 3. SPONSOR AND CUSTODIAN
Franklin Templeton Distributors, Inc., as Sponsor of the Plan (and, prior to
October 30, 1992, Templeton Funds Distributor Inc., the previous Sponsor)
received net sales and creation charges, after commissions paid to authorized
brokers and dealers, of $575,554, $336,780, and $185,919 for the years ended
August 31, 1995, 1994 and 1993, respectively. Templeton Funds Trust Company
("TFTC") serves as Custodian. No other compensation is paid by the Plan to
either the Sponsor or the Custodian except that TFTC receives a $10 annual
service fee from each Individual Retirement Account established by
planholders.
NOTE 4. SOURCE OF NET ASSETS
The Plan's net assets as of August 31, 1995 were composed of the following
amounts:
<TABLE>
<S> <C>
Amount paid in by planholders, net of sales and creation charges... $58,960,635
Distributions reinvested........................................... 2,809,514
Payment of redemption proceeds to planholders...................... (5,840,546)
Accumulated gain on sale of Fund shares............................ 611,403
Unrealized appreciation (depreciation) of investments.............. 8,017,373
-----------
Net assets applicable to planholders............................... $64,558,379
===========
</TABLE>
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Franklin/Templeton Distributors, Inc.:
We have audited the accompanying statement of financial condition of
Franklin/Templeton Distributors, Inc. (a wholly-owned subsidiary of Franklin
Resources, Inc.) as of September 30, 1995, and the related statements of
income, stockholder's equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Franklin/Templeton
Distributors, Inc. as of September 30, 1995, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
San Francisco, California
October 27, 1995
21
<PAGE>
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF FINANCIAL CONDITION
SEPTEMBER 30, 1995
----------------
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents......................................... $30,589,578
Receivables:
Due from Franklin Templeton Group of Funds...................... 20,382,973
Parent.......................................................... 11,460,749
Prepaid expenses and other........................................ 7,995,919
Premises and equipment, at cost (net of accumulated depreciation
of $2,375,721)................................................... 2,137,216
-----------
Total assets.................................................. $72,566,435
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Dealer commissions payable...................................... $17,518,961
Trade payables and accrued expenses............................. 2,532,059
Deferred taxes.................................................. 1,060,389
-----------
Total liabilities............................................. 21,111,409
-----------
Commitments (Note 3)
Stockholder's equity:
Common stock, $1.00 par value, 20,000 shares authorized; 2,355
shares issued and outstanding.................................. 2,355
Capital in excess of par value.................................. 80,564,072
Accumulated deficit............................................. (29,111,401)
-----------
Total stockholder's equity.................................... 51,455,026
-----------
$72,566,435
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1995
----------------
<TABLE>
<S> <C>
OPERATING REVENUES:
Underwriting commissions, net of $365,347,758 paid to dealers... $ 47,725,149
Investment income............................................... 2,184,550
Other........................................................... 224,915
------------
Total operating revenues...................................... 50,134,614
------------
OPERATING EXPENSES:
Selling......................................................... 50,262,458
General and administrative...................................... 71,522,921
Other........................................................... 269,788
------------
Total operating expenses...................................... 122,055,167
------------
Operating loss................................................ (71,920,553)
------------
OTHER INCOME (EXPENSES):
Interest expense................................................ (39,195)
------------
Other expenses net............................................ (39,195)
------------
Loss before taxes............................................... (71,959,748)
Income tax benefit.............................................. 25,153,544
------------
Net loss.......................................................... $(46,806,204)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1995
----------------
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN TOTAL
------------- EXCESS OF RETAINED STOCKHOLDER'S
SHARES AMOUNT PAR VALUE EARNINGS EQUITY
------ ------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1994. 2,355 $2,355 $40,564,072 $ 17,695,025 $58,261,452
Parent capital
contribution............ -- -- 40,000,000 -- 40,000,000
Net loss................. -- -- -- (46,806,204) (46,806,204)
Other.................... (222) (222)
----- ------ ----------- ------------ -----------
Balance, September 30,
1995.................... 2,355 $2,355 $80,564,072 $(29,111,401) $51,455,026
===== ====== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
NET LOSS........................................................ $(46,806,204)
Adjustments to reconcile net loss to net cash used in
operating activities:
Increase in receivables..................................... (6,257,543)
Increase in prepaid expenses and other...................... (4,725,285)
Increase in dealer commissions payable...................... 8,428,461
Decrease in trade payables and accrued expenses............. (938,888)
Depreciation................................................ 337,673
------------
NET CASH USED IN OPERATING ACTIVITIES........................... (49,961,888)
------------
Purchases of premises and equipment........................... (1,331,473)
------------
NET CASH USED IN INVESTING ACTIVITIES........................... (1,331,473)
------------
Decrease in receivables, parent................................. 38,639,590
------------
NET CASH USED IN FINANCING ACTIVITIES........................... 38,639,590
------------
Decrease in cash and cash equivalents........................... (12,653,769)
Cash and cash equivalents, beginning of year.................... 43,243,347
------------
Cash and cash equivalents, end of year.......................... $ 30,589,678
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest...................................................... $ 39,195
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING AC-
TIVITIES:
The Company received a $40,000,000 capital contribution from its
parent, through a reduction in the intercompany payable to its
parent.
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS
----------------
1. NATURE OF BUSINESS:
Franklin/Templeton Distributors, Inc. (FTDI) is a wholly-owned subsidiary of
Franklin Resources, Inc. (Parent). FTDI serves as the principal underwriter
for the Franklin Templeton Group of Funds.
2. SIGNIFICANT ACCOUNTING POLICIES:
Revenue Recognition:
Commissions on mutual fund dividend reinvestments, dividend income and 12b-1
fees are recognized as earned. Commissions on mutual fund share sales are
recognized when the share sales are settled.
Cash and Cash Equivalents:
Cash and cash equivalents consist of amounts held in bank accounts and in a
money market fund for which an affiliated company acts as investment advisor.
Due to the relatively short-term nature of these instruments, the carrying
value approximates fair value.
Allocation of Intercompany Costs:
Certain management, accounting and other administrative costs amounting to
$12,614,868 were allocated to FTDI by its Parent.
Income Tax Benefit:
FTDI is included in the consolidated federal and combined California state
income tax returns of the Parent. The Parent allocates federal and California
state income tax benefits to FTDI using the separate return method.
Deferred income taxes reflect the impact of temporary differences between
amounts of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws. Deferred tax assets and liabilities are
adjusted to reflect changes in tax rates or other provisions of the tax law in
the period in which a new tax law is enacted.
Premises and Equipment:
Premises and equipment are recorded at cost and are depreciated on the
straight-line basis over their estimated useful lives. Expenditures for
repairs and maintenance are charged to expense when incurred.
3. DEFERRED TAXES:
The major components of the deferral tax liability as of September 30, 1995
are as follows:
<TABLE>
<S> <C>
Prepaid Expenses ............................................ $ 958,218
Depreciation on fixed assets ................................ 102,171
----------
Deferred tax liability .................................... $1,060,389
==========
</TABLE>
4. NET CAPITAL AND RESERVE REQUIREMENTS:
Regulatory provisions require FTDI to maintain minimum net capital. Net
capital and the related net capital ratio may fluctuate on a daily basis. On
September 30, 1995, FTDI was in compliance with Rule 15c3-1(a)(2) of the
Securities Exchange Act of 1934. The net capital requirement on that date was
$1,407,427, and FTDI had net capital of $24,081,617, and an
26
<PAGE>
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
aggregate indebtedness to net capital ratio of .68 to 1. FTDI is exempt from
Rule 15c3-3 of the Securities Exchange Act relating to the determination of
reserve requirements.
5. COMMITMENTS:
The Parent leases computer, automobile and office equipment and office space
under various agreements expiring at various dates through 1997 which are
accounted for as operating leases. FTDI is the direct beneficiary of these
leases and consequently is responsible for payment of the various lease
commitments. Total lease expense for the year amounted to $803,116. At
September 30, 1995, remaining operating lease commitments are as follows:
<TABLE>
<S> <C>
1996............................................................ $152,823
1997............................................................ 145,418
1998............................................................ 39,523
--------
$337,764
========
</TABLE>
27
<PAGE>
NOTES
<PAGE>
TEMPLETON PROSPECTUS -- JANUARY 1, 1996
CAPITAL ACCUMULATOR FUND, INC.
- -------------------------------------------------------------------------------
INVESTMENT Templeton Capital Accumulator Fund, Inc. (the "Fund") seeks
OBJECTIVE AND long-term capital growth through a flexible policy of
POLICIES investing in stocks and debt obligations of companies and
governments of any nation.
- -------------------------------------------------------------------------------
PURCHASE OF Shares of the Fund, which will be sold at net asset value, may
SHARES be initially acquired by investors only by means of an
investment in Templeton Capital Accumulation Plans (the
"Plans" or "Plan"). The charges for the first year of a Plan
can amount to 50% of the amounts paid during that year under
the Plan. Details of the Plans, including the creation and
sales charges, may be found in the attached prospectus for the
Plans, which should be read and retained by the investor for
future reference.
- -------------------------------------------------------------------------------
PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Fund that a prospective investor should know about the Fund.
Investors are advised to read and retain this Prospectus for
future reference. A Statement of Additional Information
("SAI") about the Fund, dated January 1, 1996, has been filed
with the Securities and Exchange Commission and is
incorporated in its entirety by reference in and made a part
of this Prospectus. This SAI is available without charge upon
request to: Franklin Templeton Distributors, Inc., P.O. Box
33030, 700 Central Avenue, St. Petersburg, Florida 33733-8030
or by calling the Fund Information Department.
- -------------------------------------------------------------------------------
FUND INFORMATION DEPARTMENT -- 1-800/DIAL BEN
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXPENSE TABLE...................... P-2
FINANCIAL HIGHLIGHTS .............. P-3
GENERAL DESCRIPTION................ P-4
Investment Objective and Policies.. P-4
INVESTMENT TECHNIQUES.............. P-5
Loans of Portfolio Securities...... P-5
Debt Securities.................... P-5
Options on Indices................. P-5
Forward Foreign Currency Contracts
and Options on Foreign Currencies. P-5
Futures Contracts.................. P-5
Repurchase Agreements.............. P-6
Depositary Receipts................ P-6
RISK FACTORS....................... P-6
HOW TO BUY SHARES OF THE FUND...... P-8
HOW TO SELL SHARES OF THE FUND..... P-9
Templeton STAR Service............. P-10
EXCHANGE PRIVILEGE................. P-10
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
MANAGEMENT OF THE FUND............. P-10
Investment Manager................. P-10
Business Manager................... P-11
Principal Underwriter.............. P-11
Transfer Agent..................... P-11
Plan Custodian..................... P-11
Custodian.......................... P-11
Expenses........................... P-11
Brokerage Commissions.............. P-12
GENERAL INFORMATION................ P-12
Description of Shares/Share
Certificates...................... P-12
Meetings of Shareholders........... P-12
Dividends and Distributions........ P-12
Federal Tax Information............ P-12
Inquiries.......................... P-12
Performance Information............ P-13
Statements and Reports............. P-13
THE FRANKLIN TEMPLETON GROUP....... P-14
</TABLE>
- -------------------------------------------------------------------------------
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. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF CAPITAL.
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.
P-1
<PAGE>
EXPENSE TABLE
The purpose of this table is to assist an investor in understanding the
various costs and expenses that an investor in the Plans or the Fund will bear
directly or indirectly. The figures are estimates of the Fund's expenses for
the current fiscal year.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases.................................. None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (after fee reduction).................................... 0.41%
Other Expenses (audit, legal, business management, transfer agent and
custodian).............................................................. 0.59%
Total Fund Operating Expenses (after fee reduction)...................... 1.00%
</TABLE>
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual's own
investment in the Plans or the Fund. Rather, the table has been provided only
to assist investors in gaining a more complete understanding of fees, charges
and expenses. The information in this table does not reflect the charge of up
to $15 per transaction if a Shareholder requests that redemption proceeds be
sent by express mail or wired to a commercial bank account. For a more
detailed discussion of these matters, investors should refer to the
appropriate sections of this Prospectus and the accompanying prospectus for
the Plans. This expense information should be considered along with other
important information such as the Fund's investment objective and the fees and
expenses associated with investment through the Plans. The Fund's Shares may
be purchased only through investment in the Plans.
EXAMPLE
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
As required by SEC regulations, the following
example illustrates the expenses that apply to a
$1,000 investment over various time periods
assuming (1) a 5% annual rate of return and (2)
redemption at the end of each time period. $10 $32 $55 $122
</TABLE>
This example is based on the estimated annual operating expenses, including
fees set by contract, shown above and should not be considered a
representation of past or future expenses, which may be more or less than
those shown. The operating expenses are borne by the Fund and only indirectly
by Shareholders as a result of their investment in the Plans. In addition,
federal securities regulations require the example to assume an annual rate of
return of 5%, but the Fund's actual return may be more or less than 5%.
The Fund's Investment Manager, Templeton Investment Counsel, Inc., has
voluntarily agreed to reduce its investment management fee to the extent
necessary and to limit the total expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) of the Fund to an annual
rate of 1% of the Fund's average daily net assets. If such fee reduction is
insufficient to so limit the Fund's total expenses, the Fund's Business
Manager, Templeton Global Investors, Inc. has voluntarily agreed to reduce its
fee and, to the extent necessary, assume other Fund expenses, so as to so
limit the Fund's total expenses. If this policy were not in effect, the Fund's
Total Fund Operating Expenses would be 1.34%, and you would pay the following
expenses on a $1,000 investment, assuming 5% annual return and redemption at
the end of each time period: $14 for one year, $42 for three years, $73 for
five years and $161 for ten years. As long as this temporary expense
limitation continues, it will lower the Fund's expenses and increase its
return. The expense limitation may be terminated or revised at any time, at
which time the Fund's expenses will increase and its return will be reduced.
It is important to note that the foregoing table reflects only the expenses
of Templeton Capital Accumulator Fund. A sales and creation charge will be
deducted from a Templeton Capital Accumulation Plan to compensate the sponsor
of the Plans for creating your Plan and for selling expenses and commissions
to dealers. This charge is deducted from each investment and will vary
according to the monthly investment payment units of each Plan. For example,
on a $100 a month Plan, $50 is deducted from each of the 12 monthly investment
units made during the first year. After the first year, the charge drops to
$6.07 on each subsequent monthly unit. For further details concerning creation
and sales charges that will be deducted from a Plan, see the accompanying
prospectus for Templeton Capital Accumulation Plans.
P-2
<PAGE>
FINANCIAL HIGHLIGHTS
The following table of selected financial information has been audited by
McGladrey & Pullen, LLP, independent certified public accountants, for the
periods indicated in their report which is incorporated by reference and which
appears in the Fund's 1995 Annual Report to Shareholders. This statement
should be read in conjunction with the other financial statements and notes
thereto included in the Fund's 1995 Annual Report to Shareholders, which
contains further information about the Fund's performance, and which is
available to shareholders upon request and without charge.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
PER SHARE OPERATING PERFORMANCE -----------------------------------------
(For a share outstanding
throughout the period) 1995 1994 1993 1992 1991+
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.......................... $ 16.21 $ 13.74 $ 10.95 $10.42 $10.00
- -------------------------------------------------------------------------------
Income from investment operations
Net investment income............ .28 0.19 0.20 0.17 0.15
Net realized and unrealized
gain ........................... .23 2.60 2.88 0.55 0.27
------- ------- ------- ------ ------
Total from investment operations. .51 2.79 3.08 0.72 0.42
------- ------- ------- ------ ------
Less distributions
Dividends from net investment
income.......................... (.20) (0.14) (0.20) (0.19) (0.00)
Distributions from net realized
gains........................... (.58) (0.18) (0.09) 0.00 (0.00)
------- ------- ------- ------ ------
Total distributions.............. (.78) (0.32) (0.29) (0.19) (0.00)
------- ------- ------- ------ ------
Change in net asset value for the
period.......................... (.27) 2.47 2.79 0.53 0.42
- -------------------------------------------------------------------------------
Net asset value, end of period... $ 15.94 $ 16.21 $ 13.74 $10.95 $10.42
- -------------------------------------------------------------------------------
TOTAL RETURN**................... 3.40% 20.64% 29.11% 7.01% 4.20%++
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000).. $65,538 $38,323 $18,365 $8,690 $3,635
Ratio to average net assets of:
Expenses....................... 1.34% 1.58% 1.91% 1.84% 3.99%*
Expenses, net of reimbursement. 1.00% 1.00% 1.00% 1.00% 1.00%*
Net investment income.......... 2.37% 1.58% 1.99% 2.06% 3.80%*
Portfolio turnover rate.......... 12.91% 15.25% 14.97% 16.42% 0.00%
- -------------------------------------------------------------------------------
</TABLE>
+ Period from March 1, 1991 (commencement of operations) to August 31, 1991
++Not annualized
* Annualized
**Does not reflect the Plan's Sales and Creation Charges
P-3
<PAGE>
GENERAL DESCRIPTION
Templeton Capital Accumulator Fund, Inc. (the "Fund") was incorporated under
the laws of Maryland on October 26, 1990. The Fund is registered under the
Investment Company Act of 1940 (the "1940 Act") with the Securities and
Exchange Commission as an open-end, diversified management investment company.
The Fund sells its Shares only through Templeton Capital Accumulation Plans, a
unit investment trust. The Fund, through Templeton Capital Accumulation Plans,
offers investors an alternative to direct investment in stock and debt
obligations, with the benefits of diversification of portfolio investments and
the professional portfolio management of Templeton Investment Counsel, Inc.
(the "Investment Manager").
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 stocks and debt obligations of companies and governments of any
nation. Any income realized will be incidental. There can be no assurance that
the Fund's investment objective will be achieved.
The Fund principally invests in common stocks, but may also invest in
preferred stock and debt obligations (defined as bonds (including convertible
bonds and bonds selling at a discount), notes, debentures, commercial paper,
time deposits and bankers' acceptances), which may be rated or unrated, and
which may include structured investments, as described in the SAI under
"Investment Objective and Policies--Structured Investments." The Fund may
invest in stocks and debt obligations of companies and debt obligations of
governments of any nation.
The Directors of the Fund have adopted an operating policy, which may be
changed without Shareholder approval, that no more than 5% 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"). Debt securities which are rated Baa by Moody's are considered medium
grade obligations, i.e., they are neither highly protected nor poorly secured.
Such bonds lack outstanding investment characteristics and have speculative
characteristics as well, according to Moody's. Debt securities rated BBB by
S&P are regarded as having adequate capacity to pay interest and repay
principal. According to S&P, while these debt securities normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal. The Fund will not invest in debt securities rated less
than Caa by Moody's or CCC by S&P.
Whenever, in the judgment of the Investment Manager, market or economic
conditions warrant, the Fund may, for temporary defensive purposes, invest
without limit in money market securities, denominated in U.S. dollars or in
the currency of any foreign country, issued by entities organized in the U.S.
or any foreign country, consisting of: 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 U.S. banks and broker-dealers with respect to Canadian or U.S.
Government securities. In addition, for temporary defensive purposes, the Fund
may invest up to 25% of its total assets in obligations (including
certificates of deposit, time deposits and bankers' acceptances) of U.S. and
foreign banks; 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. In the event that the Fund adopts a temporary defensive position, the
investment practices described above may not be consistent with the Fund's
stated investment objective.
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. In furtherance of its objective of
capital growth, the Fund may invest up to 5% of its assets in warrants
(excluding warrants acquired in units or attached to securities). The Fund may
not invest more than 15% of its total assets in securities of all types of
foreign issuers which are not listed on a recognized United States or foreign
securities exchange, and may not invest more than 10% of its total assets in
securities which are illiquid, including securities which are not publicly
traded or which cannot be readily resold because of legal or contractual
restrictions, or which are not otherwise readily marketable (including
repurchase agreements having more than seven days remaining to maturity), and
over-the-counter options purchased by the Fund. Assets used as cover for over-
the-counter options written by the Fund will be considered illiquid. The
Fund's investment objective and the policies described in this paragraph, as
well as certain investment restrictions described in the SAI, cannot be
changed without Shareholder approval. All other investment policies may be
modified by the Fund's Board of Directors.
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The Fund may lend its portfolio securities, as well as enter into
transactions in options on 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. These investment techniques are described below and under the
heading "Investment Objective and Policies" in the SAI.
The Fund invests for long-term growth of capital and does not intend to
emphasize short-term trading profits. Accordingly, the Fund expects to have an
annual portfolio turnover rate not exceeding 50%.
INVESTMENT TECHNIQUES
The Fund is authorized to use the various investment techniques described
below. Although these strategies are regularly used by some investment
companies and other institutional investors in various markets, some of these
strategies cannot at the present time be used to a significant extent by the
Fund in some of the markets in which the Fund will invest and may not be
available for extensive use in the future.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to banks and broker-dealers
portfolio securities with an aggregate market value of up to one-third of its
total assets to generate income. Such loans must be secured by collateral
(consisting of any combination of cash, U.S. Government securities or
irrevocable letters of credit) in an amount at least equal (on a daily 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.
DEBT SECURITIES. The Fund may invest in the debt securities of companies and
governments of any nation. 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.
OPTIONS ON INDICES. The Fund may write (i.e., sell) covered put and call
options and purchase put and call options on securities indices that are
traded on United States and foreign exchanges or in the over-the-counter
markets. An option on a securities index permits the purchaser of the option,
in return for the premium paid, the right to receive from the seller cash
equal to the difference between the closing price of the index and the
exercise price of the option. The 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 an option, it will maintain with its custodian cash or cash
equivalents equal to the contract value (in the case of call options) or
exercise price (in the case of put options). The 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 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 purchase and sell
stock index futures contracts, foreign currency futures contracts and options
on any of the foregoing. 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, if must make an initial deposit, known as "initial
margin," as a partial guarantee of its performance under the contract. As the
value of the index or currency fluctuates, either party to the contract is
required to make additional margin payments, known 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
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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.
REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, when the Fund acquires a security from a U.S. bank or a
registered broker-dealer, it may simultaneously enter into a repurchase
agreement, wherein the seller agrees to repurchase the security at a specified
time and price. The repurchase price is in excess of the purchase price by an
amount which reflects an agreed-upon rate of return, which is not tied to the
coupon rate 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.
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 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 Shares of the Fund.
Changes in currency valuations will also affect the price of 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.
The value of debt securities held by the Fund generally will vary inversely
with changes in prevailing interest rates. Additionally, investment decisions
made by the Investment Manager will not always be profitable or prove to have
been correct. The Fund is not intended as a complete investment program.
The Fund has the unlimited right to purchase securities in any foreign
country, developed or underdeveloped. 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. Such risks
include the possibility of expropriation, nationalization or confiscatory
taxation, taxation of income earned in foreign nations or other taxes imposed
with respect to investments in foreign nations, foreign exchange controls
(which may include suspension of the ability to transfer currency from a given
country), foreign investment controls on daily stock market movements, default
in foreign government securities, political or social instability, or
diplomatic developments which could affect investment in securities of issuers
in those 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
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is available in reports about companies in the United States. Foreign
companies are not generally subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. Further, the
Fund may encounter difficulties or be unable to vote proxies, exercise
shareholder rights, pursue legal remedies and obtain judgments in foreign
courts.
Brokerage commissions, custodial services and other costs relating to
investment in foreign countries are generally more expensive than in the
United States. Foreign securities markets also have different clearance and
settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of the 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. There is an increased risk,
therefore, of uninsured loss due to lost, stolen or counterfeit stock
certificates. In addition, the foreign securities markets of many of the
countries in which the Fund may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States. As an
operating policy, the Fund may invest no more than 5% of its assets in Eastern
European countries, which involves special risks that are described under
"Risk Factors" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they trade. These
economies have also been and may continue to be adversely affected by economic
conditions in the countries with which they trade.
The Fund usually effects currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign exchange market.
However, some price spread on currency exchange (to cover service charges)
will be incurred when the Fund converts assets from one currency to another.
The Fund is authorized to invest in medium quality or high risk, lower
quality debt securities that are rated between BBB and as low as CCC by S&P,
and between Baa and as low as Caa by Moody's or, if unrated, are of equivalent
investment quality as determined by the Investment Manager. As an operating
policy, which may be changed by the Board of Directors without Shareholder
approval, the Fund will not invest more than 5% of its total assets in debt
securities rated BBB or lower by S&P or Baa or lower by Moody's. The Board may
consider a change in this operating policy if, in its judgment, economic
conditions change such that a higher level of investment in high risk, lower
quality debt securities would be consistent with the interests of the Fund and
its Shareholders. High risk, lower quality debt securities, commonly referred
to as "junk bonds," are regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation and may be in default. Unrated
debt securities are not necessarily of lower quality than rated securities but
they may not be attractive to as many buyers. Regardless of rating levels, all
debt securities considered for purchase (whether rated or unrated) will be
carefully analyzed by the Investment Manager to insure, to the extent
possible, that the planned investment is sound. The Fund may, from time to
time, purchase defaulted debt securities if, in the opinion of the Investment
Manager, the issuer may resume interest payments in the near future. As a
fundamental policy, the Fund will not invest more than 10% of its total assets
in defaulted debt securities, which may be illiquid.
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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 or options position is
sought to be closed. In addition, there may be an imperfect correlation
between movements in the foreign currency on which the futures or options
contract is based and movements in the 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 a stock index
or foreign currency market and no assurance can be given that its judgment
will be correct.
The receipt by the Fund of new money solely through the medium of continuing
payments under systematic investment plans may tend to produce a more even
rate of influx than is the case of funds whose shares are sold directly. This
may furnish a base for a gradual and planned accumulation of positions in
individual portfolio securities when such a program is deemed to be
appropriate.
There can be no assurance that the investment objective of the Fund will be
achieved. There are further risk considerations, including possible losses
through the holding of securities in domestic and foreign custodian banks and
depositories, described in the SAI.
HOW TO BUY SHARES OF THE FUND
The Fund has entered into an agreement with Franklin Templeton Distributors,
Inc. (the "Sponsor" or "FTD"), under which the Fund will issue Shares at net
asset value to Templeton Funds Trust Company as Custodian for the Plans.
The net asset value of the Shares 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 Directors. 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 in good faith by the management and approved by the Board of
Directors.
The Fund will not offer its Shares publicly except through the Plans. Except
in cases where Planholders have received Fund Shares in distribution as a
result of the liquidation of or partial withdrawal from a Plan (into a non-
contributory voluntary account), it is not generally contemplated that any
person, other than the Custodian for the Plans, will directly hold any Shares
of the Fund. The terms of the offering of the Plans are contained in the
prospectus for the Plans.
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and in the SAI, in connection with the offer contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Fund, the Investment
Manager, or the Principal Underwriter.
Except for the fact that the Fund's Shares are available only through the
medium of the Plans, the Fund does not represent an investment concept which
is new or different from other investment companies for which Templeton
Investment Counsel, Inc. or its affiliates acts as an investment manager. The
Fund's investment objective of long-term capital growth is similar to the
objective of certain other Templeton Funds. The methods employed by each of
these other funds in attaining the objective vary from each other and from the
Fund. The investment results attained by these other Templeton Funds have
varied from each other in the past and are likely to continue to vary from
each other and from the Fund in the future. Investors could, however, purchase
shares of the other Templeton Funds, which, in the early years of the Plan,
would be at a lesser sales charge.
Investors wishing information on any of these funds may contact Franklin
Templeton Distributors, Inc., 700 Central Avenue, St. Petersburg, Florida
33701-3628.
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HOW TO SELL SHARES OF THE FUND
Shareholders who have received Shares on liquidation of their Plans or as a
result of exercise of the partial withdrawal privilege under a Plan may
present their Shares to Templeton Funds Trust Company (the "Custodian") for
redemption at net asset value (which may be more or less than the investor's
cost). The redemption price in cash will be the net asset value next
determined after the time when such Shares are tendered for redemption.
Shares will be redeemed, without charge, on request of the Shareholder in
"Proper Order" to the Custodian. "PROPER ORDER" MEANS THAT THE REQUEST TO
REDEEM MUST MEET ALL OF THE FOLLOWING REQUIREMENTS:
1. 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 Templeton Funds Trust
Company, 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 Custodian believes that a signature guarantee would protect
against potential claims based on the transfer instructions, including, for
example, when (i) the current address of one or more joint owners of an
account cannot be confirmed; (ii) multiple owners have a dispute or give
inconsistent instructions to the Fund; (iii) the Fund has been notified of an
adverse claim; (iv) the instructions received by the Fund are given by an
agent, not the actual registered owner; (v) the Fund determines that joint
owners who are married to each other are separated or may be the subject of
divorce proceedings; or (vi) 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 Custodian;
. 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 Custodian;
. 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;
. 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 an IRA for which Franklin Templeton Trust
Company (FTTC) 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 an IRA are subject to additional
requirements under the Internal Revenue Code of 1986, as amended (the "Code"),
and certain documents (available from the FTTC) must be completed before the
distribution may be made. For example, distributions from IRAs are subject to
withholding requirements under the Code, and the IRS Form W-4P (available from
the FTTC) may be required to be submitted to FTTC with the distribution
request, or the distribution will be delayed. FTTC 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.
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To avoid delay in redemption or transfer, Shareholders having questions
about these requirements should contact the Shareholder Service Department by
calling 1-800-632-2301.
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 Custodian. A
gain or loss for tax purposes generally will be realized upon the redemption,
depending on the tax basis of the Shares redeemed. Payment of the redemption
price will be made by check (or by wire at the sole discretion of the
Custodian 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. 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.
Upon any redemption of a portion of a Shareholder's Shares leaving a balance
of unredeemed Shares of less than $100 at the current net asset value at the
time of the redemption, the Fund may also redeem such balance of Shares and
add the proceeds thereof to the proceeds of the redemption which the
Shareholder requested.
Templeton Funds Trust Company may also redeem Shares held by it for the
Plans as necessary to carry out liquidation or withdrawal requests.
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 750) and the Shareholder's account number are necessary
for accessing information (other than Share prices) from Templeton STAR
Service.
EXCHANGE PRIVILEGE
Shareholders who have received Shares of the Fund on termination of their
Plan or as a result of exercise of the partial withdrawal privilege under a
Plan may exchange those Shares into other funds in the Franklin Group of
Funds (R) and the Templeton Family of Funds (the "Franklin Templeton Group")
(except Templeton Variable Annuity Fund, Templeton Variable Products Series
Fund, Franklin Valuemark Funds and Franklin Government Securities Trust).
Exchange purchases are subject to the minimum investment requirements of the
fund purchased and no sales charge generally applies. In the case of exchanges
into a fund in the Franklin Templeton Group that offers two classes of shares,
a Shareholder would receive Class I shares, which generally bear lower Rule
12b-1 distribution fees than Class II shares of the same fund.
A Shareholder may exchange Shares by writing to the Custodian, by contacting
his or her investment dealer or-- if the Shareholder has not declined the
telephone exchange privilege--by telephoning 1-800-632-2301. Telephone
exchange instructions must be received by FTD by the scheduled closing time of
the New York Stock Exchange (generally 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 Custodian will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. 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.
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 sixty (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 Custodian. A gain or loss for tax purposes will be realized
upon the exchange, depending on the cost basis of the Shares redeemed.
MANAGEMENT OF THE FUND
The Fund is managed by its Board of Directors and all powers of the Fund are
exercised by or under authority of the Board. Information relating to the
Directors 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., Broward Financial Centre, Fort Lauderdale, Florida
33394-3091. The Investment Manager manages the investment and reinvestment of
the Fund's assets. The Investment Manager is an indirect wholly owned
subsidiary of Franklin Resources, Inc. ("Franklin"). Through its
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<PAGE>
subsidiaries, Franklin is engaged in various aspects of the financial services
industry. 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 4.3 million mutual fund shareholders,
foundations, endowments, employee benefit plans and individuals. The
Investment Manager and its affiliates have approximately 4,100 employees in
the United States, Australia, Scotland, Germany, Hong Kong, Luxembourg,
Bahamas, Singapore, Canada and Russia.
The Investment Manager uses a disciplined, long-term approach to value
oriented global and international investing. It has an extensive global
network of investment research sources. Securities are selected for the Fund's
portfolio on the basis of fundamental company-by-company analysis. Many
different selection methods are used for different funds and clients and these
methods are changed and improved by the Investment Manager's research on
superior selection methods.
The Investment Manager performs similar services for other funds and
accounts and there may be times when the actions taken with respect to the
Fund's portfolio will differ from those taken by the Investment Manager on
behalf of other funds and accounts. Neither the Investment Manager and its
affiliates, its officers, directors or employees, nor the officers and
Directors of the Fund are prohibited from investing in securities held by the
Fund or other funds and accounts which are managed or administered by the
Investment Manager to the extent such transactions comply with the Fund's Code
of Ethics. Please see "Investment Management and Other Services--Investment
Management Agreement" in the SAI for further information on securities
transactions and a summary of the Fund's Coder of Ethics.
The Investment Manager does not furnish any other services 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 0.75% of its average daily net assets.
The lead portfolio manager for the Fund is Gary P. Motyl, Senior Vice
President of the Investment Manager. Mr. Motyl has been a security analyst and
portfolio manager with the Investment Manager since 1981. He holds a BS in
Finance from Lehigh University and an MBA in Finance from Pace University.
Prior to joining the Templeton organization, he worked from 1974 to 1979 as 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. Gary Clemons, Vice President
of the Investment Manager and Mark R. Beveridge, Vice President of the
Investment Manager, exercise secondary portfolio management responsibilities
with respect to the Fund. Mr. Clemons hold a BS in Geology from the University
of Nevada and an MBA in Finance from the University of Wisconsin. Prior to
joining the Investment Manager in 1993, he was a research analyst for
Templeton Quantitative Advisors, Inc. in New York were he was also responsible
for management of a small capitalization fund. Mr. Beveridge holds a BBA in
Finance from the University of Miami. Prior to joining the Templeton
organization in 1985 as a security analyst, he was a principal with a
financial accounting software firm based in Miami, Florida. Further
information concerning the Investment Manager 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 and financial reports, monitoring compliance with
regulatory requirements and monitoring tax-deferred retirement plans. For its
services, the Business Manager receives a fee equivalent on an annual basis to
0.15% of the average daily net assets of the Fund, reduced to 0.135% of such
net 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.
PRINCIPAL UNDERWRITER. Franklin Templeton Distributors, Inc., a wholly owned
subsidiary of Franklin Resources, Inc., serves as the Principal Underwriter of
the Fund's Shares pursuant to a Distribution Agreement with the Fund.
TRANSFER AGENT. Franklin Templeton Investor Services, Inc. serves as
transfer agent and dividend disbursing agent for the Fund.
PLAN CUSTODIAN. Templeton Funds Trust Company acts as Custodian for the
Plans as described in the Plan prospectus.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Fund's
assets.
EXPENSES. For the fiscal year ended August 31, 1995, expenses (net of fee
reduction) amounted to 1% of the average daily net assets of the Fund.
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<PAGE>
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
Plans (and thus, indirectly, 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.
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The Fund has authorized capital
stock of 100,000,000 Shares of $.01 par value. All Shares are of one class.
Each Share entitles the holder to one vote.
The Fund will not ordinarily issue certificates for Shares received on
liquidation or withdrawal from a Plan. Share certificates for whole (not
fractional Shares) are issued only on specific written request to the Transfer
Agent, at no charge for one certificate, and $1.00 for each additional
certificate.
MEETINGS OF SHAREHOLDERS. The Fund is not required to hold annual meetings
of Shareholders and may elect not to do so. The Fund will call a special
meeting of Shareholders when requested to do so by Shareholders holding at
least 10% of the Fund's outstanding Shares. In addition, the Fund is required
to assist Shareholder communications in connection with the calling of
Shareholder meetings to consider removal of a Director or Directors.
DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gain distributions (if
any) are usually paid in October and (if necessary) in December representing
all or substantially all of the Fund's net investment income and any net
realized capital gains. Income dividends and capital gain distributions paid
by the Fund, pursuant to the terms of the Plans, are automatically reinvested
on the payment date in whole or fractional Shares of the Fund at net asset
value as of the ex-dividend date, unless a Shareholder elects to receive cash.
The processing date for the reinvestment of dividends may vary from time to
time, and does not affect the amount or value of the Shares acquired.
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 investment company generally is not subject to Federal
income tax on income and gains distributed in a timely manner to its
shareholders. The Fund intends to distribute to Shareholders substantially all
of its net investment income and net realized capital gains, which 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 on December 31 in the year such distributions were
declared. All dividends and distributions are taxable to Shareholders, whether
or not reinvested in Shares of the Fund. The Fund will inform Shareholders
each year of the amount and nature of such income or gains. Sales or other
dispositions of Fund Shares generally will give rise to taxable gain or loss.
Investors should note that Planholders generally are considered to be the
Shareholders of the Fund for federal tax purposes. A more detailed description
of tax consequences to Shareholders is contained in the SAI under the heading
"Tax Status."
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 or where the Fund or the Shareholder has been
notified by the Internal Revenue Service that the Shareholder is subject to
backup withholding. Corporate Shareholders and certain other Shareholders
specified in the Code are exempt from backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
Shareholder's Federal income tax liability.
INQUIRIES. Shareholder inquiries will be answered promptly. They should be
addressed to Franklin Templeton Distributors, Inc., Dealer Main Offices
Services, 700 Central Avenue, St. Petersburg, Florida 33701-3628. Transcripts
of Shareholder accounts less than three years old are provided on request
without charge; requests for transcripts 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.
P-12
<PAGE>
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 a proportional share of Fund expenses (on an annual basis),
and will assume that all dividends and distributions are reinvested when paid.
The Fund's total return quotations will not reflect the effect of paying the
sales and creation charges associated with the purchase of Shares of the Fund
through the Plans; of course, total return quotations would be lower if sales
and creation charges were taken into account. 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.
STATEMENTS AND REPORTS. The Fund's fiscal year ends on August 31. Annual
reports (containing financial statements audited by independent auditors and
additional information regarding the Fund's performance) and semi-annual
reports (containing unaudited financial statements) are sent to Shareholders
each year. Additional copies may be obtained, without charge, upon request to
the Account Services Department. The Fund also sends to each Shareholder a
confirmation statement after every transaction that affects the Shareholder's
account and a year-end historical confirmation statement.
P-13
<PAGE>
The Franklin Templeton Group
Literature Request -- Call today for a free descriptive brochure and
prospectus on any of the funds listed below. The prospectus contains more
complete information, including fees, charges and expenses, and should be read
carefully before investing or sending money.
<TABLE>
<S> <C> <C>
TEMPLETON FUNDS Maryland FRANKLIN FUNDS SEEKING
American Trust Massachusetts*** HIGH CURRENT INCOME
Americas Government Securities Fund Michigan*** AGE High Income Fund
Developing Markets Trust Minnesota*** German Government Bond Fund
Foreign Fund Missouri Global Government Income Fund
Global Infrastructure Fund New Jersey Investment Grade Income Fund
Global Opportunities Trust New York* U.S. Government Securities Fund
Greater European Fund North Carolina
Growth Fund Ohio*** FRANKLIN FUNDS SEEKING HIGH CURRENT
Growth and Income Fund Oregon INCOME AND STABILITY OF PRINCIPAL
Income Fund Pennsylvania Adjustable Rate Securities Fund
Japan Fund Tennessee** Adjustable U.S. Government Securities Fund
Latin America Fund Texas Short-Intermediate U.S. Government Securities Fund
Money Fund Virginia
Real Estate Securities Fund Washington** FRANKLIN FUNDS FOR NON-U.S. INVESTORS
Smaller Companies Growth Fund Tax-Advantaged High Yield Securities Fund
World Fund FRANKLIN FUNDS Tax-Advantaged International Bond Fund
SEEKING CAPITAL GROWTH Tax-Advantaged U.S. Government Securities Fund
FRANKLIN FUNDS California Growth Fund
SEEKING TAX-FREE INCOME DynaTech Fund FRANKLIN TEMPLETON INTERNATIONAL
Federal Intermediate Term Equity Fund CURRENCY FUNDS
Tax-Free Income Fund Global Health Care Fund Global Currency Fund
Federal Tax-Free Income Fund Gold Fund Hard Currency Fund
High Yield Tax-Free Income Growth Fund High Income Currency Fund
Fund International Equity Fund
Insured Tax-Free Income Fund*** Pacific Growth Fund FRANKLIN MONEY MARKET FUNDS
Puerto Rico Tax-Free Income Fund Real Estate Securities Fund California Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC FUNDS Small Cap Growth Fund Federal Money Fund
SEEKING TAX-FREE INCOME IFT U.S. Treasury Money Market Portfolio
Alabama FRANKLIN FUNDS SEEKING Money Fund
Arizona* GROWTH AND INCOME New York Tax-Exempt Money Fund
Arkansas** Balance Sheet Investment Fund Tax-Exempt Money Fund
California* Convertible Securities Fund
Colorado Equity Income Fund FRANKLIN FUND FOR CORPORATIONS
Connecticut Global Utilities Fund Corporate Qualified Dividend Fund
Florida* Income Fund
Georgia Premier Return Fund FRANKLIN TEMPLETON VARIABLE ANNUITIES
Hawaii** Rising Dividends Fund Franklin Valuemark
Indiana Strategic Income Fund Franklin Templeton Valuemark Income
Kentucky Utilities Fund Plus (an immediate annuity)
Louisiana
</TABLE>
Toll-free 1-800-DIAL BEN (1-800-342-5236)
* Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of municipal securities, and a high yield portfolio
(CA).
** The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
*** Portfolio of insured municipal securities.
P-14
<PAGE>
NOTES
<PAGE>
NOTES
<PAGE>
TEMPLETON CAPITAL ACCUMULATION PLANS
700 Central Avenue
St. Petersburg, Florida 33701-3628
(800) 354-9191
(813) 823-8712
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
[RECYCLED PAPER LOGO APPEARS HERE]
PRINCIPAL UNDERWRITER:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
700 Central Avenue
St. Petersburg, Florida 33701-3628
(800) 237-0738
<PAGE>
[LOGO OF APPLICATION APPEARS HERE]
IN ORDER TO ESTABLISH AN
ACCOUNT SIMPLY COMPLETE THIS
APPLICATION. DETACH AND MAIL IT
WITH YOUR CHECK TO:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
P.O. Box 33031, St. Petersburg, Florida 33733-8031
<PAGE>
TEMPLETON CAPITAL ACCUMULATION PLANS NEW ACCOUNT APPLICATION.
P.O. Box 33031, St. Petersburg, Florida 33733-8031 For initial investment
only. Do not use for
Templeton Prototype Keogh
or IRA/SEP. Request
separate application.
- --------------------------------------------------------------------------------
New Account #____________________
Monthly Unit $_____________
Total Plan Amount $_____________
Initial Investment $_____________
The objective in purchasing this plan is _______________________________________
Special Pricing Breakpoint
(Dealer Use)
--------------------------
Special pricing applicable? [_] Yes [_] No
--------------------------
List all associated account numbers and monthly amounts.
______________________________________________ $_____________________________
______________________________________________ $_____________________________
______________________________________________ $_____________________________
______________________________________________ $_____________________________
- --------------------------------------------------------------------------------
REGISTRATION--Please Print or Type
Individual Joint Tenant
Gifts/Transfers to Minors
Register Plan as Follows
_____________________________________________________ _______________________
First Name Middle Initial Last Name Social Security Number
_____________________________________________________ _______________________
First Name Middle Initial Last Name Social Security Number
_____________________________________________________
Custodian's Name
_____________________________________________________ _______________________
Minor's Name Social Security Number
under the ____________________________ Uniform Gifts/Transfers to Minors Act
State
- --------------------------------------------------------------------------------
Corporation, Trusts or Other Fiduciaries
-
_____________________________________________________ _____ _________________
Name of Corporation or Trustee(s) Taxpayer Identification
Number
- -
_____________________________________________________ _______ _______ _______
Name of Trust Date of Trust
_____________________________________________________
Name of Beneficiary (if to be included in registration)
- --------------------------------------------------------------------------------
Address, Citizenship & Occupation
______________________________________ ________________________________________
Street or P.O. Box Occupation (If Military, Rank & Service)
___________________ _____ ____________ ________________________________________
City State ZIP Name of Employer
- - - -
_________ ___ ____ ____ ____ _________ ________________________________________
Telephone Birth Date Street or P.O. Box
_________________________ _____ ________
Citizen of the U.S. [_] Yes [_] No City State Zip
______________________________________ ________________________________________
If no, Country of Residence Citizen(s) of
(Please attach form(s) W-8)
- --------------------------------------------------------------------------------
I am an associated person of an NASD member firm. [_] Yes [_] No
If yes, name of NASD member firm _______________________________________________
- --------------------------------------------------------------------------------
The undersigned warrant(s) that I (we) have full authority and, if a natural
person, I (we) am (are) of legal age to purchase shares pursuant to this
application, and have received a current prospectus for the Fund. I (we)
understand the Fund's investment objectives and policies and have determined
that the Plan is a suitable investment based upon my (our) investment needs and
financial situation.
Under Internal Revenue Service (IRS) regulations, I (we) am (are) required to
have the following certification: Under the penalties of perjury, I (we) certify
that:
(1) The number shown above is my (our) correct social security/taxpayer
identification number, and
(2) I (we) am (are) not subject to backup withholding either because:
(a) I (we) am (are) exempt from backup withholding, or (b) I (we)
have not been notified by the IRS that I (we) am (are) subject to
backup withholding as a result of a failure to report all interest
or dividends, or (c) the IRS has notified me (us) that I (we) am
(are) no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return.
Date ______/____/______
Signature of Owner X________________ Signature of Joint Owner X________________
- --------------------------------------------------------------------------------
A Preauthorized Check Application is completed on the reverse [_] Yes [_] No
Monthly payment date [_] 1st [_] 5th [_] 15th [_] 20th
Check box for Government Allotment [_]
Make Checks Payable To: Franklin/Templeton Distributors, Inc.
- --------------------------------------------------------------------------------
MAIL APPLICATION AND INITIAL INVESTMENT TO
Franklin/Templeton Distributors, Inc.
P.O. Box 33031
St. Petersburg, FL 33733-8031
- --------------------------------------------------------------------------------
DEALER INFORMATION
Branch Office (if applicable) ____________________ Dealer Number ______________
Firm Name _____________________________________________________________________
Firm Address __________________________________________________________________
Authorized Signature of Dealer X_______________________________________________
REPRESENTATIVE INFORMATION
Representative's name (print) _________________________________________________
Number
Street_________________________________________________________________________
City__________________________________________ State_________ ZIP______________
Representative's signature X___________________________________________________
- --------------------------------------------------------------------------------
Please see the reverse side for the Automatic Investment Plan option
<PAGE>
- -------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN
- -------------------------------------------------------------------------------
IMPORTANT: Attach an unsigned, voided check (for checking accounts) or a
savings account deposit slip here, and complete the information below.
I would like to establish an Automatic Investment Plan as described in the
Prospectus. I agree to reimburse Templeton Funds Trust Company and/or Franklin
Templeton Distributors, Inc. for any expenses or losses that they may incur in
connection with my plan, including any caused by my bank's failure to act in
accordance with my request. If my bank makes any erroneous payment or fails to
make a payment after shares are purchased on my behalf, any such purchase may
be cancelled and I hereby authorize redemptions and/or deductions from my
account for that purpose.
Debit my bank account monthly $______________ on or about the [_] 1st
[_] 5th [_] 15th or [_] 20th day ("collection date") of ____________________,
(month)
to be invested in (name of fund) __________________ account number
(if known) ___________________
- -------------------------------------------------------------------------------
INSTRUCTIONS TO BANK--AUTOMATIC INVESTMENT PLAN AUTHORIZATION
- -------------------------------------------------------------------------------
To:
----------------------------------------- ---------------------------------
Name of your bank ABA number
-------------------------------------- -------------------- -------- -------
Street address City State Zip
I authorize you to charge my checking/savings account and to make payment to
Franklin Templeton Distributors, Inc. ("FTD"), upon instructions from FTD. I
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. This authority shall
remain in effect until you receive written notice from me changing its terms
or revoking it. Until you actually receive such notice, I agree that you shall
be fully protected in paying any charge under this authority. I further agree
that if any such charge is not made, whether with or without cause and whether
intentionally or inadvertently, you shall be under no liability whatsoever.
X
- ------------------------------------------------------------------- -----------
Signature(s) EXACTLY as shown on bank records Date
- --------------------------------------------------------- ---------------------
Print name(s) Account number
- --------------------------------------- -------------------- -------- -------
Your street address City State Zip
TCAP APP 1/96
