Registration No. 33-37442 and 811-6197
As filed with the Securities and Exchange Commission on October 28, 1998
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 9 to
Form S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
TEMPLETON CAPITAL ACCUMULATION PLANS
(Exact Name of Registrant)
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
(Name of Depositor)
100 FOUNTAIN PARKWAY, P.O. BOX 33030, ST. PETERSBURG, FLORIDA 33733-8030
(Address of Depositor's Principal Executive Offices)
- -------------------------------------------------------------------------------
Barbara J. Green
Templeton Worldwide, Inc.
500 East Broward Boulevard
FORT LAUDERDALE, FLORIDA 33394
(Name and Address of Agent for Service of Process)
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It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485
on pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(1) of Rule 485
X on DECEMBER 31, 1998 pursuant to paragraph (a)(1) of Rule 485
this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
Title of securities being registered: Templeton Capital Accumulation Plans.
PAGE
Templeton Capital Accumulation Plans
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
1. (a) Name of Trust Prospectus Cover
(b) Title of securities issued Prospectus Cover
2. Name and address of each depositor Prospectus Cover; How Do I Start A Plan?; What
If I Have Questions About My Plan?
3. Name and address of Trustees N/A
4. Name and address of each principal underwriter Who Manages the Plan?
5. State of organization of trust N/A
6. Execution and termination of trust agreement How Do I Start A Plan; How Do I Cancel My
Plan and Obtain a Refund?
7. Changes of name N/A
8. Fiscal year N/A
9. Litigation N/A
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer securities Introductory Statement
(b) Cumulative or distributive securities Introductory Statement
(c) Withdrawal or Redemption Partial Withdrawals; How Do I Cancel My Plan
and Obtain a Refund?
(d) Conversion, transfer, etc. Transferring Your Plan; Electronic Fund
Transfer
</TABLE>
PAGE
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
(e) Periodic payment plan How Do I Choose A Plan?; Automatic Investment
Plan
(f) Voting Rights How Are the Plans Organized?
(g) Notice to security holders How Are the Plans Organized?
(h) Consents required Transaction Procedures and Special Requirements
(i) Other provisions N/A
11. Type of securities comprising units Introductory Statement
12. Certain information regarding periodic Statements and Reports to Planholders
payment plan certificate
13. (a) Load, fees, expenses, etc. Sales Charges; Securities Dealers and Sales Charges
(b) Certain information regarding periodic Statements and Reports to Planholders
payment plan certificates
(c) Certain percentage Sales Charges; Securities Dealers and Sales Charges
(d) Certain other fees, etc. Sales Charges; Securities Dealers and Sales Charges
(e) Certain other profits or benefits N/A
(f) Ratio of annual charges to income N/A
14. Issuance of trust's securities How Do I Choose A Plan?
</TABLE>
PAGE
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
15. Receipt and handling of payments from purchases The Custodian
16. Acquisition and disposition of underlying securities The Custodian
17. (a) Withdrawal Partial Withdrawls
(b) Redemption How Do I Terminate My Plan?
(c) Cancellation How Do I Cancel My Plan and Obtain a Refund?
18. (a) Receipt, custody and disposition of income What Distributions Might I Recieve?
(b) Reinvestment of distribution What Distributions Might I Recieve?
(c) Reserves or special funds N/A
(d) Schedule of distributions N/A
19. Records, accounts and reports The Custodian; Statements and Reports to
Planholders
20. Certain miscellaneous provisions of
trust agreement:
(a) Amendment The Custodian
(b) Termination The Custodian
(c) and (d) Trustee, removal and N/A
successor
(e) and (f) Depositors, removal and N/A
successor
21. Loans to security holders N/A
22. Limitations on liability N/A
23. Bonding arrangements N/A
</TABLE>
PAGE
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
24. Other materials provisions of trust agreement N/A
III. ORGANIZATIONS, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor The Sponsor
26. Fees received by depositor Financial Statements: Templeton Capital
Accumulation Plans
27. Business of depositor The Sponsor
28. Certain information as to officials and affiliated The Sponsor
persons of depositor
29. Voting securities of depositors The Sponsor
30. Persons controlling depositor The Sponsor
31. Payments by depositor for certain services rendered N/A
to trust
32. Payments by depositor for certain other services N/A
rendered to trust
33. Remuneration of employees of depositor for certain N/A
services rendered to trust
34. Remuneration of other persons for certain services N/A
rendered to trust
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities in states N/A
36. Suspension of sales of trust's securities N/A
37. Revocation of authority to distribute N/A
</TABLE>
PAGE
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
38. (a) Method of distribution What Distributions Might I Receive?
(b) Underwriting agreements The Sponsor
(c) Selling agreements The Sponsor
39. (a) Organization of principal underwriters The Sponsor
(b) NASD membership of principal underwriters The Sponsor
40. Certain fees received by principal underwriters Financial Statements: Templeton Capital
Accumulation Plans
41. (a) Business of each principal underwriter The Sponsor
(b) Branch offices of each principal underwriter N/A
(c) Salesmen of each principal underwriter N/A
42. Officials of Principal Underwriter Officers and Directors of the Sponsor
43. Certain brokerage commissions received by principal N/A
underwriters
44. (a) Method of Valuation N/A
(b) Schedule as to offering price N/A
(c) Variation in offering price to certain persons N/A
45. Suspension of redemption rights How Do I Terminate My Plan?
46. (a) Redemption Valuation How Do I Terminate My Plan?
(b) Schedule as to redemption price N/A
</TABLE>
PAGE
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
47. Maintenance of position in underlying securities N/A
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of trustee N/A
49. Fees and expenses of trustees N/A
50. Trustee's lien N/A
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's securities N/A
52. (a) Provisions of trust agreement with respect to A Change in the Underlying Investment
selection or elimination of underlying securities
(b) Transactions involving elimination of underlying N/A
securities
(c) Policy regarding substitution or elimination of A Change in the Underlying Investment
underlying securities
(d) Fundamental policy not other-wise covered N/A
53. Tax status of trust How Taxation Affects Planholders
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years N/A
55. Transcript of Hypothetical Plan N/A
</TABLE>
PAGE
TEMPLETON CAPITAL ACCUMULATION PLANS
PROSPECTUS
JANUARY 1, 1999
We designed the Templeton Capital Accumulation Plans (the "Plans" or "Plan") to
help you develop and maintain a disciplined approach to long-term investing. The
Plans allow you to accumulate capital in a mutual fund by making fixed monthly
investments for 15 years, with the option to extend up to 25 years. The Plans
may be suitable for you if:
/bullet/ you intend to invest your money for the long-term and
/bullet/ you want a convenient way to regularly and continuously invest
your money.
By participating in a Plan, you own shares in a Plan trust. The Plan trust
invests your monthly payments, after deducting Sales Charges, in shares of a
mutual fund called Templeton Capital Accumulator Fund, Inc. (the "fund"). The
fund primarily invests in common stocks; the value of fund shares fluctuates
depending upon the value of the stocks it holds. Since each Plan share that you
own equals one fund share, the value of your Plan shares also will fluctuate.
PLEASE READ THIS PROSPECTUS AND THE ATTACHED FUND PROSPECTUS BEFORE INVESTING IN
THE PLANS, AND KEEP EACH PROSPECTUS FOR FUTURE REFERENCE. YOU COULD LOSE MONEY
ON YOUR INVESTMENT IN A PLAN.
We deduct a large portion of the total Sales Charges that you pay under your
Plan during the first year. Depending upon your monthly investment amount, Sales
Charges in the first year of your Plan can be 50% of the total amount you invest
during that year. Although you may be entitled to a refund of these Sales
Charges in certain circumstances, you probably will lose money if you withdraw
from or terminate your Plan in its early years. For more information on Sales
Charges, please see page ____ of this prospectus.
OTHER MUTUAL FUNDS HAVE INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.
THESE MUTUAL FUNDS MAY IMPOSE NO SALES CHARGES OR LOWER SALES CHARGES
THAN THE SALES CHARGES IMPOSED ON PLAN SHARES.
THE PLANS ARE NOT SUITABLE FOR SHORT-TERM INVESTMENT.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES
OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS LEGAL ONLY WHEN ACCOMPANIED BY THE CURRENT
TEMPLETON CAPITAL ACCUMULATOR FUND, INC. PROSPECTUS
PAGE
TEMPLETON CAPITAL ACCUMULATION PLANS
January 1, 1999
When reading this prospectus, you will see certain terms beginning with capital
letters. This means the term is explained in our glossary section.
TABLE OF CONTENTS
ABOUT THE PLANS
How a Plan Can Help You......................................................1
Plan Highlights..............................................................1
How Do the Plans Invest Their Assets?........................................2
Who Manages the Plans?.......................................................3
How Taxation Affects Planholders.............................................4
How Are the Plans Organized?.................................................4
ABOUT YOUR PLAN
How Do I Choose a Plan? .....................................................5
How Do I Start a Plan? .....................................................12
What Distributions Might I Receive?.........................................12
Partial Withdrawals.........................................................13
How Do I Cancel My Plan and Obtain a Refund?................................14
How Do I Terminate My Plan? ................................................15
Transaction Procedures and Special Requirements.............................17
Services to Help You Manage Your Plan.......................................20
What If I Have Questions About My Plan?.....................................22
FINANCIAL STATEMENTS........................................................23
GLOSSARY....................................................................37
APPENDIX
Officers and Directors of the Sponsor.......................................38
PAGE
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 fund prospectus and SAI, or in any other
printed or written material issued under the name of Franklin Templeton
Distributors, Inc. or the fund. You should not rely upon any information other
than that contained in these materials.
PAGE
ABOUT THE PLANS
HOW A PLAN CAN HELP YOU
Many people who want to build an investment portfolio find it difficult to save
the money necessary to make periodic stock purchases. The Plans are designed to
help such people.
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 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 current financial situation, your financial ability to
continue a Plan, and your investment goals. A Plan offers no assurance against
loss 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.
PLAN HIGHLIGHTS
/bullet/ The Plans allow you to invest a fixed amount each month in the fund.
The Plans may be suitable for an investor who seeks the discipline of a
fixed monthly investment program.
/bullet/ The Plans are designed for long-term investment.
/bullet/ You will not own fund shares directly. You will own shares in a Plan
trust that invests in fund shares. Each Plan share that you own equals
one share in the underlying fund. Please read the attached fund
prospectus before investing in the Plans, and save it for future
reference.
/bullet/ You will pay a Sales Charge on each monthly investment. The amount of
the Sales Charge varies depending on the size of your monthly
investment. The Sales Charge is highest during the first 12 months of a
Plan and could total as much as 50% of the money invested in the first
year. Please read "How Do I Choose a Plan?" for more information about
the fees that you will pay under the Plans.
/bullet/ Subject to certain restrictions, you may increase or decrease the
amount of your fixed monthly investments by sending in a notice and a
new completed Plan application. See "Services to Help You Manage Your
Plan - Changing the Amount of Your Monthly Investment" for more
information.
/bullet/ Unless you terminate your Plan, you will make monthly investments for
15 years. Once you have completed payments for 15 years, you may
participate in the Systematic Withdrawal Program. This Program allows
you to receive regular cash payments from your account of $50 or more
monthly, quarterly, semiannually or annually.
1
PAGE
/bullet/ You may complete your Plan ahead of schedule by making monthly
investments before their due date or by prepaying monthly investments.
See "Services to Help You Manage Your Plan - Making Investments Ahead
of Schedule."
/bullet/ You may continue to make monthly investments for up to ten years after
your 15 year Plan is completed. You may not make monthly payments under
a Plan for longer than 25 years (300 months).
/bullet/ You may withdraw some of your Plan shares at any time without
terminating your Plan. See "Partial Withdrawals" for more information.
/bullet/ You may terminate your Plan at any time. In some limited circumstances,
you may receive a refund of all or a portion of the sales charges paid.
See "How Do I Terminate My Plan?" for more information.
/bullet/ We may decide to invest the Plans in some investment other than the
fund if we decide that it would be in the best interest of Planholders.
The SEC must approve any substitution and you will be notified in
writing. See "How Do the Plans Invest Their Assets - A Change in the
Underlying Investment" for more information.
HOW DO THE PLANS INVEST THEIR ASSETS?
The Plans invest in fund shares. Each Plan share equals one fund share. The
fund is an open-end, diversified investment company, commonly called a mutual
fund. A mutual fund offers investors professional investment management and
reduced investment risk through diversification.
The fund's investment goal is long-term capital growth. The fund seeks to meet
its goal by investing in common stocks and other securities that Investment
Counsel, the fund's investment manager, believes have the potential for capital
growth. Most of the fund's portfolio securities will pay little, if any, income.
Please see the attached fund prospectus for a description of the fund's
investment policies, risks, operating expenses, organization and management.
You may obtain the fund's SAI, which is a legal part of the fund prospectus, at
no charge by calling 1-800/DIAL BEN(R).
A CHANGE IN THE UNDERLYING INVESTMENT
The Sponsor may invest Plan shares in an investment other than the fund if it
decides that it would be in the best interests of Planholders. Any substitute
investment will be generally comparable in character and quality to the fund
shares, and will be securities registered with the SEC under the Act 1933.
Before the Sponsor can make a substitution, it must obtain SEC approval and
notify you in writing about the proposed substitution. The notice will describe
the new investment, and will advise you that, unless you terminate your Plan
within 30 days of when we mail you the notice, we will assume that you have
consented to the substitution and have agreed to bear your pro rata share of
expenses and taxes in connection with the substitution.
2
PAGE
If you do not terminate your Plan within 30 days from the date of the written
notice, we will purchase shares of the new investment for you with the proceeds
of any Plan investments and any reinvested distributions. If the Sponsor wants
to exchange fund shares for the new shares, the new shares will have an
aggregate value equal to the value of the fund shares. You may incur taxes when
we substitute underlying investments. Please consult your tax advisor.
If fund shares are not available for purchase for a period of 120 days or
longer, and the Sponsor or the Custodian fails to substitute investments, the
Custodian may terminate your Plan.
WHO MANAGES THE PLANS?
THE CUSTODIAN. The Custodian is responsible for the protection and safekeeping
of the assets of the Plans. Templeton Funds Trust Company, organized as a trust
company under the laws 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 where such law is determined to conflict with the Investment Company
Act of 1940.
The Custodian has only those obligations specifically imposed by 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 the fund 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. The successor must be a bank or trust company with at least
$2,000,000 in capital, surplus and undivided profits. 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 act as required by the Custodian Agreement or by terminating the
Custodian Agreement upon 90 days' notice to the Sponsor. Under the Custodian
Agreement, the Sponsor has agreed to indemnify the Custodian from all liability
arising from the Sponsor's failure to comply with any applicable laws.
THE SPONSOR. The Sponsor is responsible for selling Plan shares, preparing and
distributing promotional materials, and responding to Planholder inquiries.
Franklin Templeton Distributors, Inc., a New York corporation organized on
November 19, 1947 and a wholly owned subsidiary of Resources is the Sponsor for
the Plans. The Sponsor 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 Templeton Group of
Funds.
HOW TAXATION AFFECTS PLANHOLDERS
For federal income tax purposes, Planholders are treated as direct owners of
fund shares. Designated capital gain distributions, which are automatically
reinvested in additional Plan shares, are treated as long-term capital gains.
The tax cost of your Plan shares is the amount you paid for the shares,
including Sales Charges.
As more fully described under "How Taxation Affects Planholders" in the fund
prospectus, 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. You will receive
a notice regarding taxes each year.
3
PAGE
You are responsible for all taxes payable on any profits on the sale or transfer
of Plan shares or other property credited to your account under your Plan and
for any taxes levied or assessed with respect to your Plan shares or the income
from the Plan.
HOW ARE THE PLANS ORGANIZED?
The Plan trust is registered with the SEC as a unit investment trust under the
1940 Act. This does not mean that the SEC supervises the Plan trust's management
or investment practices or policies.
Although you do not own fund shares directly, you, as a Planholder, have certain
voting rights with respect to the fund. You may attend any meeting of
Planholders. You may ask the Custodian to furnish you with a proxy or otherwise
arrange for you to exercise your voting rights. We will notify you at least 10
days before any vote of Planholders. We will vote the fund shares held for your
Plan account as you instruct. If you do not give us instructions, we will vote
your shares proportionately in accordance with instructions received from other
Planholders.
ABOUT YOUR PLAN
HOW DO I CHOOSE A PLAN?
The Plans are available in different monthly investment amounts, ranging from
$50 to $10,000 per month. You make monthly investments for 15 years. You should
choose the monthly investment amount that best suits your financial situation
and investment goals. The following tables should help you decide which Plan is
best for you.
4
PAGE
This table shows the range of available monthly investment amounts for a Plan,
total investments you would make over the 15-year life of each Plan, and the
Sales Charges applied to each monthly payment. The table shows just the
investments that you would make over the life of a Plan. The table does not
reflect past or projected investment performance, dividends, or income of the
fund or the Plan.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MONTHLY INVESTMENTS AND SALES CHARGES FOR THE PLANS
- -----------------------------------------------------------------------------------------------------------------------
SALES CHARGES
- -----------------------------------------------------------------------------------------------------------------------
MONTHLY TOTAL INVESTMENT INVESTMENT TOTAL % OF % OF MONTHLY
INVESTMENT INVESTMENT 1 THRU 12 13 THRU 180 CHARGE CHARGES CHARGES INVESTMENT
AMOUNT TO TOTAL TO NET AMOUNT
INVESTMENT INVESTMENT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 9,000.00 $ 25.00 $ 3.04 $ 810.72 9.00% 9.89% $ 50.00
75.00 13,500.00 37.50 4.55 1,214.40 9.00 9.89 75.00
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 13,449.04 .75 .76 10,000.00
</TABLE>
5
PAGE
As explained more fully under "Services to Help You Manage Your Plan - Extended
Investment Option," you may extend the life of your Plan an additional 10 years.
This table shows the same type of information as the previous table, but we
adjusted the information for Plans extended to a total of 25 years.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MONTHLY INVESTMENTS AND SALES CHARGES IF YOU EXTEND YOUR PLAN TO A TOTAL OF 25 YEARS
- -----------------------------------------------------------------------------------------------------------------------
SALES CHARGES
- -----------------------------------------------------------------------------------------------------------------------
MONTHLY TOTAL INVESTMENT INVESTMENT TOTAL % OF % OF MONTHLY
INVESTMENT INVESTMENT 1 THRU 12 13 THRU 300 CHARGE CHARGES CHARGES INVESTMENT
AMOUNT TO TOTAL TO NET AMOUNT
INVESTMENT INVESTMENT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 15,000.00 $ 25.00 $ 3.04 $ 1,175.52 7.84% 8.50% $ 50.00
75.00 22,500.00 37.50 4.55 1,760.40 7.82 8.49 75.00
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>
6
PAGE
This table shows an example of a $100 per month Plan. It shows you the amount
invested and Sales Charges paid at different points in time. In this example, we
assumed that all monthly payments are made on time, but we did not include or
reflect dividends and distributions from the fund.
<TABLE>
<CAPTION>
A TYPICAL $100 PER MONTH INVESTMENT PLAN
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT AT THE END OF AT THE END OF AT THE END OF
AMOUNT 6 MONTHS 1 YEAR 2 YEARS
(6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE % OF AGGREGATE % OF AGGREGATE % OF AGGREGATE % OF
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL
INVEST- INVEST- INVEST- INVEST-
ENTS ENTS ENTS ENTS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15 YEARS (180
INVESTMENTS)
total
Investments..... $ 18,000 100% $600 100% $1,200 100% $ 2,400 100%
Deduct:
Sales Charge.... $ 1,619.76 9% $300 50% $ 600 50% $ 672.84 28%
Net Amount
Invested Under
Plan............ $16,380.24 91% $300 50% $ 600 50% $1,727.16 72%
25 YEARS (300
INVESTMENTS)
Total Investments.. $ 30,000 100% $600 100% $1,200 100% $ 2,400 100%
Deduct:
Sales Charge....... $ 2,348.16 7.8% $300 50% $ 600 50% $ 672.84 28%
Net Amount Under
Plan............. $27,651.84 92.2% $300 50% $ 600 50% $1,727.16 72%
</TABLE>
NOTE: After the first 12 monthly investments have been made, the Sales Charges
deducted from any subsequent monthly investment will not exceed 6.1% of your
net investment in fund shares.
7
PAGE
This table shows you the investment performance of a hypothetical $50 per month
Plan from March 29, 1991, when the fund started investment operations, to August
31, 1998. Under this Plan, $25.00 is deducted as a Sales Charge from each $50.00
monthly investment during the first year of the Plan. After the first year, the
Sales Charge decreases to $3.04. In calculating this investment performance, we
assumed that dividends and distributions were reinvested in additional fund
shares. This performance is no indication or guarantee of how your Plan will
perform.
<TABLE>
<CAPTION>
HYPOTHETICAL $50.00 PER MONTH INVESTMENT PLAN
- ---------------------------------------------------------------------------------------------------------------------------
AMOUNT OF PAYMENT AMOUNT INVESTED
- ---------------------------------------------------------------------------------------------------------------------------
FISCAL DURING CUMULA- SALES DURING CUMULATIVE SHARES SHARES TOTAL TOTAL
PERIOD FISCAL TIVE CHARGES FISCAL PURCHASED PURCHASED SHARES VALUE
ENDED PERIOD PERIOD THROUGH PURCHASED OF
REINVESTMENT SHARES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/91 $300.00 $300.00 $150.00 $150.00 $150.00 14.755 -- 14.755 $153.75
08/31/92 600.00 900.00 184.14 415.86 565.86 39.637 0.330 54.722 599.21
08/31/93 600.00 1,500.00 36.48 563.52 1,129.38 47.983 1.666 104.371 1,436.14
08/31/94 600.00 2,100.00 36.48 563.52 1,692.90 37.528 2.412 144.311 2,339.28
08/31/95 600.00 2,700.00 36.48 563.52 2,256.42 36.834 7.368 188.513 3,004.90
08/31/96(a) 600.00 3,300.00 36.48 563.52 2,819.94 65.964 8.156 451.146 4,096.41
08/31/97 600.00 3,900.00 36.48 563.52 3,383.46 55.920 16.050 523.116 5,738.61
08/31/98
</TABLE>
8
PAGE
(a) Includes the effect of a 2 for 1 split of fund shares on March 27, 1996.
SALES CHARGES
The Sponsor receives a Sales Charge to compensate it for creating the Plans and
for selling expenses and commissions paid to Securities Dealers. You pay a Sales
Charge on each monthly investment. The Sales Charge is highest during the first
12 months of a Plan. For example, on a $100 per month Plan, $50 is deducted from
each of the first 12 monthly investments. After the 12th payment, the Sales
Charge drops to $6.07 on each subsequent monthly investment. Deductions
decrease proportionately on certain larger plans. See the tables on pages 6 and
7.
SALES CHARGE REDUCTIONS
You may be able to reduce Sales Charges by combining Plans to take advantage of
the lower Sales Charges on higher monthly investments:
/bullet/ Two or more Plans purchased at one time may be combined, provided the
combined monthly investment is at least $150.
/bullet/ If you purchase a new Plan or increase your monthly investment under an
existing Plan, you may combine the new purchase or increase with an
existing, CURRENT Plan.
You may combine Plans owned by one or more of the following:
/bullet/ an individual,
/bullet/ his or her spouse,
/bullet/ children or grandchildren under the age of 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
/bullet/ 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).
In the case of Plans purchased at the same time, you must submit all the
applications together, along with a cover letter requesting that the Plans be
combined to reduce Sales Charges. If you want to combine a new Plan purchase or
Plan increase with a current Plan, you or your Securities Dealer must notify us
at the time the purchase or increase is made. Two or more Plans may be combined
to reduce Sales Charges only so long as you continue to make monthly investments
on each Plan.
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 $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.
9
PAGE
SECURITIES DEALERS AND SALES CHARGES
Securities Dealers receive 75% to 95% of the Sales Charges that you pay. The
Sponsor also may pay a bonus or other incentive to Securities Dealers that
employ registered representatives who sell a specified dollar amount of the
Plans and/or other Franklin Templeton Group funds. These incentives may include
trips for registered representatives and their families.
These Securities Dealers are independent contractors. Neither the Sponsor nor
the Custodian is responsible for their acts or obligations.
In no event will the value of such bonus or incentive paid by the Sponsor to the
Securities Dealer exceed the difference between the Sales Charges and the amount
reallowed to Securities Dealers in respect of such amounts sold by the
qualifying registered representative of such dealer. A Securities Dealer
receiving such bonus or incentive may be deemed to be an "underwriter" under the
Securities Act of 1933. Nothing herein or in other literature and confirmations
issued by the Sponsor or the Custodian, including the words "representative" or
"commission," shall make any Securities Dealer, a partner, employee or agent of
the Sponsor or the Custodian.
The Securities Dealer that you used to purchase your Plan has the right to all
commissions earned during the duration of your Plan. Your Securities Dealer has
no obligation to transfer your Plan to another Securities Dealer unless its
dealer's agreement with the Sponsor ends. If the Securities Dealer of record
chooses to release your Plan to a new Securities Dealer firm, it must first
complete, sign, and signature guarantee a release form that can be obtained from
us. This form must be returned to and accepted by the Custodian before any
change can be made.
Plans are offered in all states where it is lawful to do so.
HOW DO I START A PLAN?
To start a Plan, mail us your completed application, which is attached to this
prospectus, with a check for the monthly investment amount of your Plan, made
out to TEMPLETON FUNDS TRUST COMPANY. After we accept your application, we will
send you a confirmation statement showing the number of Plan shares purchased
for your account.
10
PAGE
You should send your monthly investments directly to us at:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
DEALER MAIN OFFICE SERVICES
100 FOUNTAIN PARKWAY
ST. PETERSBURG, FLORIDA 33716-1205
We will apply your investments, after deducting Sales Charges, toward the
purchase of Plan shares. We cannot accept partial monthly payments.
WHAT DISTRIBUTIONS MIGHT I RECEIVE?
All dividends and distributions will be automatically reinvested on the payment
date in additional Plan shares at net asset value, unless you choose to receive
cash. All dividends and distributions from retirement plan accounts that are not
reinvested are subject to federal income tax and, potentially, federal premature
distribution tax penalties if you are under age 59 1/2. Net asset value will be
calculated as described in the fund's prospectus under the heading "Transaction
Procedures and Special Requirements - Share Price."
Dividends or distributions received shortly after you make an investment may be
considered a partial return of your investment for tax purposes. Dividends and
capital gains, if any, normally will be paid by the fund at least annually and
generally will be taxable to Planholders for income tax purposes. See "How
Taxation Affects Planholders."
The net asset value per share will decrease by the amount of the dividend and
capital gains distributions on the ex-dividend date of the distributions.
PARTIAL WITHDRAWALS
If you withdraw all your Plan shares, your Plan will terminate. But you may
withdraw less than all your Plan shares WITHOUT terminating your Plan. If you
have owned your Plan for at least 45 days, you may withdraw up to 90% of your
shares from your account and receive fund shares. Or, you may redeem up to 90%
of your shares and receive cash. If you choose to receive cash, you must redeem
at least $100, but no more than 90% of the value of the shares. If you redeem
more than 90% of the net asset value of the shares and leave less than $100 in
your Plan, we may automatically redeem the entire balance in your Plan.
You may reinvest up to the amount you received without a Sales Charge within 90
days from the date of redemption. We will reinvest your cash based on the
current net asset value of fund shares. IRAs must be reinvested within 45 days.
We do not limit the number of redemptions you can make, but you must redeem at
least $100 each time. If the amount you redeemed exceeds $500, you do not need
to reinvest the entire amount you redeemed at once. That is, any reinvestment
may equal the amount you redeemed or at least $500, whichever is less.
Your request should be sent to: TEMPLETON FUNDS TRUST COMPANY
P.O. BOX 33030
ST PETERSBURG, FLORIDA 33733-8030
All withdrawal and redemption requests must be signed by the registered
Planholder. We will mail your redemption proceeds to the address we have on our
records unless you send us other instructions with a signature guarantee. A
partial withdrawal or redemption will not change the total number of monthly
investments under your Plan or the unpaid balance of your monthly investments.
Although we do not charge you a fee to partially withdraw or redeem, you will
be liable for any taxes. Please consult your tax advisor. Please clearly
identify your reinvestment request so we can distinguish it from your regular
monthly investments.
Ordinarily, we will send you a check within 7 days after we receive your
request. But if you pay your monthly investment by check, we may delay sending
your money until your check has cleared. We will need an instruction letter
11
PAGE
from you in order to send your proceeds if:
/bullet/ you redeem more than $50,000
/bullet/ the redemption check is made payable to someone other than the
Planholder we have on our records
/bullet/ the redemption check is to be sent to a different address than we have
on our records.
This letter must be signed by all Planholders and must have a signature
guarantee.
Additional requirements under the tax laws apply to withdrawals and redemptions
from retirement plan accounts. You must complete certain forms, which are
available from us, before we can process your request. To comply with the Code,
we may withhold a portion of your withdrawal or redemption proceeds. We assume
no responsibility for determining whether a withdrawal or redemption satisfies
applicable tax laws and will not be responsible for any penalties.
12
PAGE
HOW DO I CANCEL MY PLAN AND OBTAIN A REFUND?
CANCELING WITHIN 60 DAYS
Within 60 days after you purchase a Plan (your purchase date appears on the
confirmation statement for your initial payment), we will send you a notice
about your cancellation rights. If you elect to cancel within 45 days of when we
mail that notice, we will send you a cash refund equal to: (1) the total value
of your Plan shares on the date that it receives your cancellation request PLUS
(2) all Sales Charges you paid.
CANCELING WITHIN 18 MONTHS
You may cancel your Plan at any time within eighteen months after your purchase
date. If you cancel your Plan, we will send you a cash payment equal to: (1)
the total value of your Plan shares on the date we receive your request PLUS (2)
a refund of all Sales Charges you paid up to the cancellation date MINUS (3) 15%
of the total amount you have invested as of that date.
We will send you a written notice about your 18-month cancellation right if:
/bullet/ after 15 months from your purchase date, you have missed at least 3
monthly investments OR
/bullet/ you miss at least one monthly investment between your 15th month and
your 18th month.
If we have already sent you a notice at 15 months, we will not send you a second
notice even if you miss additional monthly investments.
The notice will include your cancellation rights, the value of your account when
we send you the notice, and the amount you would receive if you canceled your
Plan.
To cancel your Plan, please write us at: TEMPLETON FUNDS TRUST COMPANY
P.O. BOX 33030
ST. PETERSBURG, FLORIDA 33733-8030
If your cancellation request involves more than $100,000, we will need a
signature guarantee. If you cancel your Plan and want to reinvest the proceeds,
we will deduct all previously refunded Sales Charges from your reinvestment. You
may incur taxes if you cancel your Plan. Please consult your tax advisor.
HOW DO I TERMINATE MY PLAN?
After your cancellation rights expire, you may terminate your Plan at any time
by sending us a written request. Terminating your Plan is different from
canceling your Plan because when you terminate, you do not receive a refund of
Sales Charges.
You can choose to receive cash or fund shares. If you choose cash, we would
withdraw your shares, redeem them and send you the proceeds. We will need a
signature guarantee to process your request, which must be signed by the
registered Planholder, if:
/bullet/ you redeem more than $100,000
/bullet/ the redemption check is made payable to someone other than the
Planholder we have on our records OR
/bullet/ the check is to be sent to an address different from the one we have on
our records.
13
PAGE
The redemption price of fund shares will be the net asset value next determined
after we receive your request.
If you choose to receive fund shares, your Plan shares will may be exchanged for
fund shares. Then, you may keep your fund shares or exchange them for shares of
certain other Franklin Templeton Funds. Exchanges are more fully described in
the fund's prospectus under the caption "May I Exchange Shares for Shares of
Another Fund?" If you exchange your fund shares for shares of another Franklin
Templeton fund, you cannot exchange the other fund's shares back into fund or
Plan shares.
We can suspend your right to redeem your Plan shares when:
/bullet/ trading on the New York Stock Exchange is restricted
/bullet/ the Exchange is closed for other than weekends and holidays OR
/bullet/ the SEC declares an emergency.
You cannot withdraw cash from your account (see "Partial Withdrawals") while
your right to redeem Plan shares is suspended.
REINVESTING AFTER TERMINATION
If you terminate your Plan, you may reinvest your redemption proceeds within 60
days without any Sales Charges by re-opening an identically registered Plan. To
use this privilege, we must receive your reinvestment request and payment within
60 days after you terminated your Plan. We will reinvest your proceeds based on
the net asset value per fund share next determined after we receive your request
and payment. You may use this privilege only once. You may incur taxes on your
reinvestment. Please consult your tax advisor.
You may use this replacement privilege only if you have terminated your Plan.
You may use the partial withdrawal privilege if you do NOT want to terminate
your Plan (see "Partial Withdrawals").
If you cancel your Plan (see "How Do I Cancel My Plan and Obtain a Refund?") and
want to reinvest the proceeds, any refunded Sales Charges will be deducted from
your reinvestment.
AUTOMATIC TERMINATION
We will terminate your Plan: after you have made 300 monthly payments or if fund
shares are not available and we have not made a substitution, as described under
"How Do the Plans Invest Their Assets? - A Change in the Underlying Investment."
We will give you full credit for any advance investments you have made.
We will send you a written notice 60 days before we actually terminate your
Plan. On termination, we may liquidate all your Plan shares, or enought Plan
shares to pay all Sales Charges..
We will hold any remaining shares or cash for you and will deliver them to you
when you surrender your Plan.
You will not receive interest on any of your cash balances. If you do not
terminate your Plan within 60 days after we send you written notice, we will
mail you the shares or a check to the address noted on your Plan records. At
this point, you will have no rights under the Plan. But if the shares or the
check are returned to us undelivered, we will hold these assets for your
benefit, subject only to state law.
14
PAGE
TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
SHARE PRICE
The Plans invest in the fund at net asset value. The fund's net asset value is
based on the value of the securities the fund owns. Since the fund primarily
invests in common stocks, the value of its securities and the net asset value of
its shares fluctuate depending upon the stock market. In other words, if the
stock market declines, so will the value of the fund's securities and the net
asset value of its shares. We base the value of Plan shares on the net asset
value of fund shares. One Plan share equals one fund share, and the net asset
value of a Plan share equals the net asset value of a fund share. As a result,
the value of Plan shares also will fluctuate depending on the stock market, the
value of the fund's securities and the net asset value of fund shares.
A Plan calls for monthly investments regardless of the value of Plan or fund
shares. As a result, you should consider your tolerance for risk and volatility
before investing. A Plan offers no assurance against loss and does not eliminate
the risk of owning any security. If you terminate your Plan when the value of
your Plan shares is less than their cost, you will lose money.
SIGNATURE GUARANTEES
You can have your signature guaranteed by an eligible guarantor. Eligible
guarantors include:
/bullet/ banks, savings and loans, trust companies, industrial loan companies
and credit unions,
/bullet/ national securities exchanges, registered securities associations and
clearing agencies,
/bullet/ broker-dealers that are members of a national securities exchange or a
clearing agency or that have minimum net capital of $100,000 OR
/bullet/ institutions that participate in a recognized signature medallion
program.
A notarized signature is not sufficient. We may require signature guarantees on
various cash transactions. Also, we require a signature guarantee to transfer
Plan shares, or if we believe that it would protect against potential confusion
or claims. For example, we may require a signature guarantee when:
/bullet/ we are unable to confirm the current address of one or more joint
owners of an account
/bullet/ multiple owners have a dispute or give us inconsistent instructions
/bullet/ we have been notified of a potential claim
/bullet/ we receive instructions from an agent, not the actual registered owner
/bullet/ we determine that joint owners who are married to each other are
separated or may be in divorce proceedings
/bullet/ we are not satisfied that a representative of a corporation,
partnership, association, or other entity has proper authority.
15
PAGE
TELEPHONE TRANSACTIONS
You may redeem Plan shares by telephone unless you tell us in writing not to
allow telephone transactions. If you change your mind, you must send us written
instructions to authorize telephone transactions for your Plan. These written
instructions must be signed by each Planholder, with a signature guarantee.
Telephone transactions are very convenient, but carry some risk. For your
protection, we will ask for information to confirm the identity of the caller
and whether the transaction is legitimate. We may delay or refuse a transaction
if we are not reasonably satisfied that the transaction is legitimate. We may
record your telephone call.
We are not responsible for any loss that occurs if we delay or refuse a
telephone transaction, or if you are unable to execute a transaction by
telephone. We also are not responsible for any loss if we follow instructions
by phone that we reasonably believe are genuine.
You should not have any difficulty in reaching us by phone. If you do, you may
ask your Securities Dealer for assistance or send us written instructions.
Please refer to the sections of this prospectus that discuss the transaction you
would like to make or call the TCAP Dedicated Service Group at 1-888-881-TCAP.
INDIVIDUAL RETIREMENT ACCOUNTS
You may be eligible to set up an IRA. We offer an IRA Agreement for investment
in the Plans through Franklin Templeton Trust Company (FTTC), an affiliate of
the Custodian. Under the Agreement, FTTC provides custodial and other services
to you for an annual service fee of $10.00. FTTC is qualified under IRS
regulations to act as an IRA custodian.
You may start an IRA by executing the IRA Application and by making the initial
Plan investment. Under current law, your maximum annual contribution is limited
to the lesser of 100% of your compensation or $2,000. A second account may be
set up for a non-working spouse, and the maximum contribution for both accounts
is $4,000. If you or your spouse participate in a tax-qualified or
government-approved retirement plan, your IRA contributions may or may not be
tax deductible, depending on your income.
YOU SHOULD KNOW THAT CONTRIBUTIONS IN EXCESS OF THESE LIMITS, PREMATURE
DISTRIBUTIONS, AND/OR INSUFFICIENT WITHDRAWALS AFTER AGE 70 1/2 MAY RESULT IN
SUBSTANTIAL ADVERSE TAX CONSEQUENCES. In addition to your regular monthly
investments, once each year you may invest an additional amount to bring your
total investment for the year up to the exact amount authorized by the IRS for
your IRA. "Rollover contributions," as defined in IRS regulations, are also
allowed. Odd amounts, not in exact multiples of the monthly investment unit,
will be accepted for all rollovers and transfers into IRAs. You should inform
the Custodian of the nature of your contribution when you send it in to prevent
rejection.
A Roth IRA established by conversion of an IRA Plan shall not be considered to
create a new Plan.
We invest your contributions on the day they are received by the Custodian.
Within 7 days of making your initial contribution, you may ask us in writing to
revoke your IRA and receive the greater of the net asset value of your account
(including the Sales Charges) or the amount that you contributed.
TAX-SHELTERED RETIREMENT PLANS
You may purchase a Plan to establish a tax-sheltered retirement plan, including
a custodial account under Section 403(b) of the Code (403(b) accounts) or a
qualified retirement plan under Section 401(a) of the Code (QRPs). A
tax-sheltered retirement plan may not be established by changing the
registration of an existing plan. FTTC may serve as either trustee or custodian
for these plans. FTTC currently charges a fee of $10.00 per year for maintaining
each 403(b) account or QRP. QRPs may only be established if your Securities
Dealer is not considered a fiduciary, as that term is defined in Section 3(21)
of the Employee Retirement Income Security Act of 1974.
16
PAGE
If you establish a Plan in a 403(b) account or QRP, you likely will release any
cancellation and refund rights that you may have under the Plan (see "How Do I
Cancel My Plan and Obtain A Refund?") because of the withdrawal restrictions of
your 403(b) account or QRP. To establish a 403(b) account or QRP, you must sign
a form, supplied by your Securities Dealer, acknowledging the restrictions on
your cancellation and refund rights.
TRANSFERRING YOUR PLAN
You may transfer your Plan to another person, such as a relative, charitable
institution or trust, who will only have the right to fully withdraw from the
Plan. Or, you can transfer your Plan to another person, trustee or custodian
that is acceptable to us and who has applied to us for a similar Plan. If you
would like to transfer your Plan to someone else, please contact us and we will
give you the appropriate form. Transfers may be subject to tax. Please consult
your tax advisor.
17
PAGE
SERVICES TO HELP YOU MANAGE YOUR PLAN
AUTOMATIC INVESTMENT PROGRAM
Our automatic investment program offers a convenient way to invest in the Plan.
Under the program, you can have money transferred automatically from your
checking or savings account to a Plan each month to buy additional shares. If
you are interested in this program, please refer to the application included
with this prospectus or contact your investment representative. The market value
of fund shares may fluctuate and a systematic investment program such as this
will not assure a profit or protect against a loss. You may discontinue the
program at any time by sending written notice to us, which must be received at
least 10 days prior to the collection date.
CHANGING THE AMOUNT OF YOUR MONTHLY INVESTMENT
You may increase or decrease your Plan's fixed monthly investment by sending us
written notice and a new Plan application. You may choose any monthly investment
amount shown in the tables at pages 6 and 7. The Sales Charges that you pay will
be adjusted to reflect your change.
/bullet/ You may increase your monthly investment at any time.
/bullet/ If you increase your monthly investment, you have 6 months to change
your mind, but you may not decrease your Plan lower than your original
monthly investment amount.
/bullet/ In the first 6 months of your Plan, you may decrease your monthly
investment by up to 50%.
The Sales Charges already paid on the existing Plan will be credited to the
Sales Charge applicable to the new Plan. Excess Sales 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.
MAKING INVESTMENTS AHEAD OF SCHEDULE
Your Plan calls for monthly investments for 15 years (180 investments). You may
complete your Plan in less than 15 years by making investments before their due
date, but you may not make more than 24 monthly investments in one calendar
year. In addition, you may prepay up to 24 monthly investments at any time
during the life of your Plan. Monthly investments may be accrued and paid in a
lump sum. You pay the same Sales Charge whether or not you make monthly
investments in advance.
The limits on the number of payments you can make in one year or at one time
will be waived:
/bullet/ if you are behind schedule on your monthly investments,
/bullet/ in the case of a transfer or rollover into an IRA, or
/bullet/ if the Planholder dies, to allow the Plan to be completed at one time
by the heirs or estate of the Planholder.
A Plan is not considered behind schedule if: (1) it has been completed and not
redeemed; (2) it has not been completed but you have made at least as many
investments as there are months since the Plan began or since a Plan size
increase; or (3) it is a tax qualified plan or an IRA.
18
PAGE
EXTENDED INVESTMENT OPTION
Under our Extended Investment Option, you may continue to make monthly
investments for up to 10 years after completing all scheduled investments in
your 15-year Plan. The Sales Charge on each monthly investment will be the same
as the charge on your last scheduled investment under your 15-year Plan.
You will lose your right to the Extended Investment Option if you fail to make
monthly investments for 6 consecutive months. All Extended Investment Options
will end after 10 years (a total of 300 monthly payments over 25 years).
SYSTEMATIC WITHDRAWAL PROGRAM
When you complete your 15-year Plan, you may make regular cash withdrawals under
our Systematic Withdrawal Program. Under this program, we will redeem enough of
your Plan shares to provide regular cash payments to you of $50 or more on a
monthly, quarterly, semiannual or annual basis. To participate in the program,
the value of your account must be at least $5,000. There are no charges for
withdrawals under our Systematic Withdrawal Program. Except for the $50 minimum,
there is no limit on the size of your withdrawals. You may change the amount of
your cash withdrawal or discontinue it at any time.
Please note that:
/bullet/ Withdrawals may exhaust your account, and cannot be considered as
income on your investment.
/bullet/ You may realize a gain or loss for tax purposes on each cash
withdrawal.
/bullet/ If you own two or more Plans, it probably is not in your financial
interest to withdraw cash from a completed Plan while still making
regular payments on an uncompleted Plan.
/bullet/ You may not receive dividends and distributions in cash while you are
receiving cash withdrawals under the program.
If your Plan is part of an IRA and you are age 59 1/2 or older, you may
participate in the program even if you have not completed your 15-year Plan. For
retirement plans subject to mandatory distribution requirements, the $50 minimum
will not apply.
You will generally receive your payment by the end of the month in which a
payment is scheduled. When you sell your shares under the Systematic Withdrawal
Program, it is a taxable transaction.
You may discontinue the Systematic Withdrawal Program, change the amount and
schedule of withdrawal payments, or suspend one payment by notifying us in
writing at least 7 business days before the end of the month preceding a
scheduled payment.
ELECTRONIC FUND TRANSFER
You may choose to have dividend and capital gain distributions or payments under
the Systematic Withdrawal Program sent directly to a checking or savings
account. If the account is with a bank that is a member of the Automated
Clearing House, the payments may be made automatically by electronic funds
transfer. If you choose this option, please allow at least 15 days for initial
processing. We will send any payments made during that time to the address of
record on your account.
TELEFACTS(R)
From a touch-tone phone, you may call our TELEFACTS(R) system (day or night) at
1-800/247-1753 to:
19
PAGE
/bullet/ obtain information about your Plan account, and
/bullet/ obtain price and performance information about the fund.
You will need your account number and the fund's code number to use
TELEFACTS(R). The code number is 450.
STATEMENTS AND REPORTS TO PLANHOLDERS
We will send you the following statements and reports on a regular basis:
/bullet/ Confirmation and account statements reflecting transactions in your
Plan account, including transfers from your Plan account and dividend
reinvestments. PLEASE VERIFY THE ACCURACY OF YOUR STATEMENTS WHEN YOU
RECEIVE THEM.
Financial reports of the fund will be sent every 6 months. To reduce fund
expenses, we attempt to identify related Planholders within a household and send
only one copy of a report. Call the TCAP Dedicated service Group at
1-888-881-TCAP if you would like an additional free copy of the fund's financial
reports.
WHAT IF I HAVE QUESTIONS ABOUT MY PLAN?
If you have any questions about your Plan, you may write:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.,
DEALER MAIN OFFICE SERVICES
100 FOUNTAIN PARKWAY
ST. PETERSBURG, FLORIDA 33716-1205.
You may also contact us by phone at the number listed below.
Hours of Operation (Pacific Time)
Department Name Telephone No. (Monday through Friday)
- ---------------------------- -------------- ---------------------------------
TCAP Dedicated Service Group 1-888-881-TCAP 6:00 a.m. to 5:00 p.m.
Your phone call may be monitored or recorded to ensure that we provide you with
high quality service. You will hear a regular beeping tone if your call is being
recorded.
20
GLOSSARY
USEFUL TERMS AND DEFINITIONS
1933 ACT - Securities Act of 1933, as amended
1940 ACT - Investment Company Act of 1940, as amended
CODE - Internal Revenue Code of 1986, as amended
CUSTODIAN - Templeton Funds Trust Company
DISTRIBUTORS - Franklin/Templeton Distributors, Inc., the principal
underwriter. Also referred to as the Sponsor.
FRANKLIN TEMPLETON FUNDS - The U.S. registered mutual funds in the Franklin
Group of Funds(R) and the Templeton Group of Funds except for Franklin Valuemark
Funds, Templeton Capital Accumulator Fund, Inc. and Templeton Variable Products
Series Fund
FRANKLIN TEMPLETON GROUP - Franklin Resources, Inc., a publicly owned holding
company, and its various subsidiaries
FRANKLIN TEMPLETON GROUP OF FUNDS - All U.S. registered investment companies in
the Franklin Group of Funds(R) and the Templeton Group of Funds
FUND - Templeton Capital Accumulator Fund, Inc., the underlying investment for
the Plans.
INVESTMENT COUNSEL - Templeton Investment Counsel, Inc., the fund's investment
manager
NASD - National Association of Securities Dealers, Inc., a non-profit
self-regulatory orgainziation operating under the supervision of the SEC.
NET ASSET VALUE (NAV) - The value of a mutual fund is determined by deducting
the fund's liabilities from the total assets of the portfolio. The net asset
value per share is determined by dividing the net asset value of the fund by the
number of shares outstanding.
NYSE - New York Stock Exchange
OFFERING PRICE - The public offering price is based on the Net Asset Value per
share. Shares of the fund may be initially acquired through an investment in
Templeton Capital Accumulation Plans. The charges for the first year of a Plan
can amount to 50% of the amounts paid during that year under the Plan.
PLANS - Templeton Capital Accumulation Plans
RESOURCES - Franklin Resources, Inc.
SAI - Statement of Additional Information
SALES CHARGES - The Sponsor receives compensation for creating your Plan and for
selling expenses and commissions to dealers, which is deducted from each monthly
investment as a Sales Charge.
PAGE
SEC - U.S. Securities and Exchange Commission
SECURITIES DEALER - A financial institution that, either directly or through
affiliates, has an agreement with Distributors to handle customer orders and
accounts with the fund. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
SPONSOR - Franklin Templeton Distributors, Inc., the principal underwriter. Also
referred to as Distributors. ' TELEFACTS(R) - Franklin Templeton's automated
customer servicing system
TELEFACTS/R/ - Franklin Templeton automated customer servicing system
TFTC - Templeton Funds Trust Company, the custodian for the Plans as described
in the Plan prospectus
TRUST COMPANY - Franklin Templeton Trust Company. Trust Company is an affiliate
of Distributors and both are wholly owned subsidiaries of Resources.
WE/OUR/US - Unless the context indicates a different meaning, these terms refer
to the fund and/or Investor Services, Distributors, or other wholly owned
subsidiaries of Resources.
PAGE
APPENDIX
OFFICERS AND DIRECTORS OF THE SPONSOR.
The following sets forth the directors and executive officers of the Sponsor:
Charles B. Johnson, Director and Chairman of the Board, is Director, President
and Chief Executive Officer of Franklin Resources and Director 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 Director and Chairman of the Board of Franklin
Management, Inc.
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.
Peter D. Jones, Executive Vice President.
Daniel T. O'Lear, Executive Vice President.
Kenneth A. Lewis, Treasurer.
Deborah R. Gatzek, Senior Vice President and Assistant Secretary, is Senior Vice
President-Legal, and Assistant Secretary of Franklin Resources and Vice
President and Assistant Secretary of Franklin Advisers.
Charles E. Johnson, Senior Vice President, is Director and 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.
Harry G. Mumford, Jr., Senior 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 and Richard
Conboy.
Other Vice Presidents of the Sponsor include Jimmy A. Escobedo, Robert N.
Geppner, Mike Hackett, Ken Leder, John R. McGee, Kent P. Strazza, Bert W. Feuss,
Sarah Stypa and Laura Komar.
All officers and employees of the Sponsor are covered by a blanket bond in
the amount of $175,000,000.
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, 1997 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, 1997. 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, 1997, and the results of its operations and
the changes in its net assets for the periods indicated, in conformity with
generally accepted accounting principles.
[ ]
New York, New York
October 17, 1997
PAGE
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Templeton Capital Accumulator Fund, Inc. shares, at value (average cost, $170,204,272
$127,186,400)..............................................................
LIABILITIES: --
NET ASSETS: ------------
Net assets (equivalent to $10.97 per share based on 15,522,505 Plan shares
held for outstanding Plans) (Note 2)....................................... $170,204,272
============
</TABLE>
STATEMENTS OF OPERATIONS
Years Ended August 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Distributions received on shares of Templeton
Capital Accumulator Fund Inc.from:
Net investment income....................... $ 2,264,084 $ 1,313,090 $ 503,913
Realized gains.............................. 1,745,754 284,137 1,511,116
------------ ----------- ---------
4,009,838 1,597,227 2,015,029
Expenses (Note 3)............................. -- -- --
------------ ----------- ----------
Net investment income..................... $ 4,009,838 $ 1,597,227 $2,015,029
------------ ----------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on complete and partial
terminations, including Fund shares withdrawn
at markevalue................................ $ 1,825,361 $ 721,621 $ 205,940
Unrealized appreciation during the period..... 24,576,860 10,423,640 217,321
------------ ----------- ----------
Net gain on investments................... $ 26,402,221 $11,145,261 $ 423,261
------------ ----------- ----------
Net increase in net assets from operations.... $ 30,412,059 $12,742,488 $2,438,290
============ =========== ==========
</TABLE>
See Notes to Financial Statements.
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, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- --------------
<S> <C> <C> <C>
Increase (decrease) in net assets from:
Operations:
Net investment income................. $ 4,009,838 $ 1,597,227 $ 2,015,029
Net realized gain on plan terminations 1,825,361 721,621 205,940
Unrealized appreciation for the period 24,576,860 10,423,640 217,321
------------- ------------- ------------
Net increase in net assets from
operations..................... 30,412,059 12,742,488 2,438,290
Distributions to planholders.......... (4,009,838) (1,597,227) (2,015,029)
Transactions in Fund shares (Note 2).. 37,229,624 30,868,787 26,322,220
------------- ------------- ------------
Net increase in net assets........ 63,631,845 42,014,048 26,745,481
Net assets:
Beginning of year..................... 106,572,427 64,558,379 37,812,898
------------- ------------- ------------
End of year........................... $ 170,204,272 $ 106,572,427 $ 64,558,379
============= ============= ============
</TABLE>
See Notes to Financial Statements.
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. Fund 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.
d. Accounting Estimates. The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the amounts of income and expense during the reporting period. Actual
results could differ from those estimates.
Note 2. Transactions in Fund Shares
Effective March 27, 1996, the shares of the Fund were split on a 2-for-1
basis. As of August 31, 1997, the Plan held 15,522,505 shares of the Fund.
Transactions in Fund shares for the years ended August 31, 1997, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- ------------------------- ----------------------
Amount Shares Amount Shares Amount Shares
<S> <C> <C> <C> <C> <C> <C>
Planholder payments.............. $ 46,632,039 $ 39,848,219 $ 33,284,142
Less-sales charges............... 5,140,712 5,671,439 6,526,442
------------ ------------ ------------
Balance invested in Fund shares.. 41,491,327 4,161,074 34,176,780 2,870,915 26,757,700 1,748,783
Distributions reinvested in Fund
shares......................... 4,009,838 438,885 1,597,227 102,037 2,015,029 133,499
Redemption and withdrawals in
Fund shares...................... (8,271,541) (817,091) (4,905,220) (413,497) (2,450,509) (165,571)
Shares issued on 2-for-1 stock
split.......................... -- -- -- 5,130,349 -- --
------------ ----------- ------------ ----------- ------------ ---------
$ 37,229,624 3,782,868 $ 30,868,787 7,689,804 $ 26,322,220 1,716,711
============ =========== ============ =========== ============ =========
</TABLE>
Note 3. Sponsor and Custodian
Franklin/Templeton Distributors, Inc., as Sponsor of the Plan received net
sales and creation charges, after commissions paid to authorized brokers and
dealers, of $529,236, $610,774, and $575,554 for the years ended August 31,
1997, 1996 and 1995, respectively. Expenses of operating the Plan are paid by
the Sponsor. 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, 1997 were composed of the following
amounts:
Amount paid in by planholders, net of sales and
creation charges.................................... $ 134,628,742
Distributions reinvested................................ 8,416,579
Payment of redemption proceeds to planholders........... (19,017,307)
Accumulated gain on plan terminations................... 3,158,385
Unrealized appreciation of investments.................. 43,017,873
-------------
Net assets applicable to planholders.................... $ 170,204,272
=============
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, 1997, and the related statements of
operations, 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, 1997, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
[ ]
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF FINANCIAL CONDITION
September 30, 1997
---------------
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents................................................. $ 24,274,863
Underwriting and distribution fees receivable............................. 42,704,944
Deferred sales commissions................................................ 35,590,317
Due from parent and affiliates............................................ 43,969,811
Property and equipment, net............................................... 4,189,419
Prepaid expenses and other................................................ 7,020,088
-------------
Total assets..................................................... $ 157,749,442
=============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Underwriting and distribution fees payable to dealers.................. $ 35,794,538
Trade payables and accrued expenses.................................... 15,753,550
-------------
Total liabilities...................................................... 51,548,088
--------------
Commitments (Note 4
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......................................... 360,564,072
Accumulated deficit.................................................... (254,365,073)
-------------
Total liabilities and stockholder's equity......................... 106,201,354
-------------
$ 157,749,442
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF OPERATION
September 30, 1997
------------------
<TABLE>
<CAPTION>
<S> <C>
Revenues:
Underwriting commissions and distribution fees ...................... $ 676,006,448
Investment and other income.......................................... 2,069,908
-------------
Total revenues.............................................. 678,076,356
=============
Expenses:
Underwriting and distribution ...................................... 631,925,419
Employee related.................................................... 67,986,557
Advertising and promotion.......................................... 66,689,684
General and administrative.......................................... 53,094,117
-------------
Total expenses............................................. 819,695,777
-------------
Net loss............................................................... $ (141,619,421)
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
For the year ended September 30, 1997
<TABLE>
<CAPTION>
Common Stock Capital in Total
Excess of Retained Stockholder's
Par Value Amount Par value Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1996.... 2,355 $ 2,355 $150,564,072 $(112,745,652) $ 37,820,775
Capital contribution from -- -- 210,000,000 -- 210,000,000
parent......................
Net Loss.................... -- -- -- (141,619,421) (141,619,421)
------- ------- ------------ ------------- -------------
Balance, September 30, 1997. 2,355 $ 2,355 $360,564,072 $(254,365,073) $ 106,201,354
======= ======= ============ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF CASH FLOWS
For the year ended September 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Net loss......................................................... $(141,619,421)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation............................................. 912,769
Amortization of deferred sales commissions............... 48,566,223
Increase in underwriting and distribution fees receivable (16,529,249)
Increase in deferred sales commissions................... (69,522,603)
Decrease in prepaid and other............................ (2,543,327)
Increase in due from affiliates.......................... (43,969,811)
Increase in underwriting and distribution fees payable
to brokers............................................. 13,209,338
Increase in trade payables and accrued expenses.......... 5,738,242
Decrease in due to affiliates............................ (5,890,403)
-------------
Net cash used in operating activities............................ (211,648,242)
-------------
Purchases of furniture and equipment......................... (2,044,969)
-------------
Net cash used in investing activities............................ (2,044,969)
-------------
Capital contribution from parent................................. 210,000,000
-------------
Net cash provided by financing activities........................ 210,000,000
-------------
Decrease in cash and cash equivalents............................ (3,693,211)
Cash and cash equivalents, beginning of year..................... 27,968,074
-------------
Cash and cash equivalents, end of year........................... $ 24,274,863
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS:
Franklin/Templeton Distributors, Inc. (the Company) is a wholly-owned subsidiary
of Franklin Resources, Inc. (Franklin). The Company is registered with the
Securities and Exchange Commission as a broker dealer and serves as the
principal underwriter for the Franklin Templeton Group of Funds.
Revenues from underwriting commissions are earned primarily from fund sales.
Distribution fee revenue is generally based on the level of assets under
management. Most sales of Franklin Templeton funds include a sales commission
which is paid to the Company. The Company receives distribution fees from those
funds in reimbursement for distribution expenses incurred. A significant portion
of underwriting commission and distribution fee revenue is paid to selling
intermediaries.
2. SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation:
These financial statements are prepared in accordance with generally
accepted accounting principals which require the use of estimates made by
management.
REVENUE RECOGNITION:
Underwriting commissions on mutual fund shares sales are recorded based on
traded date. Distribution fees are accrued as earned.
ADVERTISING AND PROMOTION:
Costs of advertising and promotion are expenses as the advertising appears
in the media.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of demand deposits with banks and amounts
held in a money market fund for which an affiliate acts as investment adviser.
Due to the relatively short-term nature of these instruments, the carrying value
approximates fair value.
DEFERRED SALES COMMISSION:
Sales commissions paid to financial intermediaries in connection with the
sales of certain share classes of open-end Franklin Templeton funds are deferred
and amortized on a straight-line basis over a period of up to eighteen months.
ALLOCATION OF INTERCOMPANY COSTS:
Certain management, accounting and other administrative costs are allocated
to the Company by its affiliates. These allocations are based on estimates and
assumptions that are periodically reviewed and adjusted by management.
INCOME TAXES:
The Company is included in the consolidated federal and combined state income
tax returns of Franklin. Franklin allocates federal and state income taxes to
the Company using the separate return method with the exception that Frankln
does not allocate to the Company tax benefits arising from its net operating
losses.
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.
Deferred taxes as of September 30, 1997 relate primarily to depreciation on
fixed assets and compensation accruals. A valuation allowance has been
recognized for the entire deferred amounts.
PROPERTY AND EQUIPMENT:
Property 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. PROPERTY AND EQUIPMENT:
The following is a summary of property and equipment as September 30, 1997:
Furniture and equipment..................... $ 8,144,402
Less accumulated depreciation............... (3,954,983)
-----------
$ 4,189,419
===========
4. COMMITMENTS:
The Company leases automobile and office equipment under agreements expiring
at various dates through fiscal year 2002 which are accounted for as operating
leases. Total lease expense for the year amounted to $386,007. At September 30,
1997, remaining operating lease commitments are as follows:
1998............ $ 55,737
1999............ 28,842
2000............ 24,430
2001............ 24,430
2002............ 10,762
---------
$ 144,201
=========
5. EMPLOYEE BENEFIT AND INCENTIVE PLANS:
Franklin sponsors a defined contribution and profit sharing plan covering
substantially all employees of Franklin and its U.S. Subsidiaries. The plan is
funded on an annual basis as determined by the Board of directors of Franklin.
The Company's portion of expense for the plan for the year ended September 30,
1997 was $3,145,691.
Franklin sponsors an Annual Incentive Plan covering certain employees of the
Parent and its U.S. Subsidiaries. The costs associated with Annual Incentive
Plan awards are charged to income currently. The Company's portion of the stock-
based compensation expense for the Plan for the year ended September 30, 1997
was $1,645,557.
6. RELATED PARTY TRANSACTION:
For the year ended September 30, 1997, the Company was allocated $38,308,701
of general, administrative and other costs by Franklin and other affiliates.
Franklin has agreed to continue to provide the financial support necessary
to fund the Company's operations.
7. NET CAPITAL REQUIREMENT:
The Company is subject to the net capital rule (Rule 15c3-1) of the
Securities and Exchange Commission. In accordance with Rule 15c3-1, the Company
is required to maintain a minimum net capital of $5,000 and to maintain a ratio
of aggregate indebtedness to net capital, both as defined, not in excess of 15
to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash
dividends paid if the resulting indebtedness to net capital ratio would exceed
10 to 1. At September 30, 1997, the Company had net capital of $4,861,247 which
was $1,424,708 in excess of its required net capital of $3,436,539. The
Company's ratio of aggregate indebtedness to net capital was 10.6 to 1.
The Company is currently exempt from the requirement to maintain a "Special
Reserve account for the Exclusive Benefit of Customers" under provision of SEC
Rule 15c3-1 based upon Paragraph K(2)(i) of the Rule.
PAGE
Templeton
Capital
Accumulation Plans
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, Florida 33733-8030
(800) 632-2301
(LOGO)
Principal Underwriter:
Franklin Templeton
Distributors, Inc.
100 Fountain Parkway
St. Petersburg, Florida 33716 TL450
P 01/99
PAGE
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and
documents:
The facing sheet.
The Cross-Reference Sheet.
The Prospectus consisting of[27] pages.
Undertakings.
The list of contents of Registration Statement.
Signatures.
The following exhibits:
EXHIBIT
NUMBER DESCRIPTION
1. A (1) Custodian Agreement of Registrant - Custodian Agreement
between Franklin Templeton Distributors, Inc. and
Templeton Funds Trust Company.**
A (2) None.
A (3)(a) None.
A (3)(b) Form of Dealer's Agreement between the
Sponsor and United Services Planning
Association, Inc.*
A (3)(c) Schedules of sales commissions.*
A (4) None.
A (5) None.
A (6)(a) Articles of Incorporation of Sponsor.**
PAGE
EXHIBIT
NUMBER DESCRIPTION
(6)(b) Bylaws of Sponsor.**
A (7) None.
A (8) None.
A (9)(a) None.
A (10) Form of Application to Plans.*
2. None.
3. Opinion of Counsel.
4. None.
5. Not Applicable.
- --------------------
* Previously filed with Pre-Effective Amendment No. 2 to this Registration
Statement on February 28, 1991.
** Previously filed with Post-Effective Amendment No. 4 to this Registration
Statement on December 30, 1993.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Depositor,
Franklin Templeton Distributors, Inc., on behalf of the registrant, Templeton
Capital Accumulation Plans,cerifies that is has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St.Petersburg, Florida on
this 28th day of October, 1998.
TEMPLETON CAPITAL ACCUMULATION PLANS
(Registrant)
BY: FRANKLIN TEMPLETON DISTRIBUTORS, INC.
(Depositor)
BY: /s/PETER D. JONES
Peter D. Jones
Executive Vice President
