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
180 fixed monthly investments, with the option to extend up to 300 investments.
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 investments, 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 4 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 the Glossary.
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? .................................. 2
How Taxation Affects Planholders ........................ 3
How Are the Plans Organized? ............................ 3
ABOUT YOUR PLAN
How Do I Choose a Plan? ................................. 4
How Do I Start a Plan? .................................. 8
What Distributions Might I Receive? ..................... 9
Partial Withdrawals ..................................... 9
How Do I Cancel My Plan and Obtain a Refund? ............ 10
How Do I Terminate My Plan? ............................. 11
Transaction Procedures and Special Requirements ......... 12
Services to Help You Manage Your Plan ................... 14
What If I Have Questions About My Plan? ................. 17
FINANCIAL STATEMENTS .................................... 18
GLOSSARY ................................................ 33
APPENDIX
Officers and Directors of the Sponsor ................... 35
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. No person should rely upon any information not
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 (120 investments). Once you have completed investments
for 15 years (120 investments), 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.
/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 120
investments or ten years after you have completed your 15-year plan
(180 investments). You may not make more than an additional 120
investments nor may you make investments after the additional ten
years (a total of 300 investments and 25 years).
/bullet/ You may withdraw some of your Plan shares at any time without
terminating your Plan. See "Partial Withdrawals" for more
information.
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/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.
/bullet/ We may terminate your Plan at any time if fund shares are not
available and a substitute investment is not made or, for all Plans
established subsequent to January 1, 1995, if no investment is made
during each six month period, or, for all Plans in existence prior
to January 1, 1995, if no investment is made during each twelve
month period. See "How Do I Terminate My Plan?" 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/registered trademark/.
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
Securities Act of 1933, as amended. 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.
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,
2
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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 the fund's shares.
Designated capital gain distributions, which are automatically reinvested
in additional Plan shares, are treated as long-term capital gains. As more
fully described under "Distribution and Taxes" in the fund's 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 notice regarding
taxes each year.
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.
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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 180 monthly investments. 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.
This table shows the range of available monthly investment amounts for a
Plan, total of the 180 investments that you would make, and the Sales Charges
applied to each monthly payment. The table shows just the 180 investments that
you would make. The table does not reflect past or projected investment
performance, dividends, or income of the fund or the Plan.
MONTHLY INVESTMENTS AND SALES CHARGES FOR THE PLANS
<TABLE>
<CAPTION>
SALES CHARGES
-----------------------------------------------------------------
% OF % OF
MONTHLY CHARGES CHARGES MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL TO TOTAL TO NET INVESTMENT
AMOUNT INVESTMENT 1 THRU 12 13 THRU 180 CHARGE INVESTMENT INVESTMENT AMOUNT
- ------------ ---------------- ------------ ------------- ------------ ------------ ------------ -------------
<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>
4
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As explained more fully under "Services to Help You Manage Your Plan -
Extended Investment Option," you may extend the life of your Plan by making an
additional 120 investments. This table shows the same type of information as
the previous table, but we adjusted the information for Plans extended to a
total of 300 investments.
MONTHLY INVESTMENTS AND SALES CHARGES IF YOU EXTEND YOUR PLAN TO A TOTAL OF 300
INVESTMENTS
<TABLE>
<CAPTION>
SALES CHARGES
-------------------------------------------------------------------
% OF % OF
MONTHLY CHARGES CHARGES MONTHLY
INVESTMENT TOTAL INVESTMENT INVESTMENT TOTAL TO TOTAL TO NET INVESTMENT
AMOUNT INVESTMENT 1 THRU 12 13 THRU 300 CHARGE INVESTMENT INVESTMENT AMOUNT
- ------------ --------------- ------------ ------------- -------------- ------------ ------------ -------------
<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>
5
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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 investments are made on time, but we did
not include or reflect dividends and distributions from the fund.
A TYPICAL $100 PER MONTH INVESTMENT PLAN
<TABLE>
<CAPTION>
AT THE END OF AT THE END OF AT THE END OF
INVESTMENT 6 MONTHS 1 YEAR 2 YEARS
AMOUNT (6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
------------------------ --------------------- --------------------- ----------------------
% OF % OF % OF % OF
TOTAL TOTAL TOTAL TOTAL
AGGREGATE INVEST- AGGREGATE INVEST- AGGREGATE INVEST- AGGREGATE INVEST-
AMOUNT MENTS AMOUNT MENTS AMOUNT MENTS AMOUNT MENTS
-------------- --------- ----------- --------- ----------- --------- ------------- --------
<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 ......... $ 30,000.00 100% $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 Invested
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.
6
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This table shows you the investment performance of a hypothetical $100 per
month Plan from March 29, 1991, when the fund started investment operations, to
August 31, 1998. Under this Plan, $50.00 is deducted as a Sales Charge from
each $100.00 monthly investment during the first year of the Plan. After the
first year, the Sales Charge decreases to $6.07. 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.
HYPOTHETICAL $100.00 PER MONTH INVESTMENT PLAN
<TABLE>
<CAPTION>
AMOUNT OF PAYMENT AMOUNT INVESTED
------------------------- -------------------------
FISCAL DURING DURING
PERIOD FISCAL CUMULA- SALES FISCAL CUMULA-
ENDED PERIOD TIVE CHARGES(A) PERIOD TIVE
- ----------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
08/31/91(b) $ 600.00 $ 600.00 $ 300.00 $ 300.00 $ 300.00
08/31/92 1,200 1,800 $ 336.42 863.58 1,163.58
08/31/93 1,200 3,000 72.84 1,127.16 2,290.74
08/31/94 1,200 4,200 72.84 1,127.16 3,417.90
08/31/95 1,200 5,400 72.84 1,127,16 4,545,06
08/31/96(c) 1,200 6,600 72.84 1,127.16 5,672.22
08/31/97 1,200 7,800 72.84 1,127.16 6,799.38
08/31/98 1,200 9,000 72.84 1,127,16 7,926.54
<CAPTION>
SHARES
PURCHASED TOTAL
FISCAL THROUGH TOTAL VALUE
PERIOD SHARES REINVEST- SHARES OF
ENDED PURCHASED MENT PURCHASED SHARES
- ----------------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
08/31/91(b) 29.509 -- 29.509 $ 307.49
08/31/92 79.279 0.661 109.449 1,198.47
08/31/93 95.976 3.367 208.792 2,872.99
08/31/94 75.063 4.932 288.787 4,681.25
08/31/95 67.517 15.261 371.565 5,922.76
08/31/96(c) 97.452 8.606 892.286 8,101.95
08/31/97 111.852 31.753 1,035.891 11,363.73
08/31/98 101.874 45.145 1,182.910 11,462.40
</TABLE>
(a) Under the terms of this plan, out of a monthly investment of $100.00
made during the first year, $50.00 is deducted as a sales charge.
(b) Period from March 29, 1991 (commencement of o perations) through
August 31, 1991.
(c) 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 $50 per month Plan, $25
is deducted from each of the first 12 monthly investments. After the 12th
investment, the Sales Charge drops to $3.04 on each subsequent monthly
investment. Deductions decrease proportionately on certain larger plans. See
the tables on pages 4 and 5.
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
7
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/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.
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, as amended. 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, have your investment dealer mail your completed
application (which is attached to this prospectus) to the Sponsor with a check
for the monthly investment amount of your Plan, made out to TEMPLETON FUNDS
TRUST COMPANY. After the Sponsor accepts your application, the Sponsor will
send you a confirmation statement showing the number of Plan shares purchased
for your account.
8
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You should send your subsequent 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 investments.
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. Net Asset Value will be calculated as described in the fund's
prospectus under the heading "Transaction Procedures and Special Requirements -
Share Price."
Dividends and distributions received by your qualified retirement plan,
such as a section 401(k) plan or IRA, are generally tax-deferred; this means
that you are not required to report dividends and distributions on your income
tax return when paid to your retirement plan, but, rather, when your retirement
plan makes payments to you. Be aware, however, that special rules apply to Roth
and education IRAs.
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 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
after 90 days from the date of redemption. We will reinvest your cash based on
the current net asset value of fund shares. IRAs may be reinvested after 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
9
PAGE
All written 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 seven 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 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 OR
/bullet/ the redemption check is to be sent to an address different from
the one 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 Individual Retirement Accounts and 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.
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 we receive 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.
10
PAGE
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 $50,000, 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 $50,000
/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.
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 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
Templeton Capital Accumulation 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 NYSE 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 90 days without any Sales Charges by re-opening an identically
registered Plan. To use this privilege, we must receive your
11
PAGE
reinvestment request and payment within 90 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 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 investments
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 enough
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.
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 associations, trust companies, industrial
loan companies and credit unions,
12
PAGE
/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 OR
/bullet/ we are not satisfied that a representative of a corporation,
partnership, association, or other entity has proper authority.
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.
13
PAGE
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 701/2 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. An IRA may not be
established by changing the registration of an existing plan. 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 a Plan IRA shall not be considered
to create a new Plan.
We invest your contributions on the day they are received by the
Custodian. Within seven days of making your initial contribution, you may ask
us in writing to revoke your IRA account 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.
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.
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
14
PAGE
Plan each month to buy additional shares. If you are interested in this
program, please 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 on pages 4 and 5. 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 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 investments 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.
EXTENDED INVESTMENT OPTION
Under our Extended Investment Option, you may continue to make monthly
investments for up to an additional 120 investments after completing all 180
scheduled investments. The Sales Charge on each monthly investment will be the
same as the charge on your last scheduled investment under your 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 a total of 300 monthly investments.
15
PAGE
SYSTEMATIC WITHDRAWAL PROGRAM
When you complete your 180 investments, 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. See "Systematic Withdrawal Program" in the fund's prospectus for
information on how to establish a Systematic Withdrawal Program.
Please note that:
/bullet/ Withdrawals in excess of dividends and distributions 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 investments 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 591/2 or older, you may
participate in the program even if you have not completed your 180 investments
under the 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 a 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 TRANSFERS
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/registered trademark/
From a touch-tone phone, you may call our TELEFACTS/registered trademark/
system (day or night) at 1-800/247-1753 to:
/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/registered trademark/. The code number is 450.
16
PAGE
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.
17
PAGE
FINANCIAL STATEMENTS
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, 1998 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, 1998. 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, 1998, 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
November 13, 1998
18
PAGE
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
<TABLE>
<S> <C>
ASSETS:
Templeton Capital Accumulator Fund, Inc. shares, at value (average cost, $175,390,497) $189,596,730
LIABILITIES: --
------------
NET ASSETS:
Net assets (equivalent to $9.686 per share based on 19,574,306 Plan shares held for
outstanding Plans) (Note 2) ......................................................... $189,596,730
============
</TABLE>
STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Distributions received on shares of Templeton
Capital Accumulator Fund Inc. from:
Net investment income ...................... $ 3,043,138 $ 2,264,084 $ 1,313,090
Realized gains ............................. 4,706,723 1,745,754 284,137
------------ ----------- -----------
7,749,861 4,009,838 1,597,227
------------ ----------- -----------
Expenses (Note 3) .............................. -- -- --
------------ ----------- -----------
Net investment income .................... 7,749,861 4,009,838 1,597,227
------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on complete and partial
terminations, including Fund shares
withdrawn at market value .................. $ 2,835,931 $ 1,825,361 $ 721,621
Unrealized appreciation (depreciation) during
the period ................................. (28,811,639) 24,576,860 10,423,640
------------ ----------- -----------
Net gain (loss) on investments ........... (25,975,708) 26,402,221 $11,145,261
------------ ----------- -----------
Net increase (decrease) in net assets from
operations ................................. $(18,225,847) $30,412,059 $12,742,488
============ =========== ===========
</TABLE>
See Notes to Financial Statements.
19
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, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------------- --------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
Operations:
Net investment income .......................... $ 7,749,861 $ 4,009,838 $ 1,597,227
Net realized gain on plan terminations ......... 2,835,931 1,825,361 721,621
Unrealized appreciation (depreciation) for
the period on plan shares held ................ (28,811,639) 24,576,860 10,423,640
------------ ------------ ------------
Net increase (decrease) in net assets
from operations ............................ (18,225,847) 30,412,059 12,742,488
Distributions to planholders ................... (7,749,861) (4,009,838) (1,597,227)
Transactions in Fund shares (Note 2) ........... 45,368,166 37,229,624 30,868,787
------------ ------------ ------------
Net increase in net assets .................. 19,392,458 63,631,845 42,014,048
NET ASSETS:
Beginning of year .............................. 170,204,272 106,572,427 64,558,379
------------ ------------ ------------
End of year .................................... $189,596,730 $170,204,272 $106,572,427
============ ============ ============
</TABLE>
See Notes to Financial Statements.
20
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, 1998, the Plan held 19,574,306 shares of the Fund.
Transactions in Fund shares for the years ended August 31, 1998, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------------- ---------------------------- ----------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
---------------- --------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Planholder payments ......... $ 56,183,512 $ 46,632,039 $ 39,848,219
Less-sales charges .......... 6,148,670 5,140,712 5,671,439
------------- ------------ ------------
Balance invested in
Fund shares ................ 50,034,842 4,444,049 41,491,327 4,161,074 4,176,780 2,870,915
Distributions reinvested in
Fund shares ................ 7,749,861 709,141 4,009,838 438,885 1,597,227 102,037
Redemption and
withdrawals in Fund
shares ..................... (12,416,537) (1,101,389) (8,271,541) (817,091) (4,905,220) (413,497)
Shares issued on 2-for-1
stock split ................ -- -- -- -- -- 5,130,349
------------- ---------- ------------ --------- ------------ ---------
$ 45,368,166 4,051,801 $ 37,229,624 3,782,868 $ 30,868,787 7,689,804
------------- ---------- ------------ --------- ------------ ---------
</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 $615,973, $529,236 and
21
PAGE
$610,774 for the years ended August 31, 1998, 1997 and 1996, 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, 1998 were composed of the following
amounts:
<TABLE>
<S> <C>
Amount paid in by planholders, net of sales and creation charges ......... $184,663,585
Distributions reinvested ................................................. 16,166,440
Payment of redemption proceeds to planholders ............................ (31,433,844)
Accumulated gain on plan terminations .................................... 5,994,316
Unrealized appreciation of investments ................................... 14,206,233
------------
Net assets applicable to planholders ..................................... $189,596,730
------------
</TABLE>
22
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS
November 9, 1998
Franklin/Templeton Distributors, Inc.:
In our opinion, the accompanying statements of financial condition and related
statement of operations, stockholders' equity and cash flow present fairly, in
all material respects, the financial position of Franklin/Templeton
Distributors, Inc. (a wholly-owned subsidiary of Franklin Resources, Inc.) as
of September 30, 1998, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The information on pages 10 and 11 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements, but is supplementary information required by Rule
17a-5 of the Securities and Exchange Commission. Such information has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
PricewaterhouseCooper L.L.P.
San Francisco, California
23
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF FINANCIAL CONDITION
SEPTEMBER 30, 1998
ASSETS
<TABLE>
<S> <C>
Cash and cash equivalents ............................................... $ 35,939,818
Underwriting and distribution fees receivable ........................... 52,620,979
Investment securities, available-for-sale ............................... 5,126,877
Deferred sales commissions, net ......................................... 45,512,682
Due from parent and affiliates .......................................... 26,950,733
Property and equipment, net ............................................. 4,445,717
Prepaid expenses and other .............................................. 6,926,657
------------
Total assets ...................................................... $177,523,463
============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Underwriting and distribution fees payable to dealers ............... $ 42,044,810
Trade payables and accrued expenses ................................. 18,200,350
------------
Total liabilities ................................................. 60,245,160
------------
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 ...................................... 571,564,072
Unrealized gain on investment securities ............................ 109,554
Accumulated deficit ................................................. (454,397,678)
------------
Total stockholder's equity ........................................ 117,278,303
------------
$177,523,463
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
Revenues:
Underwriting and distribution fees ................. $ 785,806,040
Investment and other income ........................ 2,524,937
--------------
Total revenues .................................. 788,330,977
--------------
Expenses:
Underwriting and distribution ...................... 675,190,631
Compensation and benefits .......................... 79,591,532
Advertising and promotion .......................... 90,441,425
Amortization of deferred sales commissions ......... 74,407,271
Other .............................................. 68,732,723
--------------
Total expenses .................................. 988,363,582
--------------
Net loss ............................................ $ (200,032,605)
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK CAPITAL IN GAIN ON TOTAL
-------------------- EXCESS OF INVESTMENT ACCUMULATED STOCKHOLDER'S
PAR VALUE AMOUNT PAR VALUE SECURITIES DEFICIT EQUITY
----------- -------- --------------- ------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1,
1997 ................. 2,355 $2,355 $360,564,072 -- $ (254,365,073) $ 106,201,354
Capital contribution
from parent .......... -- -- 211,000,000 -- -- 211,000,000
Unrealized gain on
investment
securities ........... -- -- -- $109,554 -- 109,554
Net loss ............... -- -- -- (200,032,605) (200,032,605)
----- ------ ------------ -------- -------------- --------------
Balance,
September 30,
1998 ................. 2,355 $2,355 $571,564,072 $109,554 $ (454,397,678) $ 117,278,303
===== ====== ============ ======== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
Net loss ...................................................................... $ (200,032,605)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation ................................................................. 1,059,425
Amortization of deferred sales commissions ................................... 74,407,271
Increase in underwriting and distribution fees receivable .................... (9,916,035)
Increase in deferred sales commissions ....................................... (84,329,636)
Decrease in prepaid and other ................................................ 93,431
Decrease in due from affiliates .............................................. 17,019,078
Increase in underwriting and distribution fees payable to brokers ............ 6,250,272
Increase in trade payables and accrued expenses .............................. 2,446,800
--------------
Net cash used in operating activities ....................................... (193,001,999)
--------------
Purchases of property and equipment ........................................... (1,315,723)
Purchases of investment securities ............................................ (5,017,323)
Net cash used in investing activities ....................................... (6,333,046)
--------------
Capital contribution from parent .............................................. 211,000,000
--------------
Net cash provided by financing activities ................................... 211,000,000
--------------
Increase in cash and cash equivalents ......................................... 11,664,955
Cash and cash equivalents, beginning of year .................................. 24,274,863
--------------
Cash and cash equivalents, end of year ........................................ $ 35,939,818
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
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. (FRI). The Company is registered with
the Securities and Exchange Commission as a broker dealer and serves as the
principal underwriter for the Franklin, Templeton and Mutual Series funds (the
Funds).
The Company acts as a distributor for its sponsored Funds and receives
commission and distribution fees. Underwriting commissions are earned primarily
from fund sales. Distribution fees are generally based on the level of assets
under management. These distribution fees include 12b-1 fees, paid by the funds
in reimbursement for distribution expenses incurred up to a maximum allowed by
each fund. A significant portion of underwriting commissions and distribution
fees are paid by 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 expensed as the advertising appears
in the media.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of demand deposits with bank 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.
INVESTMENT SECURITIES:
Investment securities consist of investments in the Funds, which are
carried at fair value. Fair values are based on the last reported net asset
value.
Unrealized gains and losses are reported as a separate component of
stockholders' equity until realized. Realized gains and losses are recognized
on the specific identification method. There were no realized gains or losses
for the year ended September 30, 1998.
DEFERRED SALES COMMISSION:
Sales commissions paid to financial intermediaries in connection with the
sales of certain Funds are deferred and amortized on a straight-line basis over
a period of up eighteen months, the period in which management estimates that
they will be recovered from distribution plan payments and from contingent
deferred sales charges.
28
PAGE
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 FRI. FRI allocates federal and state income taxes to the
Company using the separate return method with the exception that FRI 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 tax law in the
period in which a new tax law is enacted.
Deferred taxes as of September 30, 1998 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 at September 30,
1998:
Furniture and equipment ............... $ 9,460,125
Less accumulated depreciation ......... (5,014,408)
------------
$ 4,445,717
============
4. COMMITMENTS:
The Company leases automobiles and office equipment under agreements
expiring at various dates through fiscal year 2003 which are accounted for as
operating leases. Total lease expense for the year amounted to $111,974.
5. EMPLOYEE BENEFIT AND INCENTIVE PLANS:
FRI sponsors a defined contribution and profit sharing plan covering
substantially all employees of FRI and its U.S. Subsidiaries. The plan is
funded on an annual basis as determined by the Board of directors of FRI. The
Company's portion of expense for the plan for the year ended September 30, 1998
was $3,317,199. FRI sponsors an Annual Incentive Plan covering certain
employees of FRI 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 year ended September 30, 1998 was
$2,935,536.
29
PAGE
6. RELATED PARTY TRANSACTION:
For the year ended September 30, 1998, the Company was allocated
$52,758,550 of general, administrative and other costs by FRI and other
affiliates.
FRI 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, 1998, the Company had net capital of
$16,638,256 which was $12,621,912 in excess of its required net capital of
$4,016,344. The Company's ratio of aggregate indebtedness to net capital was
3.6 to 1.
30
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
COMPUTATION OF NET CAPITAL
PURSUANT TO RULE 15C3-1
SEPTEMBER 30, 1998
SCHEDULE I
<TABLE>
<S> <C>
Total stockholder's equity from statement of financial condition ......... $117,278,303
Deduct nonallowable assets: Receivable from distribution fees ............ $ 15,805,935
Deferred sales commissions, prepaid expenses and other ................... 52,289,339
Property and equipment, net .............................................. 4,445,717
Due from parent and affiliates ........................................... 26,950,733
------------
(99,491,724)
Other deductions ......................................................... (1,148,323)
------------
Net capital .............................................................. $ 16,638,256
============
Aggregate indebtedness:
Underwriting and distribution fees payable to brokers .................... 42,044,810
Trade payables and accrued expenses ...................................... 18,200,350
------------
Total aggregate indebtedness ............................................. $ 60,245,160
============
Computation of basic net capital requirement:
Minimum net capital required (6-2/3% of aggregate indebtedness) .......... $ 4,016,344
============
Excess net capital ....................................................... $ 12,621,912
============
Ratio of aggregate indebtedness to net capital ........................... 3.6 to 1
============
</TABLE>
There were no material differences in the computation of net capital under
Rule 15c3-1, as shown in the audited financial statements, with the Company's
corresponding unaudited Part IIA filed for the period ended September 30, 1998.
31
PAGE
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
STATEMENT PURSUANT TO RULE 15C3-1
SEPTEMBER 30, 1998
SCHEDULE II
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 15c3-3 based upon Paragraph K(1) of the Rule.
STATEMENT REGARDING LIABILITIES SUBORDINATED
TO CLAIMS OF GENERAL CREDITORS
September 30, 1998
For the period ended September 30, 1998, the Company did not have any
liabilities subordinated to claims of general creditors.
32
PAGE
GLOSSARY
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/registered trademark/ and the Templeton Group of Funds except
for Franklin Valuemark Funds, Templeton Capital Accumulator Fund, Inc.,
Templeton Variable Annuity Fund 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/registered trademark/ 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
IRS--Internal Revenue Service
NASD--National Association of Securities Dealers, Inc., a non-profit
self-regulatory organization 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 of Plan shares is based on the Net
Asset Value per share of the Fund, plus Sales Charges. One Plan share equals
one Fund share. The public offering price of Fund shares is 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--The 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.
33
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/registered trademark/--Franklin Templeton's 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.
U.S.--United States
WE/OUR/US--Unless the context indicates a different meaning, these terms refer
to the Plan trust, the Sponsor and/or the Custodian.
34
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. ("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.
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.
