TEMPLETON CAPITAL ACCUMULATION PLANS
PROSPECTUS
JANUARY 1, 2000
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:
o you intend to invest your money for the long-term and
o 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 and other assets 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 12 investments made in the first year. Depending upon your
monthly investment amount, Sales Charges in the first 12 investments made 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 6 of this prospectus.
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 WHICH IS INCLUDED BEHIND THIS PROSPECTUS
TEMPLETON CAPITAL ACCUMULATION PLANS
JANUARY 1, 2000
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
- -------------------------------------------------------------------------------
3 How a Plan Can Help You
3 Plan Highlights
4 How Do the Plans Invest Their Assets?
4 Who Manages the Plans?
5 How Taxation Affects Planholders
5 How Are the Plans Organized?
ABOUT YOUR PLAN
- -------------------------------------------------------------------------------
6 How Do I Choose a Plan?
10 How Do I Start a Plan?
10 What Distributions Might I Receive?
10 Partial Withdrawals
11 How Do I Cancel My Plan and Obtain a
Refund?
12 How Do I Terminate My Plan?
13 Transaction Procedures and Special
Requirements
15 Services to Help You Manage Your Plan
17 What If I Have Questions About My
Plan?
18 Financial Statements
28 Glossary
APPENDIX
- -------------------------------------------------------------------------------
30 Officers and Directors of the Sponsor
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 Statement of
Additional Information (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.
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
o 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.
o The Plans are designed for long-term investment.
o 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.
o 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?" on page 6 for more information about the fees that you will pay under the
Plans.
o 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" on page 15 for more information.
o Unless you terminate your Plan, you will make a total of 180 investments,
usually one per month. Once you have made 180 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.
o 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" on page 15.
o Upon completion of your 180 investments you may continue to make an additional
120 investments. You may not make more than an additional 120 additional
investments or make more than a total of 300 investments.
o You may withdraw some of your Plan shares at any time without terminating your
Plan. See "Partial Withdrawals" on page 10 for more information.
o 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?" on page 12 for more information.
o The Plans have invested in the fund since they began investment operations on
February 29, 1991. 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"
below for more information.
o 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?" on page 12 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 of companies of any
nation 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 1-888/881-TCAP.
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 of the Plan 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 and for the maintenance of the Plans' records and
accounts. Templeton Funds Trust Company, P.O. Box 33030, St. Petersburg, Florida
33733-8030, organized as a trust company under the laws of Florida and regulated
by the Banking Department of the State of Florida, is the Custodian for the
Plans under a Custodian Agreement with the Sponsor dated June 1, 1993 and
maintains custody of the assets of the Plans. The Plan Custodian Agreement is
governed by Florida law, except 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 Investment Counsel.
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 by the Sponsor 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, including the fund.
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 "Distributions 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 shareholder meeting
of the fund. 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 shareholders of the fund or Plan. 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 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 investment. 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>
As explained more fully under "Services to Help You Manage Your Plan - Extended
Investment Option" on page 16, 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>
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 INVESTMENT AT THE END OF 6 MONTHS AT THE END OF 1 YEAR 2 YEARS
AMOUNT (6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
----------------------------------------------------------------------------------------------------
AGGREGATE % OF TOTAL AGGREGATE % OF TOTAL AGGREGATE % OF TOTAL AGGREGATE % OF TOTAL
AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
180 INVESTMENTS
Total Investments $18,000.00 100% $600 100% $1,200 100% $2,400.00 100%
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%
300 INVESTMENTS
Total Investments $30,000.00 100% $600 100% $1,200 100% $2,400.00 100%
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.
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, 1999. 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
--------------------- -----------------------
SHARES TOTAL
FISCAL DURING DURING PURCHASED VALUE
PERIOD FISCAL SALES FISCAL SHARES THROUGH SHARES OF
ENDED PERIOD CUMULATIVE CHARGES/1/ PERIOD CUMULATIVE PURCHASED REINVESTMENT PURCHASED SHARES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/91/2/ $600.00 $600.00 $300.00 $ 300.00 $ 300.00 29.509 -- 29.509 $ 307.49
08/31/92 1,200 1,800 336.42 863.58 1,163.58 79.279 0.661 109.449 1,198.47
08/31/93 1,200 3,000 72.84 1,127.16 2,290.74 95.976 3.367 208.792 2,872.99
08/31/94 1,200 4,200 72.84 1,127.16 3,417.90 75.063 4.932 288.787 4,681.25
08/31/95 1,200 5,400 72.84 1,127.16 4,545.06 67.517 15.261 371.565 5,922.76
08/31/96/3/ 1,200 6,600 72.84 1,127.16 5,672.22 97.452 8.606 892.286 8,101.95
08/31/97 1,200 7,800 72.84 1,127.16 6,799.38 111.852 31.753 1,035.891 11,363.73
08/31/98 1,200 9,000 72.84 1,127.16 7,926.54 101.874 45.145 1,182.910 11,462.40
08/31/99 1,200 10,200 72.84 1,127.16 9,053.70 102.157 67.214 1,352.281 16,376.12
</TABLE>
1. 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.
2. Period from March 29, 1991 (commencement of operations) through August 31,
1991.
3. 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 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:
o Two or more Plans purchased at one time may be combined, provided the combined
monthly investment is at least $150.
o If you purchase a new Plan(s) or increase your monthly investment under an
existing Plan, you may combine the new purchase or increase with any existing,
current Plan(s). Further, 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.
You may combine Plans owned by one or more of the following:
o an individual,
o his or her spouse,
o children or grandchildren under the age of 21, or
o 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.
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 Securities Dealers are independent contractors. Neither the Sponsor nor
the Custodian is responsible for their acts or obligations.
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.
HOW DO I START A PLAN?
To start a Plan, have your Securities 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.
You may 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 "Account Policies - Calculating Share Price."
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. See
"How Taxation Affects Planholders" on page 5.
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.
If you receive cash for your redemption, 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
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 subsequent reinvestment 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:
o you redeem more than $50,000,
o the redemption check is made payable to someone other than the Planholder we
have on our records, or
o 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 IRAs 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:
o after 15 months from your purchase date, you have missed at least 3 monthly
investments, or
o 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 would like to reinstate your Plan and have your
redemption proceeds invested after cancellation please see "Reinstating After
Termination" below. 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 all
registered Planholders, if:
o you redeem more than $100,000,
o the redemption check is made payable to someone other than the Planholder(s)
we have on our records, or
o 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 "Investor Services - Exchange Privilege." 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:
o trading on the NYSE is restricted
o the NYSE is closed for other than weekends and holidays, or
o the SEC declares an emergency.
You cannot withdraw cash from your account (see "Partial Withdrawals" on page
10) while your right to redeem Plan shares is suspended.
REINSTATING AFTER TERMINATION
If you terminate your Plan, you may reinstate your Plan and have your redemption
proceeds invested within 90 days without any Sales Charges by re-opening an
identically registered Plan. To use this privilege, we must receive your
reinstatement request and payment within 90 days after you terminated your Plan.
We will invest your redemption 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 reinstatement. 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" on page 10).
If you cancel your Plan (see "How Do I Cancel My Plan and Obtain a Refund?" on
page 11) 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" on page 4.
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.
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:
o banks, savings and loans associations, trust companies, industrial loan
companies and credit unions,
o national securities exchanges, registered securities associations and clearing
agencies,
o broker-dealers that are members of a national securities exchange or a
clearing agency or that have minimum net capital of $100,000, or
o 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:
o we are unable to confirm the current address of one or more joint owners of an
account,
o multiple owners have a dispute or give us inconsistent instructions,
o we have been notified of a potential claim,
o we receive instructions from an agent, not the actual registered owner,
o we determine that joint owners who are married to each other are separated or
may be in divorce proceedings, or
o 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.
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. 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 regular 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?" on page 11) 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 a 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.
Military service members may also fund their plans using Military Government
Allotment. 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 or
having your Securities Dealer send us written notice and a new Plan application.
You may choose any monthly investment amount shown in the tables on pages 6 and
7. The Sales Charges that you pay will be adjusted to reflect your change.
o You may increase your monthly investment at any time.
o If you increase your monthly investment, you have 12 months to change your
mind, but you may not decrease your Plan lower than your original monthly
investment amount.
o In the first 12 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
If you wish to complete your plan ahead of schedule, you may make up to 24
investments (including your regular monthly investments) in each calendar year.
You may also make additional advance investments in lump sum amounts, but the
these lump sum investments may not exceed 24 investments in total over the life
of your Plan. These prepayment rules may be waived for a transfer or rollover
into a tax-qualified retirement plan, or in the event of your death to allow
your Plan to be completed at one time by your estate or beneficiary. Monthly
investments may also be paid in lump sum amounts to make a plan that is in
arrears current. You pay the same Sales Charges when you make advance
investments.
A Plan is considered current 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.
All Extended Investment Options will end after a total of 300 monthly
investments.
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. Please call the
TCAP Dedicated Service Group at 1-888-881-TCAP for information on how to
establish a Systematic Withdrawal Program.
Please note that:
o Withdrawals in excess of dividends and distributions may exhaust your account,
and cannot be considered as income on your investment.
o You may realize a gain or loss for tax purposes on each cash withdrawal.
o 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.
o 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(R)
Our TeleFACTS system offers around-the-clock access to information about your
account or to obtain price and performance information about the fund. This
service is available from touch-tone phones at 1-800/247-1753. For a free
TeleFACTS brochure, call 1-888/881-TCAP.
STATEMENTS AND REPORTS TO PLANHOLDERS
You will receive quarterly account statements that show all your Plan account
transactions during the quarter. You also will receive written notification
after each transaction affecting your account (except for distributions and
transactions made through automatic investment or withdrawal programs, which
will be reported on your quarterly statement). You also will receive the fund's
financial reports every six months. If you need additional copies, please call
the TCAP Dedicated Service Group at 1-888/881-TCAP.
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.
DEPARTMENT NAME TELEPHONE NO. HOURS (PACIFIC TIME,
MONDAY THROUGH FRIDAY)
- -------------------------------------------------------------------------------
TCAP Dedicated Service Group 1-888/881-TCAP 6:00 a.m. to 5:00 p.m.
For your protection and to help ensure we provide you with quality service, all
calls may be monitored or recorded.
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
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the Templeton Capital
Accumulation Plans (the "Plans") at August 31, 1999, and the results of its
operations and the changes in its net assets for the year then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial 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. The financial
statements for the year ended August 31, 1998 were audited by other independent
accountants whose report dated November 13, 1998 expressed an unqualified
opinion on those financial statements.
/s/PRICEWATERHOUSECOOPERS LLP
New York, New York
November 12, 1999
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 statements of operations and changes in net
assets for the years ended August 31, 1998 and 1997 of the Templeton Capital
Accumulation Plans (the "Plans"). These financial statements are the
responsibility of the Plan's management. 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 and financial
highlights 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and changes in net assets of
Templeton Capital Accumulation Plans for the periods indicated, in conformity
with generally accepted accounting principles.
/s/MCGLADREY & PULLEN, LLP
New York, New York
September 29, 1998
TEMPLETON CAPITAL ACCUMULATION PLANS
FOR THE ACCUMULATION OF SHARES OF
TEMPLETON CAPITAL ACCUMULATOR FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
ASSETS
Templeton Capital Accumulator Fund, Inc. shares, at
value (average cost, $223,505,616) $288,062,231
LIABILITIES --
-------------
NET ASSET
Net assets (equivalent to $12.112 per share based on
23,783,209 Plan shares held for outstanding Plans) Note 2) $288,062,231
============
STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ------------- -------------
<S> <C> <C> <C>
Investment Income:
Distributions received on shares of Templeton
Capital Accumulator Fund Inc. from:
Net investment income $ 3,750,602 $ 3,043,138 $ 2,264,084
Realized gains 7,402,675 4,706,723 1,745,754
-----------------------------------------------
11,153,277 7,749,861 4,009,838
Expenses (Note 3) -- -- --
-----------------------------------------------
NET INVESTMENT INCOME 11,153,277 7,749,861 4,009,838
Realized and unrealized gain (loss) on investments:
Net realized gain on complete and partial terminations,
including Fund shares withdrawn at market value $ 4,375,330 $ 2,835,931 $ 1,825,361
Unrealized appreciation (depreciation) during the period 50,350,383 (28,811,639) 24,576,860
-----------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS 54,725,713 (25,975,708) 26,402,221
-----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $65,878,990 $(18,225,847) $30,412,059
================================================
</TABLE>
See Notes to Financial Statements.
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, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets from:
Operations
Net investment income $ 11,153,277 $ 7,749,861 $ 4,009,838
Net realized gain on plan terminations 4,375,330 2,835,931 1,825,361
Unrealized appreciation (depreciation) for the period
on plan shares held 50,350,383 (28,811,639) 24,576,860
--------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 65,878,990 (18,225,847) 30,412,059
Distributions to planholders (11,153,277) (7,749,861) (4,009,838)
Transactions in Fund shares (Note 2) 43,739,788 45,368,166 37,229,624
--------------------------------------------------
NET INCREASE IN NET ASSETS $ 98,465,501 $ 19,392,458 $ 63,631,845
==================================================
NET ASSETS:
Beginning of year 189,598,730 170,204,272 106,572,427
--------------------------------------------------
End of year $288,062,231 $189,596,730 $170,204,272
==================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
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.
2. TRANSACTIONS IN FUND SHARES
As of August 31, 1999, the Plan held 23,783,209 shares of the Fund. Transactions
in Fund shares for the years ended August 31, 1999, 1998 and 1997 were as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------- -------------------------- ----------------------
Amount Shares Amount Shares Amount Shares
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Planholder payments $ 60,600,000 $56,183,512 $46,632,039
Less: sales charges 4,466,661 6,148,670 5,140,712
---------------------------------------------------------------------------------
Balance invested in Fund shares 56,133,339 5,135,029 50,034,842 4,444,049 41,491,327 4,161,074
Distributions reinvested in Fund shares 11,153,277 1,158,746 7,749,861 709,141 4,009,838 438,885
Redemption and withdrawals
in Fund shares (23,546,828) (2,084,872) (12,416,537) (1,101,389) (8,271,541) (817,091)
---------------------------------------------------------------------------------
$ 43,739,788 4,208,903 $45,368,166 4,051,801 $37,229,624 3,782,868
==================================================================================
</TABLE>
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 $597,865, $615,973 and $529,236 for the years ended August 31, 1999, 1998 and
1997, 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.
4. SOURCE OF NET ASSETS
The Plan's net assets as of August 31, 1999 were composed of the following
amounts:
Amount paid in by planholders, net of sales and
creation charges $240,796,924
Distributions reinvested 27,319,717
Payment of redemption proceeds to planholders (54,980,672)
Accumulated gain on plan terminations 10,369,646
Unrealized appreciation of investments 64,556,616
------------
Net assets applicable to planholders $288,062,231
============
REPORT OF INDEPENDENT ACCOUNTANTS
Franklin/Templeton Distributors, Inc.
In our opinion, the accompanying consolidated statement of financial condition
presents fairly, in all material respects, the consolidated financial position
of Franklin/Templeton Distributors, Inc. (a wholly-owned subsidiary of Franklin
Resources, Inc.) and subsidiaries as of September 30, 1999, in conformity with
generally accepted accounting principles. This financial statement is the
responsibility of the Company's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, 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.
/s/PRICEWATERHOUSECOOPERS LLP
San Francisco, California
November 5, 1999
FRANKLIN/TEMPLETON DISTRIBUTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents........................................... $ 82,456,070
Commissions and distribution fees receivable........................ 52,777,379
Receivable from Franklin Templeton Funds............................ 12,659,164
Investment securities (including $25,814,542 of available for sale). 31,948,318
Deferred sales commission, net...................................... 35,597,037
Due from parent and affiliates...................................... 60,884,946
Property and equipment, net......................................... 5,829,849
Intangible assets, net.............................................. 614,183,993
Prepaid expenses and other.......................................... 3,005,147
--------------
Total asset......................................................... $ 899,341,903
=============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Commissions and distribution fees payable to dealers............... $ 45,630,608
Trade payables and accrued expenses................................ 59,398,003
Due to affiliates.................................................. 26,372,279
-------------
Total liabilities................................................... 131,400,890
-------------
Commitments (Note 6)
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..................................... 1,192,490,444
Accumulated other comprehensive income............................. 2,132,915
Other.............................................................. (2,355,813)
Accumulated deficit................................................ (424,328,888)
--------------
Total stockholder's equity.......................................... 767,941,013
--------------
Total liabilities and stockholder's equity......................... $ 899,341,903
===============
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
1. NATURE OF BUSINESS AND REORGANIZATION
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).
In April 1999, two investment advisory entities, wholly-owned subsidiaries of
FRI, were reorganized as subsidiaries of the Company. The reorganization of the
subsidiaries has been accounted for in a manner similar to a pooling of
interests because the Company and its two subsidiaries were under common control
prior to the reorganization. Accordingly, all prior period consolidated
financial statements presented have been restated to include the combined
results of operations, financial position and cash flows of the subsidiaries as
though they had always been a part of the Company.
The Company acts as a distributor for its sponsored Funds and receives
commission and distribution fees. 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 to selling intermediaries.
The Company's subsidiaries are registered investment advisors with the
Securities and Exchange Commission. They earn revenue from providing investment
advisory services to its sponsored Funds. All services are provided under
contracts that set forth the fees to be charged, usually based upon the level of
assets in each fund. The contracts are subject to periodic review by the Funds'
Board of Directors/Trustees and shareholders.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements are prepared in accordance with generally
accepted accounting principles which require the use of estimates made by
management. Actual amounts may differ from these estimates. The consolidated
financial statements include the accounts of Franklin/Templeton Distributors,
Inc. and its majority-owned subsidiaries. All material intercompany accounts and
transactions between the Company and its subsidiaries have been eliminated from
the consolidated financial statements.
COMPREHENSIVE INCOME
During the year ended September 30, 1999, the Company adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income." SFAS 130 establishes the disclosure requirements for reporting
comprehensive income in an entity's financial statements. Total comprehensive
income includes net loss and unrealized gains and losses on available-for-sale
securities. There was no impact on previously reported net loss arising from the
adoption of SFAS 130.
REVENUE RECOGNITION
Commissions on mutual fund share sales are recorded based on trade date.
Investment management and distribution fees are accrued as earned.
ADVERTISING AND PROMOTION
Costs of advertising and promotion are expensed as incurred.
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.
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 on available-for-sale securities are reported within
other comprehensive income as a separate component of stockholder's equity until
realized. Realized gains and losses are recognized on the specific
identification method.
DEFERRED SALES COMMISSIONS
Sales commissions paid to financial intermediaries in connection with the sale
of certain Funds are deferred and amortized on a straight-line basis over a
period of up to eighteen months, the period in which management estimates that
they will be recovered from distribution plan payments and from contingent
deferred sales charges.
ALLOCATION OF INTERCOMPANY COSTS
Certain management, computer, 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.
TAXES ON INCOME
The Company is included in the consolidated federal and combined California
income tax returns of FRI. FRI allocates these 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. The Company files
its New Jersey state income tax returns on a separate basis.
Deferred taxes as of September 30, 1999 relate primarily to intangible asset
amortization, depreciation on property and equipment and compensation accruals.
A valuation allowance has been recognized for all 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.
INTANGIBLE ASSETS
Intangible assets consist of the estimated value of goodwill, mutual fund
management and other contracts. Assets are being amortized over various lives
ranging from 5 to 40 years. The Company has evaluated the potential impairment
of these assets on the basis of the expected future undiscounted operating cash
flows without interest charges to be derived from these assets in relation to
the carrying values and have determined that there is no impairment. At some
future period, if such evaluations indicate that the carrying value of these
assets cannot be recovered using this test, the assets will be adjusted to their
fair values.
3. INVESTMENT SECURITIES
Investments, available-for-sale, at September 30, 1999:
1999
---------------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
---------------------------------------------------
Sponsored Funds $22,804,637 $3,009,905 $-- $25,814,542
4. INTANGIBLE ASSETS
The following is a summary of intangible assets at September 30, 1999:
AMORTIZATION
PERIOD
IN YEARS 1999
- -------------------------------------------------------------------------------
Goodwill.......................................... 40 $126,169,051
Management contracts.............................. 40 510,490,000
Other intangibles................................. 5-15 31,546,000
------------
Less accumulated amortization............... (54,021,058)
------------
$614,183,993
============
5. PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at September 30, 1999:
Furniture and equipment.................................... $13,334,692
Less accumulated depreciation.............................. (7,504,843)
------------
$ 5,829,849
============
6. COMMITMENTS
The Company leases automobiles and office equipment and office space under
agreements expiring at various dates through fiscal year 2004 which are
accounted for as operating leases. Lease commitments under non-cancelable
operating leases as of September 30, 1999 are:
2000.................................................... $1,115,421
2001.................................................... 1,124,241
2002.................................................... 1,180,356
2003.................................................... 1,183,056
2004................................................... 1,183,056
------------
$5,786,130
============
7. EMPLOYEE BENEFIT AND INCENTIVE PLANS
FRI sponsors a defined contribution and profit sharing plan covering
substantially all employees of FRI and its subsidiaries. The plan is funded on
an annual basis as determined by the Board of Directors of FRI.
FRI sponsors an Annual Incentive Plan and other incentive programs covering
certain employees of FRI and its U.S. subsidiaries.
8. RELATED PARTY TRANSACTIONS
FRI has agreed to continue to provide the financial support necessary to fund
the Company's operations.
9. 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, 1999, the Company had net capital of $29,755,067 which was
$23,563,390 in excess of its required net capital of $6,191,677. The Company's
ratio of aggregated indebtedness to net capital was 3.12 to 1.
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, also referred to as TFTC
DISTRIBUTORS - Franklin Templeton Distributors, Inc., the principal underwriter.
Also referred to as the Sponsor.
FRANKLIN TEMPLETON FUNDS - The U.S. registered Franklin Templeton mutual funds,
except Franklin Templeton Variable Insurance Products Trust, 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 Templeton Group of Funds
FTTC - Franklin Templeton Trust Company, an affiliate of Distributors and both
are wholly owned subsidiaries of Resources.
FUND - Templeton Capital Accumulator Fund, Inc., the underlying investment for
the Plans.
INVESTMENT COUNSEL - Templeton Investment Counsel, Inc., the Fund's investment
manager
IRA - Individual retirement account or annuity qualified under section 408 of
the Code
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.
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
TFTC - Templeton Funds Trust Company, the custodian for the Plans as described
in the Plan prospectus
WE/OUR/US - Unless the context indicates a different meaning, these terms refer
to the Plan trust, the Sponsor and/or the Custodian.
APPENDIX
OFFICERS AND DIRECTORS OF THE SPONSOR
The following sets forth the directors and executive officers of the Sponsor:
Charles B. Johnson, Chairman of the Board and Director, is Director, Chairman of
the Board and Chief Executive Officer of Franklin Resources, Inc. and Director
and Chairman of the Board of Franklin Advisers, Inc., Franklin Investment
Advisory Services, Inc.; Director, Franklin/Templeton Investor Services, Inc.
and Franklin Templeton Services, Inc.
Gregory E. Johnson, Chairman of the Board, is President, Member Office of the
President, of Franklin Resources, Inc. and Vice President, Franklin Advisers,
Inc.
Rupert H. Johnson, Jr., Executive Vice President and Director, is Vice Chairman,
Member Office of the Chairman and Director of Franklin Resources, Inc., Director
of Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.;
Senior Vice President, Franklin Advisory Services, LLC; Director,
Franklin/Templeton Investor Services, Inc.; and Director and Chairman of the
Board of Franklin Management, Inc.
Harmon E. Burns, Executive Vice President and Director, is Vice Chairman,
Member-Office of the Chairman and Director of Franklin Resources, Inc. and
Franklin Templeton Services, Inc. and Executive Vice President of Franklin
Advisers, Inc.; Director, Franklin Investment Advisory Services, Inc. and
Franklin/Templeton Investor Services, Inc.
Charles E. Johnson, Senior Vice President, is Director and President, Member
Office of the President, of Franklin Resources, Inc., President and Director,
Templeton Worldwide, Inc.; President and Chief Executive Officer,
Templeton/Franklin Investment Services, Inc.; Director and Chairman, Templeton
Investment Counsel, Inc.; Director and Chairman of the Board, Franklin Agency,
Inc., and President of Franklin Advisers, Inc.
Peter D. Jones, President.
Daniel T. O'Lear, Executive Vice President.
Harry G. Mumford, Jr., Senior Vice President, is Executive Vice President and
President, Bank Trust Sales Division of Templeton/Franklin Investment Services,
Inc.
Deborah R. Gatzek, Senior Vice President and Assistant Secretary, is Senior Vice
President and General Counsel of Franklin Resources; Senior Vice President
Franklin Templeton Services, Inc. and Templeton/Franklin Investment Services,
Inc.; Executive Vice President, Franklin Advisers; Vice President of Franklin
Advisory Services, LLC and Franklin Mutual Advisers, LLC; Vice President, Chief
Legal Officer and Chief Operating Officer, Franklin Investment Advisory
Services, Inc.
Leslie M. Kratter, Secretary, is Vice President and Secretary of Franklin
Resources, Inc. and Secretary of Franklin Advisers, Inc., Franklin Advisory
Services, Inc., Franklin Investment Advisory Services, Inc., Franklin/Templeton
Investor Services, Inc., Franklin Templeton Services, Inc., Templeton Worldwide,
Inc., Franklin Agency, Inc., Templeton/Franklin Investment Services, Inc. and
Franklin Management, Inc.
Philip J. Kearns, Vice President, is Vice President of Franklin Agency, Inc.
Jack Lemein, Vice President, is Executive Vice President of Franklin Advisers,
Inc. and Vice President of Franklin Management, Inc.
Vivian J. Palmieri, Vice President, is Vice President of Franklin Investment
Advisory Services, Inc.
Kenneth A. Lewis, Treasurer, Senior Vice President and Controller of Templeton
Worldwide, Inc., Vice President and Controller of Franklin Resources, Inc.,
Controller and Principal Accounting Officer, Franklin Templeton Services, Inc.,
Controller of Franklin Advisers, Inc., Franklin Advisory Services, Inc.,
Franklin Investment Advisory Services, Inc., Franklin/Templeton Investor
Services, Inc., Franklin Agency, Inc., Templeton/Franklin Investment Services,
Inc., and Franklin Management, Inc.
Other Senior Vice Presidents of the Sponsor include Edward V. McVey, Phil
Edelstein, John R. McGee, Kent P. Strazza, Robert N. Geppner and Jimmy A.
Escobedo.
Other Vice Presidents of the Sponsor include Mike Hackett, Ken Leder, Bert W.
Feuss and Laura Komar.
All officers and employees of the Sponsor are covered by a blanket bond in the
amount of $175,000,000.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the father
and uncle, respectively, of Charles E. Johnson and Gregory E. Johnson.
