o 403 *PA2
SUPPLEMENT DATED JANUARY 1, 1999
TO THE PROSPECTUS OF
FRANKLIN NATURAL RESOURCES FUND - ADVISOR CLASS
dated September 1, 1998
The prospectus is amended as follows:
I. The following is added under "What Are the Risks of Investing in the Fund?":
EURO RISK. On January 1, 1999, the European Monetary Union (EMU) plans
to introduce a new single currency, the euro, which will replace the
national currency for participating member countries. If the fund holds
investments in countries with currencies replaced by the euro, the
investment process, including trading, foreign exchange, payments,
settlements, cash accounts, custody and accounting will be impacted.
The process to establish the euro may result in market volatility. It
is not possible to predict the impact of the euro on the business or
financial condition of European issuers or on the fund. The transition and
the elimination of currency risk among EMU countries may change the
economic environment and behavior of investors, particularly in European
markets. To the extent the fund holds non-U.S. dollar (euro or other)
denominated securities, it will still be exposed to currency risk due to
fluctuations in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all
euro-related changes to enable the Franklin Templeton Funds to process
transactions accurately and completely with minimal disruption to business
activities. While there can be no assurance that the fund will not be
adversely affected, Advisers and its affiliated service providers are
taking steps that they believe are reasonably designed to address the euro
issue.
YEAR 2000. When evaluating current and potential portfolio positions,
Year 2000 is one of the factors Advisers considers.
Advisers will rely upon public filings and other statements made by
companies about their Year 2000 readiness. Issuers in countries outside the
U.S., particularly in emerging markets, may not be required to make the
same level of disclosure about Year 2000 readiness as is required in the
U.S. Advisers, of course, cannot audit each company and its major suppliers
to verify their Year 2000 readiness.
If a company in which the fund is invested is adversely affected by
Year 2000 problems, it is likely that the price of its security will also
be adversely affected. A decrease in the value of one or more of the fund's
portfolio holdings will have a similar impact on the price of the fund's
shares. Please see "Year 2000 Problem" under "Who Manages the Fund?" for
more information.
II. The following replaces the section "Year 2000 Issue" under "Who Manages the
Fund?":
YEAR 2000 PROBLEM. The fund's business operations depend on a
worldwide network of computer systems that contain date fields, including
securities trading systems, securities transfer agent operations and stock
market links. Many of the systems currently use a two digit date field to
represent the date, and unless these systems are changed or modified, they
may not be able to distinguish the Year 1900 from the Year 2000 (commonly
referred to as the Year 2000 problem). In addition, the fact that the Year
2000 is a non-standard leap year may create difficulties for some systems.
When the Year 2000 arrives, the fund's operations could be adversely
affected if the computer systems used by Advisers, its service providers
and other third parties it does business with are not Year 2000 ready. For
example, the fund's portfolio and operational areas could be impacted,
including securities trade processing, interest and dividend payments,
securities pricing, shareholder account services, reporting, custody
functions and others. The fund could experience difficulties in effecting
transactions if any of its foreign subcustodians, or if foreign
broker-dealers or foreign markets are not ready for Year 2000.
Advisers and its affiliated service providers are making a concerted
effort to take steps they believe are reasonably designed to address their
Year 2000 problems. Of course, the fund's ability to reduce the effects of
the Year 2000 problem is also very much dependent upon the efforts of third
parties over which the fund and Advisers may have no control.
III. Under "How Is the Trust Organized?", the fourth sentence in the first
paragraph is replaced with the following:
All shares outstanding before the offering of Advisor Class shares
have been designated Franklin Natural Resources Fund - Class A.
All references in the prospectus to Class I shares are replaced with
Class A.
IV. In step 2 under "How Do I Buy Shares? - Opening Your Account," the minimum
investment to add to your account is changed from $25 to $50.
V. The section "How Do I Buy Shares in Connection with Retirement Plans?",
found under "How Do I Buy Shares?", is replaced with the following:
HOW DO I BUY SHARES IN CONNECTION WITH RETIREMENT PLANS?
Your individual or employer-sponsored retirement plan may invest in
the fund. Plan documents are required for all retirement plans. Trust
Company can provide the plan documents for you and serve as custodian or
trustee.
Trust Company can provide you with brochures containing important
information about its plans. These plans require separate applications and
their policies and procedures may be different than those described in this
prospectus. For more information, including a free retirement plan brochure
or application, please call Retirement Plan Services.
Please consult your legal, tax or retirement plan specialist before
choosing a retirement plan. Your investment representative or advisor can
help you make investment decisions within your plan.
VI. Under "May I Exchange Shares for Shares of Another Fund? - Exchange
Restrictions," the third item is replaced with the following:
o Generally exchanges may only be made between identically registered
accounts, unless you send written instructions with a signature
guarantee. You may, however, exchange shares from a fund account
requiring two or more signatures into an identically registered money
fund account requiring only one signature for all transactions. PLEASE
NOTIFY US IN WRITING IF YOU DO NOT WANT THIS OPTION TO BE AVAILABLE ON
YOUR ACCOUNT. Additional procedures may apply. Please see "Transaction
Procedures and Special Requirements."
VII. In the "By Phone" section of the chart under "How Do I Sell Shares?",
(a) the first bulleted item is replaced with the following:
o If the request is $100,000 or less. Institutional accounts may exceed
$100,000 by completing a separate agreement. Call Institutional
Services to receive a copy.
(b) and the third bulleted item is deleted.
VIII. Distribution option 3 in
the section "What Distributions Might I Receive From the Fund? -
Distribution Options" is replaced with the following:
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive dividends, or both
dividend and capital gain distributions in cash. If you have the money sent
to another person or to a checking or savings account, you may need a
signature guarantee. If you send the money to a checking or savings
account, please see "Electronic Fund Transfers" under "Services to Help You
Manage Your Account."
IX. Under "Transaction Procedures and Special Requirements,"
(a) the section "Joint Accounts" is replaced with the following:
JOINT ACCOUNTS. For accounts with more than one registered owner, the
fund accepts written instructions signed by only one owner for transactions
and account changes that could otherwise be made by phone. For all other
transactions and changes, all registered owners must sign the instructions.
Please keep in mind that if you have previously told us that you do
not want telephone exchange or redemption privileges on your account, then
we can only accept written instructions to exchange or redeem shares if
they are signed by all registered owners on the account.
(b) the reference to $50,000 in the section "Signature Guarantees" is
replaced with $100,000.
(c) and the section "Trust Company Retirement Plan Accounts," found
under "Telephone Transactions," is deleted.
X. Under "Services to Help You Manage Your Account," (a) the second sentence
in the section "Automatic Investment Plan" is replaced with the following:
Under the plan, you can have money transferred automatically from your
checking or savings account to the fund each month to buy additional
shares.
(b) the second paragraph under "Systematic Withdrawal Plan" is
replaced with the following:
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the account application
included with this prospectus and indicate how you would like to receive
your payments. You may choose to direct your payments to buy the same class
of shares of another Franklin Templeton Fund or have the money sent
directly to you, to another person, or to a checking or savings account. If
you choose to have the money sent to a checking or savings account, please
see "Electronic Fund Transfers" below. Once your plan is established, any
distributions paid by the fund will be automatically reinvested in your
account.
(c) and the following new section is added after the section
"Systematic Withdrawal Plan":
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or
payments under a systematic withdrawal plan 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
fifteen days for initial processing. We will send any payments made during
that time to the address of record on your account.
XI. In the "Useful Terms and Definitions" section, the definition of "Class I
and Advisor Class" is replaced with the following:
CLASS A AND ADVISOR CLASS - The fund offers two classes of
shares, designated "Class A" and "Advisor Class." The two classes have
proportionate interests in the fund's portfolio. They differ, however,
primarily in their sales charge and expense structures.
Please keep this supplement for future reference.
o 460*SAA
403*SAA
SUPPLEMENT DATED JANUARY 1, 1999
TO THE STATEMENTS OF ADDITIONAL INFORMATION OF
FRANKLIN BOND FUND - ADVISOR CLASS
DATED AUGUST 3, 1998
FRANKLIN NATURAL RESOURCES FUND - ADVISOR CLASS
DATED SEPTEMBER 1, 1998
The Statement of Additional Information is amended as follows:
I. The fund offers two classes of shares: Class A and Advisor Class. Before
January 1, 1999, Class A shares were designated Class I. All references in
the Statement of Additional Information to Class I shares are replaced with
Class A.
II. The first sentence in the section "Additional Information on Exchanging
Shares," found under "How Do I Buy, Sell and Exchange Shares?", is replaced
with the following:
If you request the exchange of the total value of your account,
declared but unpaid income dividends and capital gain distributions will be
reinvested in the fund and exchanged into the new fund at Net Asset Value
when paid.
III. The following paragraph is added under "Miscellaneous Information":
The Information Services & Technology division of Resources
established a Year 2000 Project Team in 1996. This team has already begun
making necessary software changes to help the computer systems that service
the fund and its shareholders to be Year 2000 compliant. After completing
these modifications, comprehensive tests are conducted in one of Resources'
U.S. test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis.
Resources is also beginning to develop a contingency plan, including
identification of those mission critical systems for which it is practical
to develop a contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to use
of normal systems, especially mission critical systems, or supplies of
electricity or long distance voice and data lines are limited.
Please keep this supplement for future reference.
