SUPPLEMENT TO THE PROSPECTUS
PROSPECTUS DATED JULY 28, 1994
(AS PREVIOUSLY SUPPLEMENTED NOVEMBER 30, 1994,
AND DECEMBER 6, 1994)
Franklin Templeton Japan Fund
* * *
The prospectus is hereby supplemented by adding the following section after the
section entitled "EXPENSE TABLE":
FINANCIAL HIGHLIGHTS
Per Share Operating Performance
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
JULY 28, 1994
(COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1994
(UNAUDITED)
-----------------------------
<S> <C>
Net asset value, beginning
or period $10.00
--------
Income from investment operations:
Net investment income .06
Net realized and unrealized loss (.12)
--------
Total from investment operations (.06)
--------
Distribution:
Dividend from net investment
income (.05)
--------
Change in net asset value (.11)
--------
Net asset value, end of period $9.89
--------
TOTAL RETURN* (0.59)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $954
Ratio of expenses to average
net assets 12.62%**
Ratio of expenses, net of
reimbursement, to average
net assets 1.25%**
<PAGE>
Ratio of net investment income to
average net assets 1.71%**
Portfolio turnover rate --
</TABLE>
*Total return does not reflects sales commissions. Not annualized.
** Annualized.
THE FOLLOWING CHANGES WILL BE EFFECTIVE FEBRUARY 1, 1995:
The text of the footnote to the sales charge table under "HOW TO BUY SHARES OF
THE FUND - OFFERING PRICE" is deleted and replaced with the following text:
*The following commissions will be paid by FTD to dealers who initiate and are
responsible for purchases of $1 million or more: 1.00% on sales of $1 million
but less $2 million, plus 0.80% on sales of $2 million but less than $3
million, plus 0.50% on sales of $3 million but less than $50 million, plus
0.25% on sales of $50 million but less than $100 million, plus 0.15% on sales
of $100 million or more. Dealer concession breakpoints are reset every 12
months for purposes of additional purchases.
The following paragraph is added to the section entitled "HOW TO BUY SHARES OF
THE FUND-OFFERING PRICE":
FTD, or one of its affiliates, may make payments, out of its own resources, of
up to 1% of the amount purchased to dealers who initiate and are responsible for
purchases made at net asset value by certain designated retirement plans
(excluding IRA and IRA rollovers), certain trust companies and trust departments
of banks and certain retirement plans of organizations with collective
retirement
plan assets of $10 million or more). Please refer to the SAI for further
information.
The following text is added to the fifth paragraph of the section entitled "HOW
TO BUY SHARES OF THE FUND-OFFERING PRICE":
Effective February 1, 1995, dealers will be paid a continuing trail fee
beginning in the 13th month after the date of the purchase, for purchases of
$1 million or
more of Fund Shares that are subject to a contingent deferred sales charge.
The second sentence of the section entitled "HOW TO BUY SHARES OF THE FUND-
CUMULATIVE QUANTITY DISCOUNT" is deleted and replaced with the following:
For this purpose, the dollar amount of the sale is added to the higher of (1)
the value (calculated at the applicable Offering Price) or (2) the purchase
price, of the following: (a) Shares of the Fund; (b) Shares of other funds
in the Franklin Templeton Group (except Templeton Capital Accumulator Fund,
Inc., Templeton Variable Annuity Fund, Templeton Variable Products Series Fund,
Franklin Valuemark Funds and Franklin Government Securities Trust); and (c)
other investment products underwritten by FTD or its affiliates (although
certain
investments may not have the same schedule of sales charges and/or may not be
subject to reduction in sales charges). Clauses (a), (b) and (c) above are
collectively referred to as "Franklin Templeton Investments". The cumulative
quantity discount applies to Franklin Templeton Investments owned at the time of
purchase by the purchaser, his or her spouse, and their children under age 21.
The text of the section entitled "HOW TO BUY SHARES OF THE FUND-LETTER OF
INTENT" is deleted and replaced with the following:
Investors may also reduce sales charges on all investments by means of a Letter
of Intent ("LOI") which expresses the investor's intention to invest a certain
amount within a 13-month period in Shares of the Fund or any other fund in the
Franklin Templeton Group. See the Shareholder Application. Except for certain
employee benefit plans, the minimum initial investment under an LOI is 5% of the
total LOI amount. Except for Shares purchased by certain employee benefit
plans, Shares purchased with the first 5% of such amount will be held in
escrow to secure payment of the higher sales charge applicable to the Shares
actually purchased if the full amount indicated is not purchased, and such
escrowed Shares
will be involuntarily redeemed to pay the additional sales charge, if
necessary. A purchase not originally made pursuant to an LOI may be
included under a subsequent LOI executed within 90 days of the purchase.
Any redemptions made by
<PAGE>
Shareholders, other than by certain employee benefit plans, during the 13-month
period will be subtracted from the amount of the purchases for purposes of ning
whether the terms of the LOI have been completed. For a further description of
the Letter of Intent, see "Purchase, Redemption and Pricing of Shares-Letter of
Intent" in the SAI.
The second paragraph of the section entitled "HOW TO BUY SHARES OF THE FUND-NET
ASSET VALUE PURCHASES" is deleted and replaced with the following:
Shares of the Fund may be purchased at net asset value by REGISTERED investment
advisers and/or their affiliated broker-dealers, who have entered into a
supplemental agreement with FTD, on behalf of their clients who are
participating in a comprehensive fee program (ALSO KNOWN AS A WRAP FEE PROGRAM).
Shares of the Fund may also be purchased at net asset value by certain
designated retirement plans, including, profit sharing, pension, 401(k) and
simplified
employee pension plans, subject to minimum requirements with respect to number
of employees or amount of purchase, which may be established by FTD. Currently,
those criteria require that the employer establishing the plan have 200 or more
employees or that the amount invested or to be invested during the subsequent
13-month period in the Fund or in any of the Franklin Templeton Investments
totals at least $1,000,000. Employee benefit plans not designated above or
qualified under Section 401 of the Code may be afforded the same privilege if
they meet the
above requirements as well as the uniform criteria for qualified groups
previously described under "Group Purchase", which enable FTD to realize
economies of scale in its sales efforts and sales related expenses.
Shares of the Fund may be purchased at net asset value by trustees or other
fiduciaries purchasing securities for certain retirement plans of organizations
with collective retirement plan assets of $10 million or more, without regard to
where such assets are currently invested.
Please refer to the SAI for further information.
The first paragraph of the section entitled "EXCHANGE PRIVILEGE" is deleted and
replaced with the following:
A Shareholder may exchange Shares into other funds in the Franklin Templeton
Group (except Templeton American Trust, Inc., Templeton Capital Accumulator
Fund, Inc., Templeton Variable Annuity Fund, Templeton Variable Products
Series Fund, Franklin Valuemark Funds and Franklin Government Securities
Trust). A contingent deferred sales charge will not be imposed on exchanges.
If, however, the
exchanged Shares were subject to a contingent deferred sales charge in the
original fund purchased, and Shares are subsequently redeemed within 12 months
of the calendar month following the original purchase date, a contingent
deferred sales charge will be imposed. The 12-month period will be tolled
(or stopped) for the period such Shares are exchanged into and held in a
Franklin or Templeton money market fund. See also "How to Sell Shares of the
Fund - Contingent Deferred Sales Charge."
The first sentence of the section entitled "HOW TO SELL SHARES OF THE FUND-
REINSTATEMENT PRIVILEGE" is deleted and replaced with the following:
Shares of the Fund may be purchased at net asset value with the proceeds from
(i) a redemption of Shares of any fund in the Franklin Templeton Group (except
Templeton American Trust, Inc., Templeton Capital Accumulator Fund, Inc.,
Templeton Variable Annuity Fund, Templeton Variable Products Series Fund,
Franklin Valuemark Funds and Franklin Government Securities Trust) which were
purchased with an initial sales charge or assessed a contingent deferred sales
charge on redemption, or (ii) a dividend or distribution paid by any Fund in
the
<PAGE>
Franklin Templeton Group, within 120 days after the date of the redemption or
dividend or distribution.
The text of the section entitled "HOW TO SELL SHARES OF THE FUND-CONTINGENT
DEFERRED SALES CHARGE" is deleted and replaced with the following:
In order to recover commissions paid to dealers on qualified investments of $1
million or more, a contingent deferred sales charge of 1% applies to redemptions
of those investments within 12 months of the calendar month after their
purchase. The charge is 1% of the lesser of the value of the Shares redeemed
(exclusive of
reinvested dividends and capital gains distributions) or the total cost of such
Shares, and is retained by FTD. In determining if a charge applies, Shares not
subject to a contingent deferred sales charge are deemed to be redeemed first,
in the following order: (i) Shares representing amounts attributable to capital
appreciation of those Shares held less than 12 months; (ii) Shares purchased
with reinvested dividends and capital gains distributions; and (iii) other
Shares held longer than 12 months, followed by any Shares held less than 12
months, on a "first in, first out" basis.
The contingent deferred sales charge is waived for: exchanges; distributions to
participants in Franklin Templeton Trust Company or Templeton Funds Trust
Company
retirement accounts due to death, disability or attainment of age 59 1/2; tax-
free returns of excess contributions to employee benefit plans; distributions
from employee benefit plans; redemptions through a Systematic Withdrawal Plan
established prior to February 1, 1995 and, for Systematic Withdrawal Plans
established thereafter, redemptions of up to 1% monthly of an account's net
asset value (3% quarterly, 6% semiannually or 12% annually); and redemptions
initiated by the Fund due to a Shareholder's account falling below the
minimum specified account size.
REQUESTS FOR REDEMPTIONS FOR A SPECIFIED DOLLAR AMOUNT WILL RESULT IN ADDITIONAL
SHARES BEING REDEEMED TO COVER ANY APPLICABLE CONTINGENT DEFERRED SALES CHARGE
WHILE REQUESTS FOR REDEMPTION OF A SPECIFIC NUMBER OF SHARES WILL RESULT IN THE
APPLICABLE CONTINGENT DEFERRED SALES CHARGE BEING DEDUCTED FROM THE TOTAL DOLLAR
AMOUNT REDEEMED.
January 25, 1995 TLCDS STKR3 2/95
