File No. 33-73244
As filed with the Securities and Exchange Commission on May 1,
1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 5 X
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 7 X
TEMPLETON GLOBAL INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
700 Central Avenue, P.O. Box 33030, St. Petersburg, Florida
33701-8030
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (813) 823-
8712
Jeffrey L. Steele, Esq. Thomas M. Mistele, Esq.
Dechert Price & Rhoads Templeton Global Investors, Inc.
1500 K Street, N.W. 500 East Broward Blvd.
Washington, D.C. 20005 Fort Lauderdale, FL 33394
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on May 1, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a) of Rule 485
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Registrant has elected to register an indefinite number of
shares of beneficial interest, $0.01 par value per share,
pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant filed the Notice required by Rule 24f-2 with respect
to its fiscal year ended March 31, 1994 on May 24, 1994.
TEMPLETON GLOBAL INVESTMENT TRUST
CROSS-REFERENCE SHEET
Part A - Templeton Global Rising Dividends Fund
1 Cover Page
2 Expense Table
3 Financial Highlights
4 General Description;
Investment Techniques
5 Management of the Fund
5A Not Applicable
6 General Information
7 How to Buy Shares of the Fund
8 How to Sell Shares of the Fund
9 Not Applicable
Part A - Templeton Global Infrastructure Fund
1 Cover Page
2 Expense Table
3 Financial Highlights
4 General Description;
Investment Techniques
5 Management of the Fund
5A Not Applicable
6 General Information
7 How to Buy Shares of the Fund
8 How to Sell Shares of the Fund
9 Not Applicable
Part A - Templeton Americas Government Securities Fund
This Post-Effective Amendment No. 5 to the Registration Statement
(File No. 33-73244) on Form N-1A for Templeton Global Investment
Trust incorporates by reference the prospectus for Templeton
Americas Government Securities Fund, which was contained in
Templeton Global Investment Trust's Post-Effective Amendment No.
3, which was filed on December 2, 1994.
Part B
10 Cover Page
11 Table of Contents
12 General Information and History
13 Investment Objectives and Policies
14 Management of the Trust
15 Principal Shareholders
16 Investment Management and Other
Services
17 Brokerage Allocation
18 Description of Shares; Part A
19 Purchase, Redemption and Pricing of
Shares
20 Tax Status
21 Principal Underwriter
22 Performance Information
23 Financial Statements
<PAGE>
TEMPLETON GLOBAL RISING DIVIDENDS SUPPLEMENT DATED MAY 1, 1995
FUND PROSPECTUS -- JUNE 27, 1994
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INTRODUCTION As of May 1, 1995, the Templeton Global Rising Dividends Fund
(the "Fund") offers two classes of shares to its investors:
Templeton Global Rising Dividends Fund--Class I ("Class I")
and Templeton Global Rising Dividends Fund--Class II ("Class
II"). Investors can choose between Class I shares, which
generally bear a higher front-end sales charge and lower
ongoing Rule 12b-1 distribution fees ("Rule 12b-1 fees"), and
Class II shares, which generally have a lower front-end sales
charge and higher ongoing Rule 12b-1 fees. Investors should
consider the differences between the two classes, including
the impact of sales charges and distribution fees, in choosing
the more suitable class given their anticipated investment
amount and time horizon. The date of the Prospectus of the
Fund is hereby amended to be May 1, 1995.
- -------------------------------------------------------------------------------
THIS All investment objectives and policies described in the
SUPPLEMENT Prospectus apply equally to both classes of shares in the new
MUST BE READ multiclass structure. Further, all operational procedures
IN apply equally to both classes, unless otherwise specified in
CONJUNCTION the following discussion. See "Deciding Which Class to
WITH THE Purchase" below.
PROSPECTUS
FOR THIS
FUND
- -------------------------------------------------------------------------------
MULTICLASS The Fund has two classes of shares available for investment:
FUND Class I and Class II. All Fund shares outstanding before the
STRUCTURE implementation of the multiclass structure have been
redesignated as Class I shares, and will retain their previous
rights and privileges. See the Prospectus for more details
about Class I shares. Class II shares are explained in detail
in the following discussion. Except as described below, shares
of both classes represent identical interests in the Fund's
investment portfolio.
- -------------------------------------------------------------------------------
THE NEW APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST BE USED FOR
ALL PURCHASES. DO NOT USE THE APPLICATION FORM INCLUDED IN THE PROSPECTUS.
May 1, 1995 TL414 STKRB 05/95
<PAGE>
EXPENSE TABLE
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a Shareholder will bear directly or indirectly
in connection with an investment in the Fund. The figures are estimates of the
Fund's expenses for the current fiscal year, restated to reflect current sales
charges and 12b-1 fees for each class.
<TABLE>
<CAPTION>
CLASS I CLASS II
------- --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage
of Offering Price)....................................... 5.75% 1.00%/1/
Deferred Sales Charge..................................... None/2/ 1.00%/3/
Exchange Fee (per transaction)............................ $5.00/4/ $5.00/4/
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees........................................... 0.75% 0.75%
Rule 12b-1 Fees/5/........................................ 0.35% 1.00%
Other Expenses (audit, legal, business management,
transfer agent and custodian) (after expense
reimbursement)........................................... 0.15% 0.15%
Total Fund Operating Expenses (after expense
reimbursement)........................................... 1.25% 1.90%/1/
</TABLE>
- -------
/1/Although Class II has a lower front-end sales charge than Class I, over time
the higher Rule 12b-1 fee for Class II may cause Shareholders to pay more for
Class II shares than for Class I shares. Given the maximum front-end sales
charge and the rate of Rule 12b-1 fees of each class, it is estimated that
this will take less than six years for Shareholders who maintain total shares
valued at less than $50,000 in the Franklin Templeton Funds. Shareholders
with larger investments in the Franklin Templeton Funds will reach the cross-
over point more quickly.
/2/Class I investments of $1 million or more are not subject to a front-end
sales charge; however, a contingent deferred sales charge of 1%, which has
not been reflected in the Example below, is generally imposed on certain
redemptions within a "contingency period" of 12 months of the calendar month
following such investments. See "How to Sell Shares of the Fund --Contingent
Deferred Sales Charge."
/3/Class II shares redeemed within a "contingency period" of 18 months of the
calendar month following such investments are subject to a 1% contingent
deferred sales charge. See "How to Sell Shares of the Fund -- Contingent
Deferred Sales Charge."
/4/$5.00 fee imposed only on Timing Accounts as described under "Exchange
Privilege" in the Prospectus. All other exchanges are processed without a
fee.
/5/Annual Rule 12b-1 fees may not exceed 0.35% of the Fund's average net assets
attributable to Class I shares and 1.00% of the Fund's average net assets
attributable to Class II shares. Consistent with the National Association of
Securities Dealers, Inc.'s rules, it is possible that the combination of
front-end sales charges and Rule 12b-1 fees could cause long-term
Shareholders to pay more than the economic equivalent of the maximum front-
end sales charges permitted under those same rules.
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual's own
investment in the Fund. Rather the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and
expenses. For a more detailed discussion of these matters, investors should
refer to the appropriate sections of the Prospectus and this Supplement.
EXAMPLE
As required by SEC regulations, the following example illustrates the
expenses, including the maximum front-end sales charge and applicable
contingent deferred sales charge, that apply to a $1,000 investment in the
Fund over various time periods assuming (1) a 5% annual rate of return and (2)
redemption at the end of each time period.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
-------- -----------
<S> <C> <C>
Class I.................................................... $69 $95
Class II................................................... $33 $49
</TABLE>
This example is based on the estimated annual operating expenses, including
fees set by contract, shown above and should not be considered a
representation of past or future expenses, which may be more or less than
those shown. The operating expenses are
2
<PAGE>
borne by the Fund and only indirectly by Shareholders as a result of their
investment in the Fund. (See "Management of the Fund" in the Prospectus for a
description of the Fund's expenses.) In addition, federal securities
regulations require the example to assume an annual return of 5%, but the
Fund's actual return may be more or less than 5%.
The Fund's Business Manager, Templeton Global Investors, Inc., has
voluntarily agreed to limit the total expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) of the Fund to an annual
rate of 1.25% for Class I, and 1.90% for Class II, of the Fund's average daily
net assets until December 31, 1995. If this policy were not in effect, the
Fund's "other expenses" would be 5.01% for both classes and the "total Fund
operating expenses" would be 6.11% for Class I and 6.76% for Class II. In this
case, you would pay the following expenses on a $1,000 investment, assuming 5%
annual return and redemption at the end of each time period: $115 for one year
and $227 for three years for Class I; $86 for one year and $206 for three
years for Class II. As long as this temporary expense limitation continues, it
may lower the Fund's expenses and increase its total return. After December
31, 1995, the expense limitation may be terminated at any time, at which time
the Fund's expenses may increase and its total return may be reduced,
depending on the total assets of the Fund.
DECIDING WHICH CLASS TO PURCHASE. Investors should carefully evaluate their
anticipated investment amount and time horizon prior to determining which
class of shares to purchase. Generally, an investor who expects to invest less
than $50,000 in the Franklin Templeton Funds and who expects to make
substantial redemptions within approximately six years or less of investment
should consider purchasing Class II shares. However, the higher annual Rule
12b-1 fees on Class II shares will result in slightly higher operating
expenses and lower income dividends for Class II shares, which will accumulate
over time to outweigh the difference in initial sales charges. For this
reason, Class I shares may be more attractive to long-term investors even if
no sales charge reductions are available to them.
Investors who qualify to purchase Class I shares at reduced sales charges
definitely should consider purchasing Class I shares, especially if they
intend to hold their shares for six years or more. Investors who qualify to
purchase Class I shares at reduced sales charges but who intend to hold their
shares less than six years should evaluate whether it is more economical to
purchase Class I shares through a Letter of Intent or under Cumulative
Quantity Discount or other means rather than purchasing Class II shares.
Investors investing $1 million or more in a single payment and other investors
who qualify to purchase Class I shares at net asset value will be precluded
from purchasing Class II shares. See "How to Buy Shares of the Fund" in the
Prospectus.
Each class represents the same interest in the investment portfolio of the
Fund and has the same rights, except that each class has a different sales
charge, bears the separate expenses of its Rule 12b-1 distribution plan, and
has exclusive voting rights with respect to such plan. The two classes also
have separate exchange privileges.
ALTERNATIVE PURCHASE ARRANGEMENTS. The difference between Class I and Class
II shares lies primarily in their front-end and contingent deferred sales
charges and Rule 12b-1 fees as described below.
A separate Plan of Distribution has been approved and adopted for each class
("Class I Plan" and "Class II Plan," respectively) pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Rule 12b-1 fees charged to each class will be based solely on the distribution
and servicing fees attributable to that particular class. Any portion of fees
remaining from either plan after distribution to securities dealers up to the
maximum amount permitted under each Plan may be used by the class to reimburse
Franklin Templeton Distributors, Inc. ("FTD") for routine ongoing promotion
and distribution expenses incurred with respect to such class. See "Plan of
Distribution" in the Prospectus for a description of such expenses.
CLASS I. Class I shares are generally subject to a variable sales charge
upon purchase and not subject to any sales charge upon redemption. Class I
shares are subject to Rule 12b-1 fees of up to an annual maximum of 0.35% of
average daily net assets of such shares. With this multiclass structure, Class
I shares have higher front-end sales charges than Class II shares and
comparatively lower Rule 12b-1 fees.
3
<PAGE>
Plan of Distribution. Under the Class I Plan, the Fund will reimburse FTD or
other securities dealers for expenses incurred in the promotion, servicing,
and distribution of Class I Fund shares. (See "Plan of Distribution" in the
Prospectus and "Distribution Plan" in the Statement of Additional Information
("SAI")).
Quantity Discounts and Purchases At Net Asset Value. Class I shares may be
purchased at a reduced front-end sales charge or at net asset value if certain
conditions are met. See "How to Buy Shares of the Fund."
Contingent Deferred Sales Charge. In most circumstances, a contingent
deferred sales charge will not be assessed against redemptions of Class I
shares. A contingent deferred sales charge will be imposed on Class I shares
only if shares valued at $1 million or more are purchased without a sales
charge and are subsequently redeemed within 12 months of the calendar month
following their purchase. See "Contingent Deferred Sales Charge" under "How to
Sell Shares of the Fund" in this Supplement.
CLASS II. The current public offering price of Class II shares is equal to
the net asset value, plus a front-end sales charge of 1% of the amount
invested. Class II shares are also subject to a contingent deferred sales
charge of 1.0% if shares are redeemed within 18 months of the calendar month
following purchase. In addition, Class II shares are subject to Rule 12b-1
fees of up to a maximum of 1.0% of average daily net assets of such shares.
Class II shares have lower front-end sales charges than Class I shares and
comparatively higher Rule 12b-1 fees.
Purchases of Class II shares are limited to amounts below $1 million. Any
purchases of $1 million or more will automatically be invested in Class I
shares, since that is more beneficial to investors. Such purchases, however,
may be subject to a contingent deferred sales charge. Investors may exceed $1
million in Class II shares by cumulative purchases over a period of time.
Investors who intend to make investments exceeding $1 million, however, should
consider purchasing Class I shares through a Letter of Intent instead of
purchasing Class II shares. See "How to Buy Shares of the Fund" in the
Prospectus for more information.
Plan of Distribution. Class II's operating expenses will generally be higher
than Class I's under the Class II Plan. During the first year following a
purchase of Class II shares, FTD will keep a portion of the Plan fees
attributable to those shares to partially recoup fees FTD pays to securities
dealers. FTD, or its affiliates, may pay, from its own resources, a commission
of up to 1% of the amount invested to securities dealers who initiate and are
responsible for purchases of Class II shares.
Contingent Deferred Sales Charge. Unless a waiver applies, a contingent
deferred sales charge will be imposed on Class II shares redeemed within 18
months of their purchase. See "Contingent Deferred Sales Charges" under "How
to Sell Shares of the Fund" in this Supplement.
MANAGEMENT OF THE FUND
The Board of Directors has carefully reviewed the multiclass structure to
ensure that no material conflict exists between the two classes of shares.
Although the Board does not expect to encounter material conflicts in the
future, the Board will continue to monitor the Fund and will take appropriate
action to resolve such conflicts if any should later arise.
In developing the multiclass structure, the Fund has retained the authority
to establish additional classes of shares. It is the Fund's present intention
to offer only two classes of shares, but new classes may be offered in the
future.
For more information regarding the responsibilities of the Board and the
management of the Fund, please see "Management of the Fund" in the Prospectus.
CLASS II PLAN OF DISTRIBUTION. Under the Class II Plan, the maximum amount
which the Fund is permitted to pay to FTD or others for distribution and
related expenses is 0.75% per annum of Class II shares' average daily net
assets, payable quarterly. All expenses of distribution, marketing and related
services over that amount will be borne by FTD or others who have incurred
them without reimbursement by the Fund. In addition, the Class II Plan
provides for an additional payment by the Fund of up to 0.35% per annum of
4
<PAGE>
Class II shares' average daily net assets as a servicing fee, payable
quarterly. This fee will be used to pay securities dealers or others for,
among other things, assisting in establishing and maintaining customer
accounts and records; assisting with purchase and redemption requests;
receiving and answering correspondence; monitoring dividend payments from the
Fund on behalf of their customers, or similar activities related to furnishing
personal services and/or maintaining Shareholder accounts.
The Class II Plan also covers any payments to or by the Fund, the Investment
Manager, FTD, or other parties on behalf of the Fund, the Investment Manager
or FTD, to the extent such payments are deemed to be for the financing of any
activity primarily intended to result in the sale of Class II shares issued by
the Fund within the context of Rule 12b-1. The payments under the Plan are
included in the maximum operating expenses which may be borne by Class II of
the Fund.
During the first year after the purchase of Class II shares, FTD will keep a
portion of the Plan fees assessed on Class II shares to partially recoup fees
FTD pays to securities dealers.
See the "Plan of Distribution" discussion in the "Management of the Fund"
section in the Prospectus and in the SAI for more information about both Class
I and Class II Plans.
DIVIDENDS AND DISTRIBUTIONS
According to the requirements of the Internal Revenue Code of 1986, as
amended (the "Code"), dividends and capital gains will be calculated and
distributed in the same manner for Class I and Class II shares. The per share
amount of any income dividends will generally differ only to the extent that
each class is subject to different Rule 12b-1 fees.
Unless otherwise requested, income dividends and capital gain distributions,
if any, will be automatically reinvested in the Shareholder's account in the
form of additional shares, valued at the closing net asset value (without a
front-end sales charge) on the ex-dividend date. Dividend and capital gain
distributions are only eligible for reinvestment at net asset value in the
same class of Shares of the Fund or the same class of another of the Franklin
Templeton Funds. See "Dividends and Distributions" in the Prospectus and the
SAI for more information.
HOW TO BUY SHARES OF THE FUND
The following discussion supplements the one included in the Prospectus
under "How to Buy Shares of the Fund."
THE APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST ACCOMPANY ANY PURCHASE
OF SHARES. DO NOT USE THE APPLICATION INCLUDED IN THE PROSPECTUS.
OFFERING PRICE. Shares of both classes of the Fund are offered at their
respective public Offering Prices, which are determined by adding the net
asset value per share plus a front-end sales charge, next computed (1) after
the Shareholder's securities dealer receives the order which is promptly
transmitted to the Fund, or (2) after receipt of an order by mail from the
Shareholder directly in proper form (which generally means a completed
Shareholder Application accompanied by a negotiable check).
CLASS I. The sales charge for Class I shares is a variable percentage of the
Offering Price depending upon the amount of the sale. A description of the
method of calculating net asset value per share is included under the caption
"Net Asset Value" in the Prospectus.
5
<PAGE>
Set forth below is a table of total front-end sales charges or underwriting
commissions and dealer concessions for Class I shares:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
--------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF NET PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE OF THE ASSET VALUE OF THE OFFERING PRICE
AT OFFERING PRICE SHARES PURCHASED SHARES PURCHASED RETAINED BY DEALERS/1,3/
- ----------------- --------------------- ---------------------- --------------------------
<S> <C> <C> <C>
Less than $50,000....... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000............... 4.50% 4.71% 3.75%
$100,000 but less than
$250,000............... 3.50% 3.63% 2.80%
$250,000 but less than
$500,000............... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000............. 2.00% 2.04% 1.60%
$1,000,000 or more...... none none (see below)/2/
</TABLE>
- -------
/1/Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
/2/The following commissions will be paid by FTD, out of its own resources, to
securities dealers who initiate and are responsible for purchases of $1
million or more: 1.00% on sales of $1 million but less than $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.
/3/At the discretion of FTD, all sales charges may at times be allowed to the
securities dealer. If 90% or more of the sales commission is allowed, such
securities dealer may be deemed to be an underwriter as that term is defined
in the Securities Act of 1933, as amended.
No front-end sales charge applies on investments of $1 million or more, but
a contingent deferred sales charge of 1% is imposed on certain redemptions of
all or a portion of investments of $1 million or more within the contingency
period. See "How to Sell Shares of the Fund -- Contingent Deferred Sales
Charge," in this Supplement.
The size of a transaction which determines the applicable sales charge on
the purchase of Class I shares is determined by adding the amount of the
Shareholder's current purchase plus the cost or current value (whichever is
higher) of a Shareholder's existing investment in one or more of the funds in
the Franklin Group of Funds(R) and the Templeton Family of Funds. Included for
these aggregation purposes are (a) the mutual funds in the Franklin Group of
Funds except Franklin Valuemark Funds and Franklin Government Securities Trust
(the "Franklin Funds"), (b) 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) and (c) the U.S.
registered mutual funds in the Templeton Family of Funds except Templeton
Capital Accumulator Fund, Inc., Templeton Variable Annuity Fund, and Templeton
Variable Products Series Fund (the "Templeton Funds"). (Franklin Funds and
Templeton Funds are collectively referred to as the "Franklin Templeton
Funds.") Sales charge reductions based upon aggregate holdings of (a), (b) and
(c) above ("Franklin Templeton Investments") may be effective only after
notification to FTD that the investment qualifies for a discount.
Other Payments to Securities Dealers. FTD, or one of its affiliates, may
make payments, out of its own resources, of up to 1% of the amount purchased
to securities dealers who initiate and are responsible for purchases made at
net asset value by certain designated retirement plans (excluding IRA and IRA
rollovers), certain non-designated plans, certain trust companies and trust
departments of banks and certain retirement plans of organizations with
collective retirement plan assets of $10 million or more. See definitions
under "Purchases at Net Asset Value," and as set forth in the SAI.
6
<PAGE>
CLASS II. Unlike Class I shares, the front-end sales charges and dealer
concessions for Class II shares do not vary depending on the amount of
purchase. See table below:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
--------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF NET PORTION OF THE TOTAL
AMOUNT OF SALE OFFERING PRICE OF THE ASSET VALUE OF THE OFFERING PRICE
AT OFFERING PRICE SHARES PURCHASED SHARES PURCHASED RETAINED BY DEALERS*
- ----------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C>
any amount (less than $1
million)............... 1.00% 1.01% 1.00%
</TABLE>
- -------
* FTD, or one of its affiliates, may make additional payments to the
securities dealer, from its own resources, of up to 1% of the amount
invested. During the first year following a purchase of Class II shares, FTD
will keep a portion of the Rule 12b-1 fees assessed to those shares to
partially recoup fees FTD pays to securities dealers.
Class II shares redeemed within 18 months of their purchase will be assessed
a contingent deferred sales charge of 1.0% on the lesser of the then-current
net asset value or the net asset value of such shares at the time of purchase,
unless such charge is waived as described under "How to Sell Shares of the
Fund -- Contingent Deferred Sales Charge."
The following section, which supersedes that included in the Prospectus,
describes the categories of investors who may purchase Class I shares of the
Fund at net asset value and when Class I and Class II shares may be purchased
at net asset value. The sections in the Prospectus titled "Cumulative Quantity
Discount" and "Group Purchases" only apply to Class I shares. Although sales
charges on Class II shares may not be reduced by a Letter of Intent or
Cumulative Quantity Discount as described under "Cumulative Quantity
Discount," the value of Class II shares owned by an investor may be included
in determining the appropriate sales charges for Class I shares.
PURCHASES AT NET ASSET VALUE. Class I shares may be purchased without the
imposition of either a front-end sales charge ("net asset value") or a
contingent deferred sales charge by (1) officers, trustees, directors and
full-time employees of the Fund, any of the Franklin Templeton Funds, or of
the Investment Manager or its affiliates, and by their spouses and family
members, including any subsequent payments by such parties after cessation of
employment; (2) companies exchanging Shares with or selling assets pursuant to
a merger, acquisition or exchange offer; (3) insurance company separate
accounts for pension plan contracts; (4) accounts managed by the Investment
Manager or its affiliates; (5) shareholders of Templeton Institutional Funds,
Inc. reinvesting redemption proceeds from that fund under an employee benefit
plan qualified under Section 401 of the Internal Revenue Code of 1986, as
amended, in shares of the Fund; (6) certain unit investment trusts and unit
holders of such trusts reinvesting their distributions from the trusts in the
Fund;(7) registered securities dealers and their affiliates, for their
investment account only; and (8) registered personnel and employees of
securities dealers and by their spouses and family members, in accordance with
the internal policies and procedures of the employing securities dealer.
For either Class I or Class II, the same class of shares of the Fund may be
purchased at net asset value by persons who have redeemed, within the previous
120 days, their shares of the Fund or another of the Franklin Templeton Funds
which were purchased with a front-end sales charge or assessed a contingent
deferred sales charge on redemption. If a different class of shares is
purchased, the full front-end sales charge must be paid at the time of
purchase of the new shares. An investor may reinvest an amount not exceeding
the redemption proceeds. While credit will be given for any contingent
deferred sales charge paid on the shares redeemed and subsequently
repurchased, a new contingency period will begin. Shares of the Fund redeemed
in connection with an exchange into another fund (see "Exchange Privilege")
are not considered "redeemed" for this privilege. In order to exercise this
privilege, a written order for the purchase of Shares of the Fund must be
received by the Fund or Franklin Templeton Investor Services, Inc. (the
"Transfer Agent") within 120 days after the redemption. The 120 days, however,
do not begin to run on redemption proceeds placed immediately after redemption
in a Franklin Bank Certificate of Deposit ("CD") until the CD (including any
rollover) matures. Reinvestment at net asset value may also be handled by a
securities dealer or other financial institution, who may charge the
Shareholder a fee for this
7
<PAGE>
service. The redemption is a taxable transaction but reinvestment without a
sales charge may affect the amount of gain or loss recognized and the tax
basis of the shares reinvested. If there has been a loss on the redemption,
the loss may be disallowed if a reinvestment in the same fund is made within a
30-day period. Information regarding the possible tax consequences of such a
reinvestment is included in the tax section of the Prospectus and the SAI.
For either Class I or Class II, the same class of shares of the Fund or of
another of the Franklin Templeton Funds may be purchased at net asset value
and without a contingent deferred sales charge by persons who have received
dividends and capital gain distributions in cash from investments in that
class of shares of the Fund within 120 days of the payment date of such
distribution. To exercise this privilege, a written request to reinvest the
distribution must accompany the purchase order. Additional information may be
obtained from Account Services at 1-800-393-3001. See "General Information --
Dividends and Distributions."
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by investors who have, within
the past 60 days, redeemed an investment in a mutual fund which is not part of
the Franklin Templeton Funds and which charged the investor a contingent
deferred sales charge upon redemption and which has investment objectives
similar to those of the Fund.
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by broker-dealers who have
entered into a supplemental agreement with FTD, or by registered investment
advisors affiliated with such broker-dealers, on behalf of their clients who
are participating in a comprehensive fee program (sometimes known as a wrap
fee program).
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by anyone who has taken a
distribution from an existing retirement plan already invested in the Franklin
Templeton Funds (including former participants of the Franklin Templeton
Profit Sharing 401(k) plan), to the extent of such distribution. In order to
exercise this privilege a written order for the purchase of shares of the Fund
must be received by Franklin Templeton Trust Company, the Fund or the Transfer
Agent within 120 days after the plan distribution.
Class I shares may also be purchased at net asset value and without the
imposition of a contingent deferred sales charge by any state, county, or
city, or any instrumentality, department, authority or agency thereof which
has determined that the Fund is a legally permissible investment and which is
prohibited by applicable investment laws from paying a sales charge or
commission in connection with the purchase of shares of any registered
management investment company ("an eligible governmental authority"). SUCH
INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISORS TO DETERMINE WHETHER AND TO
WHAT EXTENT THE SHARES OF THE FUND CONSTITUTE LEGAL INVESTMENTS FOR THEM.
Municipal investors considering investment of proceeds of bond offerings into
the Fund should consult with expert counsel to determine the effect, if any,
of various payments made by the Fund or its Investment Manager on arbitrage
rebate calculations. If an investment by an eligible governmental authority at
net asset value is made through a securities dealer who has executed a dealer
agreement with FTD, FTD or one of its affiliates may make a payment, out of
its own resources, to such securities dealer in an amount not to exceed 0.25%
of the amount invested. Contact Franklin Templeton Institutional Services for
additional information.
DESCRIPTION OF SPECIAL NET ASSET VALUE PURCHASES. Class I shares may also be
purchased at net asset value and without the imposition of a contingent
deferred sales charge by certain designated retirement plans, including profit
sharing, pension, 401(k) and simplified employee pension plans ("designated
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 ("non-designated plans") may be
afforded the same privilege if they meet the above requirements as well as the
uniform
8
<PAGE>
criteria for qualified groups previously described under "Group Purchases"
which enable FTD to realize economies of scale in its sales efforts and sales
related expenses.
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by trust companies and bank
trust departments for funds over which they exercise exclusive discretionary
investment authority and which are held in a fiduciary, agency, advisory,
custodial or similar capacity. Such purchases are subject to minimum
requirements with respect to amount of purchase, which may be established by
FTD. Currently, those criteria require that the amount invested or to be
invested during the subsequent 13-month period in this Fund or any of the
Franklin Templeton Investments must total at least $1,000,000. Orders for such
accounts will be accepted by mail accompanied by a check or by telephone or
other means of electronic data transfer directly from the bank or trust
company, with payment by federal funds received by the close of business on
the next business day following such order.
Class I shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge 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.
For a complete understanding of how to buy shares of the Fund, this
Supplement must be read in conjunction with the Prospectus. Refer to the SAI
for further information regarding net asset value purchases of Class I shares.
PURCHASING CLASS I AND CLASS II SHARES. When placing purchase orders,
investors should clearly indicate which class of shares they intend to
purchase. A purchase order that fails to specify a class will automatically be
invested in Class I shares. Purchases of $1 million or more in a single
payment will be invested in Class I shares. There are no conversion features
attached to either class of shares.
Investors who qualify to purchase Class I shares at net asset value should
purchase Class I rather than Class II shares. See the section "Purchases at
Net Asset Value" and "Description of Special Net Asset Value Purchases" above
for a discussion of when shares may be purchased at net asset value.
OTHER PROGRAMS AND PRIVILEGES AVAILABLE TO FUND SHAREHOLDERS
With the exception of Systematic Withdrawal Plans, all programs and
privileges detailed in the Prospectus will remain in effect for the new
multiclass structure.
SYSTEMATIC WITHDRAWAL PLANS. Subject to the requirements outlined in the
Prospectus, a Shareholder may establish a Systematic Withdrawal Plan for his
or her account. With respect to Class I shares, the contingent deferred sales
charge is waived for redemptions through a Systematic Withdrawal Plan set up
prior to February 1, 1995. With respect to Systematic Withdrawal Plans set up
on or after February 1, 1995, the applicable contingent deferred sales charge
is waived for Class I and Class II share redemptions of up to 1% monthly of an
account's net asset value (12% annually, 6% semi-annually, 3% quarterly). For
example, if a Class I account maintained an annual balance of $1,000,000, only
$120,000 could be withdrawn through a once-yearly Systematic Withdrawal Plan
free of charge; any amount over that $120,000 would be assessed a 1% (or
applicable) contingent deferred sales charge. Likewise, if a Class II account
maintained an annual balance of $10,000, only $1,200 could be withdrawn
through a once-yearly Systematic Withdrawal Plan free of charge.
EXCHANGE PRIVILEGE
Shareholders are entitled to exchange their shares for shares of the same
class of other Franklin Templeton Funds which are eligible for sale in the
Shareholder's state of residence and in conformity with such fund's stated
eligibility requirements and investment
9
<PAGE>
minimums. Some funds, however, may not offer Class II shares. Class I shares
may be exchanged for Class I shares of any Franklin Templeton Funds. Class II
shares may be exchanged for Class II shares of any Franklin Templeton Funds.
No exchanges between different classes of shares will be allowed. 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
(Class I shares) or 18 months (Class II shares) of the calendar month of the
original purchase date, a contingent deferred sales charge will be imposed.
Investors should review the Prospectus of the fund they wish to exchange from
and the fund they wish to exchange into for all specific requirements or
limitations on exercising the exchange privilege, for example, minimum holding
periods or applicable sales charges.
EXCHANGE OF CLASS I SHARES. The contingency period of Class I shares will be
tolled (or stopped) for the period such shares are exchanged into and held in
a Franklin or Templeton money market fund. If a Class I account has shares
subject to a contingent deferred sales charge, Class I shares will be
exchanged into the new account on a "first-in, first-out" basis. See also "How
to Sell Shares of the Fund -- Contingent Deferred Sales Charge."
EXCHANGES OF CLASS II SHARES. When an account is composed of Class II shares
subject to the contingent deferred sales charge, and shares that are not, the
shares will be transferred proportionately into the new fund. Shares received
from reinvestment of dividends and capital gains are referred to as "free
shares," shares which were originally subject to a contingent deferred sales
charge but to which the contingent deferred sales charge no longer applies are
called "matured shares," and shares still subject to the contingent deferred
sales charge are referred to as "CDSC liable shares." CDSC liable shares held
for different periods of time are considered different types of CDSC liable
shares. For instance, if a Shareholder has $1,000 in free shares, $2,000 in
matured shares, and $3,000 in CDSC liable shares, and the Shareholder
exchanges $3,000 into a new fund, $500 will be exchanged from free shares,
$1,000 from matured shares, and $1,500 from CDSC liable shares. Similarly, if
CDSC liable shares have been purchased at different periods, a proportionate
amount will be taken from shares held for each period. If, for example, a
Shareholder holds $1,000 in shares bought 3 months ago, $1,000 bought 6 months
ago, and $1,000 bought 9 months ago, and the Shareholder exchanges $1,500 into
a new fund, $500 from each of these shares will be deemed exchanged into the
new fund.
The only money market fund exchange option available to Class II
Shareholders is the Franklin Templeton Money Fund II ("Money Fund II"), a
series of the Franklin Templeton Money Fund Trust. No drafts (checks) may be
written on Money Fund II accounts, nor may Shareholders purchase shares of
Money Fund II directly. Class II shares exchanged for shares of Money Fund II
will continue to age and a contingent deferred sales charge will be assessed
if CDSC liable shares are redeemed. No other money market funds are available
for Class II Shareholders for exchange purposes. Class I shares may be
exchanged for shares of any of the money market funds in the Franklin
Templeton Funds except Money Fund II. Draft writing privileges and direct
purchases are allowed on these other money market funds as described in their
respective Prospectuses.
To the extent shares are exchanged proportionately, as opposed to another
method, such as first-in first-out, or free-shares followed by CDSC liable
shares, the exchanged shares may, in some instances, be CDSC liable even
though a redemption of such shares, as discussed elsewhere herein, may no
longer be subject to a CDSC. The proportional method is believed by management
to more closely meet and reflect the expectations of Class II Shareholders in
the event shares are redeemed during the contingency period. For federal
income tax purposes, the cost basis of shares redeemed or exchanged is
determined under the Code without regard to the method of transferring shares
chosen by the Fund for purposes of exchanging or redeeming shares.
TRANSFERS. Transfers between identically registered accounts in the same
fund and class are treated as non-monetary and non-taxable events, and are not
subject to a contingent deferred sales charge. The transferred shares will
continue to age from the date of original purchase. Like exchanges, CLASS II
shares will be moved proportionately from each type of shares in the original
account.
10
<PAGE>
CONVERSION RIGHTS. It is not presently anticipated that Class II shares will
be converted to Class I shares. A Shareholder may, however, sell his Class II
shares and use the proceeds to purchase Class I shares, subject to all
applicable sales charges.
See "Exchange Privilege" in the Prospectus for more information.
HOW TO SELL SHARES OF THE FUND
For a discussion regarding the sale of either class of Fund shares, refer to
the section in the Prospectus titled "How to Sell Shares of the Fund." In
addition, the charges described in this Supplement will also apply to the sale
of all Fund shares.
CONTINGENT DEFERRED SALES CHARGE Class I. In order to recover commissions
paid to securities dealers on investments of $1 million or more, a contingent
deferred sales charge of 1% applies to redemptions of those investments within
the contingency period of 12 months of the calendar month following their
purchase. The charge is 1% of the lesser of the then-current net asset value
of the shares redeemed (exclusive of reinvested dividends and capital gain
distributions) or the net asset value of such shares at the time of purchase,
and is retained by FTD. The contingent deferred sales charge is waived in
certain instances. See below and "Purchases at Net Asset Value" under "How To
Buy Shares of the Fund."
Class II. Class II shares redeemed within the contingency period of 18
months of the calendar month following their purchase will be assessed a
contingent deferred sales charge, unless one of the exceptions described below
applies. The charge is 1% of the lesser of the then-current net asset value of
the shares redeemed (exclusive of reinvested dividends and capital gain
distributions) or the net asset value of such shares at the time of purchase,
and is retained by FTD. The contingent deferred sales charge is waived in
certain instances. See below.
Class I and Class II. In determining if a contingent deferred sales 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 the
contingency period (12 months in the case of Class I shares and 18 months in
the case of Class II shares); (ii) shares purchased with reinvested dividends
and capital gain distributions; and (iii) other shares held longer than the
contingency period; and followed by any shares held less than the contingency
period, on a "first in, first out" basis. For tax purposes, a contingent
deferred sales charge is treated as either a reduction in redemption proceeds
or an adjustment to the cost basis of the shares redeemed.
The contingent deferred sales charge on each class of shares is waived, as
applicable, for: exchanges; any account fees; distributions to participants or
beneficiaries in Franklin Templeton Trust Company individual retirement plan
accounts due to death, disability or attainment of age 59 1/2; tax-free
returns of excess contributions from employee benefit plans; distributions
from employee benefit plans, including those due to plan termination or plan
transfer; redemptions through a Systematic Withdrawal Plan set up for shares
prior to February 1, 1995, and for Systematic Withdrawal Plans set up
thereafter, redemptions of up to 1% monthly of an account's net asset value
(3% quarterly, 6% semiannually or 12% annually); redemptions initiated by the
Fund due to a Shareholder's account falling below the minimum specified
account size; and redemptions following the death of the Shareholder.
All investments made during a calendar month, regardless of when during the
month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Requests for redemptions for a specified dollar amount, unless otherwise
specified, 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.
11
<PAGE>
NET ASSET VALUE
The following sentence replaces the first sentence of the first paragraph in
this section; the subsequent paragraph is added to the end of this section.
The net asset value per share of each class of the Fund is determined as of
the scheduled close of trading of the New York Stock Exchange ("Exchange")
(generally 4:00 p.m., New York time) each day that the Exchange is open for
trading.
Each of the Fund's classes will bear, pro-rata, all of the common expenses
of the Fund. The net asset value of all outstanding shares of each class of
the Fund will be computed on a pro-rata basis for each outstanding share based
on the proportionate participation in the Fund represented by the value of
shares of such classes, except that the Class I and Class II shares will bear
the Rule 12b-1 expenses payable under their respective plans. Due to the
specific distribution expenses and other costs that will be allocable to each
class, the dividends paid to each class of the Fund may vary.
TEMPLETON STAR SERVICE
Replace the Section captioned "How to Buy Shares of the Fund -- Templeton
STAR Service" with the following language:
From a touch tone phone, Templeton and Franklin Shareholders may access an
automated system (day or night) which offers the following features.
By calling the Templeton STAR Service, Shareholders may obtain current price
and yield information specific to a Templeton fund, regardless of class, or
Franklin Class II shares; obtain account information, request duplicate
confirmation or year-end statements and money fund checks, if applicable.
By calling the Franklin TeleFACTS system, Class I shareholders may obtain
current price, yield or other performance information specific to a Franklin
fund; process an exchange into an identically registered Franklin account;
obtain account information and request duplicate confirmation or year-end
statements, money fund checks, if applicable, and deposit slips.
Share prices and account information specific to Templeton Class I or II
shares and Franklin Class II shares may also be accessed on TeleFACTS by
Franklin Class I and Class II shareholders.
The STAR Service is accessible by calling 1-800-654-0123. The TeleFACTS
system is accessible by calling 1-800-247-1753. Templeton Class I and Class II
share codes for the Fund, which will be needed to access system information,
are 414 and 514, respectively. The system's automated operator will prompt the
caller with easy to follow step-by-step instructions from the main menu. Other
features may be added in the future.
PERFORMANCE (CLASS II)
Because Class II shares were not offered prior to May 1, 1995, no
performance data is available for these shares. After a sufficient period of
time has passed, Class II performance data as described in the "Performance"
section of the Prospectus will be available.
GENERAL INFORMATION
With the exception of Voting Rights, all rights and privileges detailed
under the discussion of "General Information" will remain in effect as
described in the Prospectus for the new multiclass structure. For a complete
discussion of these rights and privileges, see "General Information" in the
Prospectus.
12
<PAGE>
VOTING RIGHTS. Shares of each class represent proportionate interests in the
assets of the Fund and have the same voting and other rights and preferences
as the other class of the Fund for matters that affect the Fund as a whole.
For matters that only affect a certain class of the Fund's shares, however,
only Shareholders of that class will be entitled to vote. Therefore, each
class of shares will vote separately on matters (1) affecting only that class,
(2) expressly required to be voted on separately by state law, or (3) required
to be voted on separately by the 1940 Act or the rules adopted thereunder. For
instance, if a change to the Rule 12b-1 plan relating to Class I shares
requires Shareholder approval, only Shareholders of Class I may vote on
changes to the Rule 12b-1 plan affecting that class. Similarly, if a change to
the Rule 12b-1 plan relating to Class II shares requires Shareholder approval,
only Shareholders of Class II may vote on the change to such plan. On the
other hand, if there is a proposed change to the investment objective of the
Fund, this affects all Shareholders, regardless of which class of shares they
hold, and therefore, each share has the same voting rights. For more
information regarding voting rights, see the "Voting Rights" discussion in the
Prospectus under the heading "General Information."
FINANCIAL HIGHLIGHTS
The following table of selected financial information for the period March
14, 1994 to March 31, 1994 has been audited by McGladrey & Pullen, LLP,
independent certified public accountants, whose report is incorporated by
reference and which appears in the Fund's 1994 Annual Report to Shareholders.
Information for the six months ended September 30, 1994 has not been audited.
This statement should be read in conjunction with the other financial
statements and notes thereto included in the Fund's Semi-Annual Report to
Shareholders dated September 30, 1994, which contains further information
about the Fund's performance, and which is available to Shareholders upon
request and without charge.
<TABLE>
<CAPTION>
SIX MONTHS MARCH 14, 1994
ENDED (COMMENCEMENT OF
SEPTEMBER 30, 1994 OPERATIONS) TO
(UNAUDITED)+ MARCH 31, 1994
------------------ ----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(FOR A SHARE OUTSTANDING THROUGHOUT THE PE-
RIOD)
Net asset value, beginning of period....... $10.01 $10.00
------ ------
Income from investment operations:
Net investment income..................... .12 .009
Net realized and unrealized gain.......... .02 .001
------ ------
Total from investment operations......... .14 .01
------ ------
Change in net asset value.................. .14 .01
------ ------
Net asset value, end of period............. $10.15 $10.01
====== ======
TOTAL RETURN*.............................. 1.40% 0.10%
RATIOS/SUPPLEMENT DATA
Net assets, end of period (000)............ $4,019 $ 100
Ratio of expenses to average net assets.... 5.60%** 32.15%**
Ratio of expenses, net reimbursement, to
average net assets........................ 1.25%** 1.25%**
Ratio of net investment income to average
net assets................................ 2.23%** 1.89%**
Portfolio turnover rate.................... 3.98% --
</TABLE>
- -------
* Total return does not reflect sales charges. Not annualized.
** Annualized.
+ Based on monthly weighted average shares outstanding.
13
<PAGE>
PROPOSED CHANGE IN INVESTMENT OBJECTIVE
On February 24, 1995, the Fund's Board of Trustees approved a change to the
name and investment objective of the Fund, subject to approval by a majority
of the Fund's issued and outstanding shares (as defined in the Investment
Company Act of 1940, as amended). Under the proposal, the Fund's investment
objective will be changed from capital appreciation to a combination of income
and capital appreciation (see below). Additionally, it is proposed that the
Fund's name be changed to "Templeton Growth and Income Fund" to reflect the
change in investment objective. A meeting of the Fund's shareholders is
tentatively scheduled for May 4, 1995, to approve or disapprove the change to
the Fund's investment objective and name. Prior to the meeting, a Proxy
Statement and Notice of Meeting with accompanying proxy will be mailed to the
Fund's shareholders. If approved by shareholders, the proposed changes will be
implemented upon the completion of regulatory filings which is expected to be
during the third quarter of 1995.
ANY INVESTMENTS MADE IN THE FUND PRIOR TO SHAREHOLDER APPROVAL WILL BE
AFFECTED BY THE PROPOSED CHANGE IN INVESTMENT OBJECTIVE.
If approved by the Fund's shareholders, the new investment objective of the
Fund would be to seek a high total return, comprising a combination of income
and capital appreciation. In pursuit of the proposed investment objective, the
Fund would follow a flexible investment policy of investing primarily in
equity and debt securities of domestic and foreign companies.
Under the proposed investment objective, the Fund would not be subject to
the current policy of investing at least 65% of its total assets in equity
securities of companies that meet the following criteria: consistent dividend
increases, reinvested earnings, prospects for future earnings growth, and a
strong balance sheet. While these factors may be considered by the Investment
Manager in selecting equity investments for the Fund, under the proposed new
investment objective (and as reflected in the proposed name), the Investment
Manager would have the flexibility to select equity securities without
reference to specific criteria as to the security's dividend paying history.
Currently, the Fund may invest in debt securities only to the extent
consistent with the objective of capital appreciation (i.e., debt securities
for which the market value is expected to increase) and only in amounts up to
35% of the Fund's total assets. Under the proposed investment objective, the
Fund could invest in debt securities for the purpose of generating current
income, as well as for capital appreciation, if any, and without limitation as
to the percentage of the Fund's assets invested in debt securities. Under the
proposed investment objective, the percentage of the Fund's assets invested in
equity or debt securities would vary from time to time, based on the
Investment Manager's assessment of the relative total return potential of
various investment vehicles.
The following text supplements the one included in the Prospectus under "How
to Buy Shares of the Fund--Exchange Privilege."
EXCHANGES BY TIMING ACCOUNTS. In the case of market timing or allocation
services ("Timing Accounts"), FTD will deduct an administrative service fee of
$5.00 per exchange. Timing Accounts generally include accounts administered so
as to redeem or purchase Shares based upon certain predetermined market
indicators. In accordance with the terms of their respective prospectuses,
certain funds in the Franklin Templeton Group do not accept or may place
differing limitations than those described below on exchanges by Timing
Accounts.
The Fund reserves the right to temporarily or permanently terminate the
exchange privilege or reject any specific purchase order for any Timing
Account or any person whose transactions seem to follow a timing pattern who:
(i) makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1% of the Fund's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
In addition, the Fund reserves the right to refuse the purchase side of
exchange requests by any Timing Account, person, or group if, in the
Investment Manager's judgment, the Fund would be unable to invest effectively
in accordance with its investment objectives
14
<PAGE>
and policies, or would otherwise potentially be adversely affected. A
Shareholder's exchanges into the Fund may be restricted or refused
if the Fund receives or anticipates simultaneous orders affecting significant
portions of the Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Fund and
therefore may be refused.
Finally, as indicated above, the Fund and FTD reserve the right to refuse
any order for the purchase of Shares.
The following text is added to the section of the Prospectus entitled "How
to Sell Shares of the Fund."
REDEMPTIONS BY TELEPHONE. Shareholders who file a Telephone Redemption
Authorization Agreement (the "Agreement") (a copy of which is included in this
Supplement) may redeem Shares of the Fund by telephone, subject to the
Restricted Account exception noted under "Telephone Transactions--Restricted
Accounts." The Fund and the Transfer Agent will employ reasonable procedures
to confirm that instructions given by telephone are genuine. Shareholders,
however, bear the risk of loss in certain cases as described under "Telephone
Transactions--Verification Procedures."
For Shareholder accounts with a completed Agreement on file, redemptions of
uncertificated Shares or Shares which have previously been deposited with the
Fund or the Transfer Agent may be made for up to $50,000 per day per Fund
account. Telephone redemption requests received before the scheduled closing
time of the New York Stock Exchange (generally 4:00 p.m., New York time), on
any business day will be processed that same day. The redemption check will be
sent within seven days, made payable to all the registered owners on the
account, and will be sent only to the address of record. Redemption requests
by telephone will not be accepted within 30 days following an address change
by telephone. In that case, a Shareholder should follow the other redemption
procedures set forth in the Prospectus. Institutional accounts which wish to
execute redemptions in excess of $50,000 must complete an Institutional
Telephone Privileges Agreement which is available from Franklin Templeton
Institutional Services by telephoning 1-800-321-8563.
The following text is added to the Prospectus after the section entitled
"How to Sell Shares of the Fund."
TELEPHONE TRANSACTIONS
Shareholders of the Fund and their dealer of record, if any, may be able to
execute various transactions by calling the Transfer Agent at 1-800-393-3001.
All Shareholders will be able to: (i) effect a change in address, (ii) change
a dividend option (see "Restricted Accounts" below), (iii) transfer Fund
Shares in one account to another identically registered account in the Fund,
and (iv) exchange Fund Shares as described in this Prospectus by telephone. In
addition, Shareholders who complete and file an Agreement as described under
"How to Sell Shares of the Fund--Redemptions by Telephone" will be able to
redeem Shares of the Fund.
VERIFICATION PROCEDURES. The Fund and the Transfer Agent will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. These will include: recording all telephone calls requesting
account activity by telephone, requiring that the caller provide certain
personal and/or account information requested by the telephone service agent
at the time of the call for the purpose of establishing the caller's
identification, and sending a confirmation statement on redemptions to the
address of record each time account activity is initiated by telephone. So
long as the Fund and the Transfer Agent follow instructions communicated by
telephone which were reasonably believed to be genuine at the time of their
receipt, neither they nor their affiliates will be liable for any loss to the
Shareholder caused by an unauthorized transaction. The Fund and the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions in the event such reasonable procedures are not followed.
Shareholders are, of course, under no obligation to apply for or accept
telephone transaction privileges. In any instance where the Fund or the
Transfer Agent is not reasonably satisfied that instructions received by
telephone are genuine, the requested transaction will not be executed, and
neither the Fund, the Transfer Agent, nor their affiliates will be liable for
any losses which may occur because of a delay in implementing a transaction.
RESTRICTED ACCOUNTS. Telephone redemptions and dividend option changes may
not be accepted on Franklin Templeton Trust Company retirement accounts. To
assure compliance with all applicable regulations, special forms are required
for any distribution, redemption, or dividend payment. Although the telephone
exchange privilege is extended to these retirement accounts, a Franklin
15
<PAGE>
Templeton Transfer Authorization Form must be on file in order to transfer
retirement plan assets between the Franklin Group of Funds (R) and the
Templeton Family of Funds within the same plan type. Changes to dividend
options for these accounts must also be made in writing.
To obtain further information regarding distribution or transfer procedures,
including any required forms, Franklin Templeton Trust Company retirement
account shareholders may call 1-800-527-2020 (toll free), or 1-800-354-9191
(press "2") (also toll free).
GENERAL. During periods of drastic economic or market changes, it is
possible that the telephone transaction privileges will be difficult to
execute because of heavy telephone volume. In such situations, Shareholders
may wish to contact their dealer for assistance, or to send written
instructions to the Fund as detailed elsewhere in the Prospectus.
Neither the Fund nor the Transfer Agent will be liable for any losses
resulting from the inability of a Shareholder to execute a telephone
transaction.
The telephone transaction privilege may be modified or discontinued by the
Fund at any time upon 60 days' written notice to Shareholders.
16
<PAGE>
THE FRANKLIN TEMPLETON TELEPHONE REDEMPTION AUTHORIZATION AGREEMENT
You may use Franklin Templeton's telephone redemption privilege to redeem
uncertificated Franklin Templeton Fund shares for up to $50,000 (or your
Shareholder account balance, whichever is less) per day, per fund account in
accordance with the terms of the Fund's Prospectus.
The telephone redemption privilege is available only to Shareholders who
specifically request it. If you would like to add this redemption privilege to
the other telephone transaction privileges automatically available to Franklin
Templeton Fund shareholders, please sign and return this authorization to
Franklin Templeton Investor Services, Inc. ("Services"), transfer agent and
shareholder servicing agent for the Franklin Templeton Funds.
SHAREHOLDER AUTHORIZATION: I/We request the telephone redemption privilege
under the terms described below and in the prospectus for each investment
company in the Franklin Templeton Group of Funds (a "Franklin Templeton Fund"
or a "Fund"), now opened or opened at a later date, holding shares registered
as follows:
- ------------------------------------- ---------------------------------------
PRINT NAME(S) AS SHOWN IN YOUR ACCOUNT REGISTRATION ("SHAREHOLDER")
- ------------------------------------- ---------------------------------------
ACCOUNT NUMBER(S)
I/We authorize each Fund and Services to honor and act upon telephone requests
given as provided in this agreement to redeem shares from any
Shareholder account:
- ------------------------------------- ---------------------------------------
SIGNATURE(S) AND DATE
- ------------------------------------- ---------------------------------------
PRINT NAME(S) (AND TITLE/CAPACITY, IF APPLICABLE)
VERIFICATION PROCEDURES: I/We understand and agree that: (1) each Fund and
Services will employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine and that if these
confirmation procedures are not followed, the Fund or Services may be liable
for any losses due to unauthorized or fraudulent telephone instructions; (2)
the confirmation procedures will include the recording of telephone calls
requesting redemptions, requiring that the caller provide certain personal
and/or account information requested by the telephone service agent at the
time of the call for the purpose of establishing the caller's identification,
and the sending of confirmation statements to the address of record each time
a redemption is initiated by telephone; and (3) so long as the Fund and
Services follow the confirmation procedures in acting on instructions
communicated by telephone which were reasonably believed to be genuine at the
time of receipt, neither they, nor their parent or affiliates, will be liable
for any loss, damages or expenses caused by an unauthorized or fraudulent
redemption request.
JOINTLY OWNED/CO-TRUSTEE ACCOUNTS: Each of us signing this agreement as either
joint owners or co-trustees authorizes each Fund and Services to honor
telephone redemption requests given by ANY ONE of the signers, or our
investment representative of record, if any, ACTING ALONE.
APPOINTMENT OF ATTORNEY-IN-FACT: In order to issue telephone redemption
requests acting alone, each of us individually makes the following
appointment: I hereby appoint the other joint owner(s)/co-trustee(s) as my
agent(s) (attorney[s]-in-fact) with full power and authority to individually
act for me in any lawful way with respect to the issuance of instructions to a
Fund or Services in accordance with the telephone redemption privilege we have
requested by signing this agreement. This appointment shall not be affected by
my subsequent disability or incompetency and shall remain in effect until it
is revoked by either written notice from any one of us delivered to a Fund or
Services by registered mail, return receipt requested or by a Fund or Services
upon receipt of any information that causes a Fund or Services to believe in
good faith that there is or that there may be a dispute among any of us with
respect to the Franklin Templeton Fund account(s) covered by this agreement.
Each of us agrees to notify the Fund or Services immediately upon the death of
any of the signers.
CORPORATE/PARTNERSHIP/TRUST/RETIREMENT ACCOUNTS: The Shareholder and each of
us signing this agreement on behalf of the Shareholder represent and warrant
to each Franklin Templeton Fund and Services that the Shareholder has the
authority to enter into this agreement and that each of us is duly authorized
to execute this agreement on behalf of the Shareholder. The Shareholder agrees
that its election of the telephone redemption privilege means that a Fund or
Services may honor a telephone redemption request given by ANY
officer/partner/member/administrator/or agent of the Shareholder ACTING ALONE.
RESTRICTED ACCOUNTS: Telephone redemptions may not be accepted on Franklin
Templeton Trust Company retirement accounts.
PLEASE RETURN THIS FORM TO:
Franklin Templeton Investor Services, Inc., Attn.: Telephone Redemptions
Dept., P.O. Box 33030, St. Petersburg, Florida 33733-8030.
17
<PAGE>
PROSPECTUS -- MARCH 14, 1994
TEMPLETON GLOBAL RISING DIVIDENDS FUND
- -------------------------------------------------------------------------------
INVESTMENT The investment objective of Templeton Global Rising Dividends
OBJECTIVE Fund (the "Fund") is capital appreciation. The Fund seeks to
AND POLICIES achieve its objective by investing primarily in equity
securities of domestic and foreign companies that have a
history of paying consistently rising dividends. THE FUND MAY
BORROW MONEY FOR INVESTMENT PURPOSES, WHICH MAY INVOLVE
GREATER RISK AND ADDITIONAL COSTS TO THE FUND. IN ADDITION,
THE FUND MAY INVEST UP TO 15% OF ITS ASSETS IN ILLIQUID
SECURITIES, INCLUDING UP TO 10% OF ITS ASSETS IN RESTRICTED
SECURITIES, WHICH MAY INVOLVE GREATER RISK AND INCREASED FUND
EXPENSES. SEE "RISK FACTORS." The Fund is a series of
Templeton Global Investment Trust.
- -------------------------------------------------------------------------------
PURCHASE OF Please complete and return the Shareholder Application. If you
SHARES need assistance in completing this form, please call our
Account Services Department. The Fund's Shares may be
purchased at a price equal to their net asset value plus a
sales commission not exceeding 5.75% of the Offering Price.
The minimum initial investment is $100 ($25 minimum for
subsequent investments).
- -------------------------------------------------------------------------------
PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Fund that a prospective investor ought to know before
investing. Investors are advised to read and retain this
Prospectus for future reference. A Statement of Additional
Information ("SAI") dated March 14, 1994 has been filed with
the Securities and Exchange Commission and is incorporated in
its entirety by reference in and made a part of this
Prospectus. The SAI is available without charge upon request
to Franklin/Templeton Distributors, Inc., 700 Central Avenue,
St. Petersburg, Florida 33701-3628 or by calling the Account
Services Department.
- -------------------------------------------------------------------------------
ACCOUNT SERVICES DEPARTMENT -- 1-800-354-9191 OR 813-823-8712
- -------------------------------------------------------------------------------
TEMPLETON "STAR" SERVICE (24 hours, seven days a week access to current
prices, shareholder account balances/values, last transaction and duplicate
account statements) -- 1-800-654-0123
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXPENSE TABLE........ 2
GENERAL INFORMATION.. 2
Investment Objective
and Policies........ 3
INVESTMENT
TECHNIQUES.......... 4
Temporary
Investments......... 4
Borrowing............ 4
Loans of Portfolio
Securities.......... 4
Options on Securities
or Indices.......... 5
Forward Foreign
Currency Contracts
and Options on
Foreign Currencies.. 5
Futures Contracts.... 5
Repurchase
Agreements.......... 6
Depositary Receipts.. 6
Illiquid and
Restricted
Securities.......... 6
RISK FACTORS......... 7
HOW TO BUY SHARES OF
THE FUND............ 8
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Net Asset Value...... 8
Offering Price....... 9
Cumulative Quantity
Discount............ 10
Letter of Intent..... 10
Group Purchases...... 10
Net Asset Value
Purchases........... 11
Exchange Privilege... 11
Automatic Investment
Plan................ 12
Institutional
Accounts............ 12
Account Statements... 12
Templeton STAR
Service............. 12
Retirement Plans..... 13
HOW TO SELL SHARES OF
THE FUND............ 13
Reinstatement
Privilege........... 14
Contingent Deferred
Sales Charge........ 14
Systematic Withdrawal
Plan................ 15
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
MANAGEMENT OF THE
FUND................ 15
Investment Manager... 15
Business Manager..... 16
Transfer Agent....... 16
Custodian............ 16
Plan of Distribution. 16
Brokerage
Commissions......... 17
GENERAL INFORMATION.. 17
Description of
Shares/Share
Certificates........ 17
Meetings of
Shareholders........ 17
Dividends and
Distributions....... 17
Federal Tax
Information......... 17
Inquiries............ 18
Performance
Information......... 18
Withholding
Information......... 19
Corporate Resolution. 20
</TABLE>
- -------------------------------------------------------------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
<PAGE>
EXPENSE TABLE
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
Offering Price)................................................... 5.75%
Deferred Sales Charge (as a percentage of original purchase or
redemption proceeds, as applicable)............................... None*
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fees.................................................... 0.75%
12b-1 Fees......................................................... 0.35%**
Other Expenses (audit, legal, business management, transfer agent
and custodian) (after expense reimbursement)...................... 0.15%
Total Fund Operating Expenses (after expense reimbursement)........ 1.25%
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, as-
suming (1) 5% annual return and (2) redemption at the end of
each time period:.............................................. $69 $95
</TABLE>
- -------
* Investments of $1 million or more are not subject to an initial sales load;
however, a contingent deferred sales charge of 1% is imposed in the event of
certain redemption transactions within one year following such investments.
See "How to Sell Shares of the Fund--Contingent Deferred Sales Charge."
** These expenses may not exceed 0.35% of the Fund's average net assets
annually. (See "Management of the Fund--Plan of Distribution.") After a
substantial period, these expenses, together with the initial sales charge,
may total more than the maximum sales expense that would have been
permissible if imposed entirely as an initial sales charge.
The information in the table above is an estimate based on the Fund's
expected expenses for the current fiscal year and is provided for purposes of
assisting current and prospective Shareholders in understanding the various
costs and expenses that an investor in the Fund will bear, directly or
indirectly. The information in the table does not reflect the charge of up to
$15 per transaction if a Shareholder requests that redemption proceeds be sent
by express mail or wired to a commercial bank account or an administrative
service fee of $5.00 per exchange for market timing or allocation service
accounts. THE 5% ANNUAL RETURN AND ANNUAL EXPENSES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF ACTUAL OR EXPECTED FUND PERFORMANCE OR EXPENSES, BOTH OF
WHICH MAY VARY. For a more detailed discussion of the Fund's fees and
expenses, see "Management of the Fund."
The Fund's Business Manager, Templeton Global Investors, Inc., has
voluntarily agreed to limit the total expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) of the Fund to an annual
rate of 1.25% of the Fund's average daily net assets until December 31, 1994.
If this policy were not in effect, the Fund's "Other Expenses" and "Total Fund
Operating Expenses" would be 1.90% and 3.00%, respectively, and you would pay
the following expenses on a $1,000 investment, assuming 5% annual return and
redemption at the end of each time period: $86 for one year and $145 for three
years. As long as this temporary expense limitation continues, it may lower
the Fund's expenses and increase its total return. After December 31, 1994,
the expense limitation may be terminated or revised at any time, at which time
the Fund's expenses may increase and its total return may be reduced,
depending on the total assets of the Fund.
GENERAL INFORMATION
Templeton Global Investment Trust (the "Trust") was organized as a business
trust under the laws of Delaware on December 21, 1993 and is registered under
the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
management investment company. It has two diversified series of Shares, each
of which is a separate mutual fund: Templeton Global Rising Dividends
2
<PAGE>
Fund (the "Fund") and Templeton Global Infrastructure Fund. A prospectus for
Templeton Global Infrastructure Fund is available upon request and without
charge from the Principal Underwriter.
INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is
capital appreciation. The Fund seeks to achieve its objective by investing
primarily in equity securities of domestic and foreign companies that have a
history of paying consistently rising dividends (as described below). The
Fund's investment objective and the investment restrictions set forth under
"Investment Objectives and Policies--Investment Restrictions" in the SAI are
fundamental and may not be changed without Shareholder approval. All other
investment policies and practices described in this Prospectus are not
fundamental, and may be changed by the Board of Trustees without Shareholder
approval. The Fund's investment objective and policies are based on the belief
of the Fund's investment manager, Templeton, Galbraith & Hansberger Ltd. (the
"Investment Manager') that the securities of companies with a history of
consistently rising dividends have a strong potential for capital
appreciation. Investors should bear in mind, however, that past performance is
not a guarantee of future results.
Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities (as defined below) of companies that meet
the following criteria: consistent dividend increases, reinvested earnings,
prospects for future earnings growth, and a strong balance sheet.
Specifically, in order to meet these criteria, (1) a company must have raised
its dividend payments by at least 5% in each of the three years immediately
preceding the date of the Fund's acquisition of the security; (2) a company's
dividend payout must not represent more than 65% of the company's current
earnings; (3) a company must, in the view of the Investment Manager, have the
prospect of increasing its earnings per share by 50% over the 5 years
following the Fund's acquisition of the company's security; and (4) the net
debt of a company must be less than 70% of shareholders' equity (except in the
case of utility companies and financial institutions). It is expected that the
remaining 35% of the Fund's assets generally will be invested in (1) dividend-
paying equity securities with similar characteristics that may not meet all of
the criteria listed above, and (2) certain debt securities, described below.
The Investment Manager will select equity investments for the Fund on the
basis of fundamental company-by-company analysis (rather than broader analyses
of specific industries or sectors of the economy). Although the Investment
Manager will consider historical value measures, such as price/earnings
ratios, operating profit margins and liquidation values, the primary factor in
selecting equity securities of companies meeting the criteria listed above
will be the company's current price relative to its long-term earnings
potential, as determined by the Investment Manager. Securities considered for
purchase by the Fund may be listed or unlisted, and may be issued by companies
in various industries, with various levels of market capitalization. Under
normal circumstances, the Fund will invest at least 65% of its total assets in
issuers domiciled in at least three different nations (one of which may be the
United States).
As used in this Prospectus, "equity securities" refers to common stock,
preferred stock, securities convertible into or exchangeable for such
securities, warrants or rights to subscribe to or purchase such securities,
and sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
(collectively, "Depositary Receipts"). For capital appreciation, the Fund may
invest up to 35% of its total assets in debt securities (defined as bonds,
notes, debentures, commercial paper, time deposits and bankers' acceptances)
which are rated in any rating category by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P") or which are unrated by
any rating agency. Such securities may include high risk, lower quality debt
securities, commonly referred to as "junk bonds." See "Risk Factors." As an
operating policy, which may be changed by the Board of Trustees, the Fund will
not invest more than 5% of its total assets in debt securities rated Baa or
lower by Moody's or BBB or lower by S&P. Certain debt securities can provide
the potential for capital appreciation based on various factors such as
changes in interest rates, economic and market conditions, improvement in an
issuer's ability to repay principal and pay interest, and ratings upgrades.
Additionally, convertible bonds offer the potential for capital appreciation
through the conversion feature, which enables the holder of the bond to
benefit from increases in the market price of the securities into which they
are convertible. Debt securities are subject to certain market and credit
risks. See "Investment Objectives and Policies--Debt Securities" in the SAI.
3
<PAGE>
The Fund may also lend its portfolio securities and borrow money for
investment purposes (i.e., "leverage" its portfolio). In addition, the Fund
may enter into transactions in options on securities, securities indices and
foreign currencies, forward foreign currency contracts, and futures contracts
and related options. When deemed appropriate by the Investment Manager, the
Fund may invest cash balances in repurchase agreements and other money market
investments to maintain liquidity in an amount to meet expenses or for day-to-
day operating purposes. These investment techniques are described below and
under the heading "Investment Objectives and Policies" in the SAI.
When the Investment Manager believes that market conditions warrant, the
Fund may adopt a temporary defensive position and may invest without limit in
money market securities denominated in U.S. dollars or in the currency of any
foreign country. See "Investment Techniques--Temporary Investments."
The Fund does not emphasize short-term trading profits and usually expects
to have an annual portfolio turnover rate generally not exceeding 50%. There
can be no assurance that the Fund's investment objective will be achieved.
INVESTMENT TECHNIQUES
TEMPORARY INVESTMENTS. For temporary defensive purposes, the Fund may invest
up to 100% of its total assets in the following money market securities,
denominated in U.S. dollars or in the currency of any foreign country, issued
by entities organized in the United States or any foreign country: short-term
(less than twelve months to maturity) and medium-term (not greater than five
years to maturity) obligations issued or guaranteed by the U.S. Government or
the governments of foreign countries, their agencies or instrumentalities;
finance company and corporate commercial paper, and other short-term corporate
obligations, in each case rated Prime-1 by Moody's or A or better by S&P or,
if unrated, of comparable quality as determined by the Investment Manager;
obligations (including certificates of deposit, time deposits and bankers'
acceptances) of banks; and repurchase agreements with banks and broker-dealers
with respect to such securities.
BORROWING. The Fund may borrow up to one-third of the value of its total
assets from banks to increase its holdings of portfolio securities. Under the
1940 Act, the Fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of the
Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value,
and money borrowed will be subject to interest and other costs (which may
include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of the Fund's
total assets to generate income for the purpose of offsetting operating
expenses. Such loans must be secured by collateral (consisting of any
combination of cash, U.S. Government securities or irrevocable letters of
credit) in an amount at least equal (on a daily marked-to-market basis) to the
current market value of the securities loaned. The Fund may terminate the
loans at any time and obtain the return of the securities loaned within five
business days. The Fund will continue to receive any interest or dividends
paid on the loaned securities and will continue to retain any voting rights
with respect to the securities. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
the Fund could experience delays and costs in gaining access to the collateral
and could suffer a loss to the extent that the value of the collateral falls
below the market value of the borrowed securities.
4
<PAGE>
OPTIONS ON SECURITIES OR INDICES. The Fund may write (i.e., sell) covered
put and call options and purchase put and call options on securities or
securities indices that are traded on United States and foreign exchanges or
in the over-the-counter markets. An option on a security is a contract that
permits the purchaser of the option, in return for the premium paid, the right
to buy a specified security (in the case of a call option) or to sell a
specified security (in the case of a put option) from or to the writer of the
option at a designated price during the term of the option. An option on a
securities index permits the purchaser of the option, in return for the
premium paid, the right to receive from the seller cash equal to the
difference between the closing price of the index and the exercise price of
the option. The Fund may write a call or put option only if the option is
"covered." This means that so long as the Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or
hold a call at the same or lower exercise price, for the same exercise period,
and on the same securities as the written call. A put is covered if the Fund
maintains liquid assets with a value equal to the exercise price in a
segregated account, or holds a put on the same underlying securities at an
equal or greater exercise price. The value of the underlying securities on
which options may be written at any one time will not exceed 15% of the total
assets of the Fund. The Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of its total assets at
the time of purchase.
FORWARD FOREIGN CURRENCY CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES. The
Fund will normally conduct its foreign currency exchange transactions either
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through entering into forward contracts to
purchase or sell foreign currencies. The Fund will generally not enter into a
forward contract with a term of greater than one year. A forward contract is
an obligation to purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded by currency
traders and their customers.
The Fund will generally enter into forward contracts only under two
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed
to settle the transaction. Second, when the Investment Manager believes that
the currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to
sell or buy the former foreign currency (or another currency which acts as a
proxy for that currency) approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging." The Fund has
no specific limitation on the percentage of assets it may commit to forward
contracts, subject to its stated investment objective and policies, except
that the Fund will not enter into a forward contract if the amount of assets
set aside to cover forward contracts would impede portfolio management or the
Fund's ability to meet redemption requests. Although forward contracts will be
used primarily to protect the Fund from adverse currency movements, they also
involve the risk that anticipated currency movements will not be accurately
predicted.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines
in the U.S. dollar value of foreign currency denominated portfolio securities
and against increases in the U.S. dollar cost of such securities to be
acquired. As in the case of other kinds of options, however, the writing of an
option on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to the Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Fund are traded on U.S. and
foreign exchanges or over-the-counter.
FUTURES CONTRACTS. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a
specified debt security at a set price on a future date. An index futures
contract is an agreement to take or make delivery of an amount of cash based
on the difference between the value of the index at the beginning and at the
end of the
5
<PAGE>
contract period. A futures contract on a foreign currency is an agreement to
buy or sell a specified amount of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must make an initial
deposit, known as "initial margin," as a partial guarantee of its performance
under the contract. As the value of the security, index or currency
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation it
may have under the contract. In addition, when the Fund enters into a futures
contract, it will segregate assets or "cover" its position in accordance with
the 1940 Act. See "Investment Objectives and Policies--Futures Contracts" in
the SAI. With respect to positions in futures and related options that do not
constitute "bona fide hedging" positions, the Fund will not enter into a
futures contract or related option contract if, immediately thereafter, the
aggregate initial margin deposits relating to such positions plus premiums
paid by it for open futures option positions, less the amount by which any
such options are "in-the-money," would exceed 5% of the Fund's total assets.
REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, the Fund may, without limit, enter into repurchase
agreements with U.S. banks and broker-dealers. Under a repurchase agreement,
the Fund acquires a security from a U.S. bank or a registered broker-dealer
and simultaneously agrees to resell the security back to the bank or broker-
dealer at a specified time and price. The repurchase price is in excess of the
original purchase price paid by the Fund by an amount which reflects an
agreed-upon rate of return and which is not tied to any coupon rate on the
underlying security. Under the 1940 Act, repurchase agreements are considered
to be loans collateralized by the underlying security and therefore will be
fully collateralized. However, if the bank or broker-dealer should default on
its obligation to repurchase the underlying security, the Fund may experience
a delay or difficulties in exercising its rights to realize upon the security
and might incur a loss if the value of the security declines, as well as
disposition costs in liquidating the security.
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts typically used by a U.S.
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs and GDRs are typically issued by foreign banks
or trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
foreign or a United States corporation. Generally, Depositary Receipts in
registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the securities underlying
unsponsored Depositary Receipts are not obligated to disclose material
information in the United States and, therefore, there may be less information
available regarding such issuers and there may not be a correlation between
such information and the market value of the Depositary Receipts. Depositary
Receipts also involve the risks of other investments in foreign securities, as
discussed below. For purposes of the Fund's investment policies, the Fund's
investments in Depositary Receipts will be deemed to be investments in the
underlying securities.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its
total assets in illiquid securities, for which there is a limited trading
market and for which a low trading volume of a particular security may result
in abrupt and erratic price movements. The Fund may be unable to dispose of
its holdings in illiquid securities at then current market prices and may have
to dispose of such securities over extended periods of time. The Fund may also
invest in securities that are sold (i) in private placement transactions
between their issuers and their purchasers and that are neither listed on an
exchange nor traded over-the-counter, or (ii) in transactions between
qualified institutional buyers pursuant to Rule 144A under the U.S. Securities
Act of 1933, as amended. Such restricted securities are subject to contractual
or legal restrictions on subsequent transfer. As a result of the absence of a
public trading market, such restricted securities may in turn be less liquid
and more difficult to value than publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from the sales could, due to illiquidity, be less than those
originally paid by the Fund or less than their fair value. In addition,
issuers whose securities are not publicly traded may not be subject to the
disclosure and other investor protection requirements that may be applicable
if their securities were publicly traded. If any privately
6
<PAGE>
placed or Rule 144A securities held by the Fund are required to be registered
under the securities laws of one or more jurisdictions before being resold,
the Fund may be required to bear the expenses of registration. The Fund will
limit its investment in restricted securities to 10% of its total assets,
except that Rule 144A securities determined by the Board of Trustees to be
liquid are not subject to this limitation.
RISK FACTORS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Fund, nor
can there be any assurance that the Fund's investment objective will be
attained. As with any investment in securities, the value of, and income from,
an investment in the Fund can decrease as well as increase, depending on a
variety of factors which may affect the values and income generated by the
Fund's portfolio securities, including general economic conditions, market
factors and currency exchange rates. Additionally, investment decisions made
by the Investment Manager will not always be profitable or prove to have been
correct. The Fund is not intended as a complete investment program.
The Fund has the right to purchase securities in any foreign country,
developed or underdeveloped. Investors should consider carefully the
substantial risks involved in investing in securities issued by companies and
governments of foreign nations, which are in addition to the usual risks
inherent in domestic investments. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations (including, for example, withholding taxes on interest and dividends)
or other taxes imposed with respect to investments in foreign nations, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), default in foreign government securities,
political or social instability or diplomatic developments which could affect
investment in securities of issuers in foreign nations. Some countries may
withhold portions of interest and dividends at the source. In addition, in
many countries there is less publicly available information about issuers than
is available in reports about companies in the United States. Foreign
companies are not generally subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to United States companies. Further, the
Fund may encounter difficulties or be unable to pursue legal remedies and
obtain judgments in foreign courts. Commission rates in foreign countries,
which are sometimes fixed rather than subject to negotiation as in the United
States, are likely to be higher. Further, the settlement period of securities
transactions in foreign markets may be longer than in domestic markets. In
many foreign countries there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States. The foreign securities markets of many of the
countries in which the Fund may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States. As an
open-end investment company, the Fund is limited in the extent to which it may
invest in illiquid securities. See "Investment Objectives and Policies--Risk
Factors" in the SAI.
The Fund usually effects currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign exchange market.
However, some price spread on currency exchange transactions (to cover service
charges) will be incurred when the Fund converts assets from one currency to
another.
The Fund is authorized to invest in debt securities rated in any category by
S&P or Moody's and securities which are unrated by any rating agency. See
"Investment Objectives and Policies--Debt Securities" in the SAI. As an
operating policy, which may be changed by the Board of Trustees without
Shareholder approval, the Fund will not invest more than 5% of its total
assets in debt securities rated BBB or lower by S&P or Baa or lower by
Moody's. The Board of Trustees may consider a change in this operating policy
if, in its judgment, economic conditions change such that a higher level of
investment in high risk, lower quality debt securities would be consistent
with the interests of the Fund and its Shareholders. High risk, lower quality
debt securities, commonly referred to as "junk bonds," are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligation and may be in default. Unrated debt securities are not necessarily
of lower
7
<PAGE>
quality than rated securities, but they may not be attractive to as many
buyers. Regardless of rating levels, all debt securities considered for
purchase (whether rated or unrated) will be carefully analyzed by the
Investment Manager to insure, to the extent possible, that the planned
investment is sound. The Fund may, from time to time, invest up to 5% of its
total assets in defaulted debt securities if, in the opinion of the Investment
Manager, the issuer may resume interest payments in the near future.
Leveraging by means of borrowing may exaggerate the effect of any increase
or decrease in the value of portfolio securities on the Fund's net asset
value, and money borrowed will be subject to interest and other costs (which
may include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
Successful use of futures contracts and related options is subject to
special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation
between movements in the securities or foreign currency on which the futures
or options contract is based and movements in the securities or currency in
the Fund's portfolio. Successful use of futures or options contracts is
further dependent on the Investment Manager's ability to correctly predict
movements in the securities or foreign currency markets, and no assurance can
be given that its judgment will be correct. Successful use of options on
securities or stock indices is subject to similar risk considerations. In
addition, by writing covered call options, the Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price.
There are further risk factors, including possible losses through the
holding of securities in domestic and foreign custodian banks and
depositories, described elsewhere in this Prospectus and in the SAI.
HOW TO BUY SHARES OF THE FUND
Shares of the Fund may be purchased at the Offering Price through any broker
which has a dealer agreement with Franklin/Templeton Distributors, Inc.
("FTD"), the Principal Underwriter for Shares of the Fund, or directly from
FTD upon receipt by FTD of a completed Shareholder Application and check. The
minimum initial purchase order is $100 (other than in monthly investment
plans, such as sponsored payroll deduction, automatic investment, split-
funding or comparable plans, which require a minimum of $25), with subsequent
investments of $25 or more.
NET ASSET VALUE. The net asset value of the Shares of the Fund is computed
as of the close of trading on each day the New York Stock Exchange is open for
trading, by dividing the value of the Fund's securities plus any cash and
other assets (including accrued interest and dividends receivable) less all
liabilities (including accrued expenses) by the number of Shares outstanding,
adjusted to the nearest whole cent. A security listed or traded on a
recognized stock exchange or NASDAQ is valued at its last sale price on the
principal exchange on which the security is traded. The value of a foreign
security is determined in its national currency as of the close of trading on
the foreign exchange on which it is traded, or as of 4:00 p.m., New York time,
if that is earlier, and that value is then converted into its U.S. dollar
equivalent at the foreign exchange rate in effect at noon, New York time, on
the day the value of the foreign security is determined. If no sale is
reported at that time, the mean between the current bid and asked price is
used. Occasionally, events which affect the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange, and will therefore not be reflected
in the computation of the Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at fair value as determined by the management and
approved in good faith by the Board of Trustees. All other securities for
which over-the-counter market quotations are readily available are valued at
the mean between the current bid and asked price. Securities for which market
quotations are not readily available and other assets are valued at fair value
as determined by the management and approved in good faith by the Board of
Trustees.
8
<PAGE>
OFFERING PRICE. The Offering Price to the public on purchases of the Fund's
Shares made at one time by a single purchaser, by an individual, his or her
spouse and their children under age 21, or by a single trust or fiduciary
account other than an employee plan, is the net asset value per Share plus a
sales commission not exceeding 5.75% of the Offering Price (equivalent to
6.10% of the net asset value), which is reduced on larger sales as shown
below:
<TABLE>
<CAPTION>
SALES COMMISSION
---------------------------------
AS A PERCENTAGE AS A PERCENTAGE PORTION OF TOTAL
AMOUNT OF SINGLE OF OFFERING OF NET ASSET OFFERING PRICE
SALE AT PRICE OF THE VALUE OF THE RETAINED BY
OFFERING PRICE SHARES PURCHASED SHARES PURCHASED DEALERS
- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Less than $50,000........... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000................... 4.50% 4.71% 3.60%
$100,000 but less than
$250,000................... 3.50% 3.63% 2.80%
$250,000 but less than
$500,000................... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000................. 2.00% 2.04% 1.60%
$1,000,000 or more.......... none none (see below)*
</TABLE>
- -------
* The following commissions will be paid by FTD to dealers who initiate and
are responsible for purchases of $1 million or more and for purchases made
at net asset value by certain retirement plans of organizations with
collective retirement plan assets of $10 million or more: 1.00% on sales of
up to $2 million, plus 0.80% on sales of $2 million to $3 million, plus
0.50% on sales of $3 million to $50 million, plus 0.25% on sales of $50
million to $100 million, plus 0.15% on sales in excess of $100 million.
No initial sales commission applies on investments of $1 million or more,
but a contingent deferred sales charge of 1% is imposed on certain redemptions
within one year of the purchase. (See "How to Sell Shares of the Fund--
Contingent Deferred Sales Charge.")
A sales commission of 4% of the Offering Price (4.17% of the net asset
value) is applicable to all purchases of Shares made for any qualified or non-
qualified employee benefit plan. Of the 4% sales commission applicable to such
purchases, 3.20% of the Offering Price will be retained by dealers.
At the discretion of FTD, the entire sales commission may at times be
reallowed to dealers. During periods when 90% or more of the sales commission
is reallowed, such dealers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933. FTD or its affiliates, at their
expense, may also provide additional compensation to dealers in connection
with sales of Shares of the Fund and other funds in the Franklin Group of
Funds (R) and the Templeton Family of Funds (collectively, the
"Franklin/Templeton Group"). Compensation may include financial assistance to
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising, sales campaigns and/or
shareholder services and programs regarding one or more funds in the
Franklin/Templeton Group and other dealer-sponsored programs or events. In
some instances, this compensation may be made available only to certain
dealers whose representatives have sold or are expected to sell significant
amounts of such Shares. Compensation may include payment for travel expenses,
including lodging, incurred in connection with trips taken by invited
registered representatives and members of their families to locations within
or outside of the U.S. for meetings or seminars of a business nature. Dealers
may not use sales of the Fund's Shares to qualify for this compensation to the
extent such may be prohibited by the laws of any state or any self-regulatory
agency, such as the National Association of Securities Dealers, Inc. None of
the aforementioned additional compensation is paid for by the Fund or its
Shareholders.
Dealers whose Shareholder accounts with the Fund equal or exceed $25,000
will be paid a continuing trail fee at the annual rate of 0.25% of the average
daily net asset value of Fund Shares registered in the name of that broker-
dealer as nominee or held in a Shareholder account that designates that
broker-dealer as dealer of record. This fee is paid in order to promote
selling efforts and to compensate dealers for providing certain services,
including processing purchase and redemption transactions, establishing
Shareholder accounts and providing certain information and assistance with
respect to the Fund.
9
<PAGE>
As to telephone orders placed with FTD by dealers, the dealer must receive
the investor's order before the close of the New York Stock Exchange and
transmit it to FTD by 5:00 p.m., New York time, for the investor to receive
that day's Offering Price. Payment for such orders must be by check in U.S.
currency and must be promptly submitted to FTD. Orders mailed to FTD by
dealers or individual investors are effected at the Offering Price next
computed after the purchase order accompanied by payment has been received by
FTD. Such payment must be by check in U.S. currency drawn on a commercial bank
in the United States and, if over $100,000, may not be deemed to have been
received until the proceeds have been collected unless the check is certified
or issued by such bank. Any subscription may be rejected by FTD or by the
Fund.
Investors should promptly check the confirmation advice that is mailed after
each purchase (or redemption) in order to ensure that it has been accurately
recorded in the investor's account.
CUMULATIVE QUANTITY DISCOUNT. The schedule of reduced sales charges also may
be applied to qualifying sales on a cumulative basis. 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 any other
Shares of the Fund and/or any other funds in the Franklin/Templeton Group
owned at that time by the purchaser, his or her spouse, and their children
under age 21. For example, if the investor held Shares valued at $40,000 (or,
if valued at less than $40,000, had been purchased for $40,000) and purchased
an additional $20,000 of the Fund's Shares, the sales commission for the
$20,000 purchase would be at the rate of 4.50%. It is FTD's policy to give
investors the best sales commission rate possible; however, there can be no
assurance that an investor will receive the appropriate discount unless, at
the time of placing the purchase order, the investor or the dealer makes a
request for the discount and gives FTD sufficient information to determine
whether the purchase will qualify for the discount. On telephone orders from
dealers for the purchase of Shares to be registered in "street name," FTD will
accept the dealer's instructions with respect to the applicable sales
commission rate to be applied. The Cumulative Quantity Discount may be amended
or terminated at any time.
LETTER OF INTENT. 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. The minimum initial investment under an LOI is 5% of the total
LOI amount. 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. For a
further description of the Letter of Intent, see "Purchase, Redemption and
Pricing of Shares--Letter of Intent" in the SAI.
GROUP PURCHASES. An individual who is a member of a qualified group may also
purchase Shares of the Fund at the reduced sales charge applicable to the
group as a whole. The sales charge is based upon the aggregate dollar value of
Shares previously purchased and still owned by the group, plus the amount of
the current purchase. For example, if members of the group had previously
invested and still held $80,000 of Fund Shares and now were investing $25,000,
the sales charge would be 3.50%. Information concerning the current sales
charge applicable to a group may be obtained by contacting FTD.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund Shares at a discount and
(iii) satisfies uniform criteria which enable FTD to realize economies of
scale in its costs of distributing Shares. A qualified group must have more
than 10 members, must be available to arrange for group meetings between
representatives of the Fund or FTD and the members, must agree to include
sales and other materials related to the Fund in its publications and mailings
to members at reduced or no cost to FTD, and must seek to arrange for payroll
deduction or other bulk transmission of investments to the Fund.
If an investor selects a payroll deduction plan, subsequent investments will
be automatic and will continue until such time as the investor notifies the
Fund and the investor's employer to discontinue further investments. Due to
the varying procedures to prepare,
10
<PAGE>
process and forward the payroll deduction information to the Fund, there may
be a delay between the time of the payroll deduction and the time the money
reaches the Fund. The investment in the Fund will be made at the Offering
Price per Share determined on the day that both the check and payroll
deduction data are received in required form by the Fund.
NET ASSET VALUE PURCHASES. Shares of the Fund may be purchased at net asset
value without imposition of a sales commission by the following persons: (i)
trustees or other fiduciaries purchasing securities for certain retirement
plans with assets of $10 million or more; (ii) directors, trustees and
officers of the investment companies sponsored by Templeton Worldwide, Inc.
and its affiliates (the "Templeton Group"), directors, officers and employees
(current or retired) in the Templeton Group (and their families) and
retirement plans established by the Templeton Group for employees; (iii)
companies exchanging shares with or selling assets to the Fund pursuant to a
merger, acquisition or exchange offer; (iv) dealers or brokers who have a
sales agreement with FTD, for their own accounts, or for retirement plans for
their employees or sold to registered representatives or full time employees
(and their families) that certify to FTD at the time of purchase that such
purchase is for their own account (or for the benefit of their families); (v)
insurance company separate accounts; (vi) accounts managed by the Templeton
Group; (vii) shareholders of Templeton Institutional Funds, Inc. reinvesting
redemption proceeds from that fund under a 401(k) plan in Shares of the Fund;
(viii) certain unit investment trusts and unit holders of such trusts
reinvesting their distributions from the trusts in the Fund; and (ix)
employees (and their families) of financial institutions which have, directly
or through affiliates, signed an agreement with FTD.
Shares of the Fund may also be purchased at net asset value by employee
benefit plans qualified under Section 401 of the Internal Revenue Code of
1986, as amended, (the "Code") including salary reduction plans qualified
under Section 401(k) of the Code, 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
500 or more employees or that the amount invested or to be invested during the
subsequent 13-month period in the Fund or other funds in the
Franklin/Templeton Group totals at least $1 million. Employee benefit plans
not 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 described above under "Group Purchases" 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 trust companies
and bank trust departments for funds over which they exercise exclusive
discretionary investment authority and which are held in a fiduciary, agency,
advisory, custodial or similar capacity. Such purchases are subject to minimum
requirements with respect to amount of purchase, which may be established by
FTD. Currently, those criteria require that the amount invested or to be
invested during the subsequent 13-month period in the Fund or any other funds
in the Franklin/Templeton Group must total at least $1 million. Orders for
such accounts will be accepted by mail accompanied by a check, or by telephone
or other means of electronic data transfer directly from the bank or trust
company, with payment by federal funds received by the close of business on
the next business day following such order.
EXCHANGE PRIVILEGE. 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 and Franklin Valuemark II). However, Shares
purchased at net asset value and subject to a contingent deferred sales charge
(see "How To Sell Shares of the Fund--Contingent Deferred Sales Charge") are
not eligible for exchange between the Templeton Family of Funds and the
Franklin Group of Funds (R).
Exchange purchases are subject to the minimum investment requirements of the
fund purchased and no sales charge generally applies. However, exchanges of
shares from the Franklin/Templeton Money Funds are subject to applicable sales
charges on the funds being purchased, unless the Franklin/Templeton Money Fund
shares were acquired by an exchange from a fund having a sales charge, or by
reinvestment of dividends or capital gains distributions. Exchanges of shares
of a fund which were purchased with a lower sales charge to a fund which has a
higher sales charge will be charged the difference, unless the shares were
held in the original fund for at least six months prior to executing the
exchange. In addition, in the case of market timing or allocation services
("Timing Accounts"), FTD will deduct an administrative service fee of $5.00
per exchange. Timing Accounts generally include accounts administered so as to
11
<PAGE>
redeem or purchase shares based upon certain predetermined market indicators.
All exchanges are permitted only after at least 15 days have elapsed from the
date of the purchase of the Shares to be exchanged. In addition, in accordance
with the terms of their respective prospectuses, certain funds do not accept,
or may place certain limitations on, exchanges by Timing Accounts.
A Shareholder may exchange Shares by writing to Franklin/Templeton Investor
Services, Inc. (the "Transfer Agent") (see "How to Sell Shares of the Fund"),
by contacting his or her investment dealer or--if the Shareholder Application
indicates that the Shareholder has not declined the option--by telephoning 1-
800-354-9191. Telephone exchange instructions must be received by FTD by 4:00
p.m., New York time. Telephonic exchanges can involve only Shares in non-
certificated form. Shares held in certificate form are not eligible, but may
be returned and qualify for these services. All accounts involved in a
telephonic exchange must have the same registration and dividend option as the
account from which the Shares are being exchanged. Neither the Transfer Agent,
any of its affiliates, nor the Franklin/Templeton Group will be liable for any
loss, damages, expense or cost arising out of any telephone exchange effected
upon instructions reasonably believed by them to be genuine. The Transfer
Agent has instituted procedures that it believes are reasonably designed to
insure that exchange instructions communicated by telephone are genuine, and
could be liable for losses caused by unauthorized or fraudulent instructions
in the absence of such procedures. The procedures currently include a recorded
verification of the Shareholder's name, social security number and account
number, followed by written confirmation of the transaction sent to the
address of record. Forms for declining the telephone exchange privilege and
prospectuses of the other funds in the Franklin/Templeton Group may be
obtained from FTD. Unless authorized, Shares held in corporate-type retirement
plans for which Templeton Funds Trust Company serves as trustee may not be
exchanged by telephone. Exchange redemptions and purchases are processed
simultaneously at the Share prices next determined after the exchange order is
received. (See "How to Buy Shares of the Fund--Offering Price.") A gain or
loss for tax purposes generally will be realized upon the exchange, depending
on the tax basis of the Shares redeemed.
This exchange privilege is available only in states where shares of the fund
being acquired may legally be sold and may be modified, limited or terminated
at any time by the Fund upon 60 days' written notice. A Shareholder who wishes
to make an exchange should first obtain and review a current prospectus of the
fund into which he or she wishes to exchange. Broker-dealers who process
exchange orders on behalf of their customers may charge a fee for their
services. Such fee may be avoided by making requests for exchange directly to
the Transfer Agent.
During periods of drastic economic or market changes, it is possible that
the telephone exchange privilege may be difficult to implement. In this event,
Shareholders should follow the other exchange procedures discussed in this
section, including the procedures for processing exchanges through broker-
dealers.
The equivalent of an exchange involving retirement accounts (including
IRA's) between the Templeton Family of Funds and the Franklin Group of
Funds (R) requires the completion of additional documentation before it can be
effected. Call 1-800-354-9191 for further information and forms.
AUTOMATIC INVESTMENT PLAN. Investors may accumulate Fund Shares regularly
each month by means of automatic debits to their checking accounts ($25
minimum). Forms for this purpose are in the Shareholder Application in this
Prospectus. Such a plan is voluntary and may be discontinued by written notice
to FTD, which must be received at least 10 days prior to the collection date,
or by FTD upon written notice to the investor at least 30 days prior to the
collection date.
INSTITUTIONAL ACCOUNTS. There may be additional methods of purchasing,
redeeming or exchanging shares of the Fund available for institutional
accounts. For further information, contact Franklin/Templeton Investor
Services, Inc. at 1-800-684-4001.
ACCOUNT STATEMENTS. Shareholder accounts are opened in accordance with the
Shareholder's registration instructions. Transactions in the account, such as
additional investments and dividend reinvestments, will be reflected on
regular confirmation statements from the Transfer Agent.
TEMPLETON STAR SERVICE. Shareholders may check the current prices of Shares,
account balances/values, a description of the last transaction and duplicate
account statements, 24 hours a day, 365 days a year, with Templeton STAR
Service by calling 1-800-654-
12
<PAGE>
0123 from a touch-tone telephone. A fund code (the Fund's code is 414) and the
Shareholder's account number are necessary for accessing information (other
than Share prices) from Templeton STAR Service.
RETIREMENT PLANS. Shares of the Fund may be purchased through various
retirement plans including the following plans for which Templeton Funds Trust
Company acts as trustee or custodian: IRAs, Simplified Employee Pensions,
403(b) plans, qualified plans for corporations, self-employed individuals and
partnerships, and 401(k) plans. For further information about any of the
plans, agreements, applications and annual fees, contact Franklin/Templeton
Distributors, Inc. To determine which retirement plan is appropriate, an
investor should contact his or her tax adviser.
HOW TO SELL SHARES OF THE FUND
Shares will be redeemed, without charge, on request of the Shareholder in
"Proper Order" to the Transfer Agent. "PROPER ORDER" MEANS THAT THE REQUEST TO
REDEEM MUST MEET ALL OF THE FOLLOWING REQUIREMENTS:
1. It must be in writing, signed by the Shareholder(s) exactly in the manner
as the Shares are registered, and must specify either the number of Shares, or
the dollar amount of Shares, to be redeemed and sent to Franklin/Templeton
Investor Services, Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030;
2. The signature(s) of the redeeming Shareholder(s) must be guaranteed by an
"eligible guarantor," including (1) national or state banks, savings
associations, savings and loan associations, trust companies, savings banks,
industrial loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing agencies; (3)
securities broker-dealers which are members of a national securities exchange
or a clearing agency or which have minimum net capital of $100,000; or (4)
institutions that participate in the Securities Transfer Agent Medallion
Program ("STAMP") or other recognized signature medallion program. A notarized
signature will not be sufficient for the request to be in Proper Order. If the
Shares are registered in more than one name, the signature of each of the
redeeming Shareholders must be guaranteed. A signature guarantee is not
required for redemptions of $50,000 or less, requested by and payable to all
Shareholders of record, to be sent to the address of record for that account.
However, the Fund reserves the right to require signature guarantees on all
redemptions. A signature guarantee is required in connection with any request
for transfer of Shares. A signature guarantee is also required in connection
with any redemption if the Transfer Agent has, within the 30-day period prior
to receipt of the redemption request, received instructions to change the
Shareholder's address of record;
3. Any outstanding certificates must accompany the request together with a
stock power signed by the Shareholder(s), with signature(s) guaranteed as
described in Item 2 above;
4. If the Shares being redeemed are registered in the name of an estate,
trust, custodian, guardian, retirement plan or the like, or in the name of a
corporation or partnership, documents also must be included which, in the
judgment of the Transfer Agent, are sufficient to establish the authority of
the person(s) signing the request, and/or as may be required by applicable
laws or regulations, with signature(s) guaranteed as described in Item 2
above; and
5. Redemption of Shares held in a Templeton Tax Deferred Retirement Plan
must conform to the requirements of the Plan and the Fund's redemption
requirements above. Distributions from such plans are subject to additional
requirements under the Code, and certain documents (available from the
Transfer Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding requirements
under the Code, and the IRS Form W-4P (available from the Transfer Agent) may
be required to be submitted to the Transfer Agent with the distribution
request, or the distribution will be delayed. The Transfer Agent and its
affiliates assume no responsibility to determine whether a distribution
satisfies the conditions of applicable tax laws and will not be responsible
for any penalties assessed.
To avoid delay in redemption or transfer, Shareholders having questions
about these requirements should contact the Account Services Department by
calling (800) 354-9191 or (813) 823-8712.
13
<PAGE>
The redemption price will be the net asset value of the Shares next computed
after the redemption request in Proper Order is received by the Transfer
Agent. Payment of the redemption price ordinarily will be made by check (or by
wire at the sole discretion of the Transfer Agent if wire transfer is
requested, including name and address of the bank and the Shareholder's
account number to which payment of the redemption proceeds is to be wired)
within seven days after receipt of the redemption request in Proper Order.
However, if Shares have been purchased by check, the Fund will make redemption
proceeds available when a Shareholder's check received for the Shares
purchased has been cleared for payment by the Shareholder's bank, which,
depending upon the location of the Shareholder's bank, could take up to
fifteen days or more. The check will be mailed by first-class mail to the
Shareholder's registered address (or as otherwise directed). Remittance by
wire (to a commercial bank account in the same name(s) as the Shares are
registered that has been in existence for more than six months) or express
mail, if requested, will be at a charge of $15, which will be deducted from
the redemption proceeds.
The Fund, through FTD, also repurchases Shares (whether in certificate or
book-entry form) through securities dealers. The Fund normally will accept
orders to repurchase such Shares by wire or telephone from dealers for their
customers at the net asset value next computed after the dealer has received
the certificate holder's request for repurchase, if the dealer received such
request before closing time of the New York Stock Exchange on that day.
Dealers have the responsibility of submitting such repurchase requests by
calling not later than 5:00 p.m., New York time, on such day in order to
obtain that day's applicable redemption price. Repurchase of Shares is for the
convenience of Shareholders and does not involve a charge by the Fund;
however, securities dealers may impose a charge on the Shareholder for
transmitting the notice of repurchase to the Fund. The Fund reserves the right
to reject any order for repurchase, which right of rejection might adversely
affect Shareholders seeking redemption through the repurchase procedure.
Ordinarily, payment will be made to the securities dealer within seven days
after receipt of a repurchase order and Share certificate (if any) in "Proper
Order" as set forth above. The Fund also will accept, from member firms of the
New York Stock Exchange, orders to repurchase Shares for which no certificates
have been issued by wire or telephone without a redemption request signed by
the Shareholder, provided the member firm indemnifies the Fund and FTD from
any liability resulting from the absence of the Shareholder's signature. Forms
for such indemnity agreement can be obtained from FTD.
The Fund may involuntarily redeem an investor's Shares if the net asset
value of such Shares is less than $100; provided that involuntary redemptions
will not result from fluctuations in the value of an investor's Shares. In
addition, the Fund may involuntarily redeem the Shares of any investor who has
failed to provide the Fund with a certified taxpayer identification number or
such other tax-related certifications as the Fund may require. A notice of
redemption, sent by first-class mail to the investor's address of record, will
fix a date not less than 30 days after the mailing date, and Shares will be
redeemed at net asset value at the close of business on that date, unless
sufficient additional Shares are purchased to bring the aggregate account
value up to $100 or more, or unless a certified taxpayer identification number
(or such other information as the Fund has requested) has been provided, as
the case may be. A check for the redemption proceeds will be mailed to the
investor at the address of record.
REINSTATEMENT PRIVILEGE. A former Shareholder of any eligible Templeton Fund
may reinvest proceeds from a redemption or a dividend or capital gains
distribution, without a sales charge, in any other eligible Templeton Fund by
sending a written request and a check to the Transfer Agent within 120 days
after the date of the redemption or distribution. Reinvestment will be at the
next calculated net asset value after receipt. However, if a Shareholder's
original investment was in a fund with a lower sales charge, or no sales
charge, the Shareholder must pay the difference. Credit will be given for any
contingent deferred sales charge paid on the Shares redeemed. The amount of
gain or loss resulting from a redemption may be affected by exercise of the
reinstatement privilege if the Shares redeemed were held for 90 days or less,
or if a Shareholder reinvests in the same fund within 30 days.
CONTINGENT DEFERRED SALES CHARGE. 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 certain of those redemptions within the first
year after investing. The charge is 1% of the lesser of the value of the
Shares redeemed (exclusive of reinvested dividends and capital gain
distributions) or the total
14
<PAGE>
cost of such Shares, and is retained by FTD. In determining if a charge
applies and the amount of any such charge, the first Shares redeemed are those
purchased with reinvested dividends and capital gain distributions, followed
by others held the longest. The contingent deferred sales charge is waived for
exchanges (except if Shares acquired by exchange were then redeemed within 12
months of the initial purchase); for distributions to participants in
qualified retirement plans due to death, disability or attainment of age 59
1/2; for tax-free returns of excess contributions to qualified plans; for
distributions from employee benefit plans; and for redemptions through the
Systematic Withdrawal Plan.
SYSTEMATIC WITHDRAWAL PLAN. A Shareholder may establish a Systematic
Withdrawal Plan ("Plan") and receive regular monthly, quarterly, semi-annual
or annual payments of $50 or more from the account. It is suggested that the
Shareholder maintain an account balance of $10,000. There are no service
charges for establishing or maintaining a Plan. Capital gain distributions and
Income dividends to the Shareholder's account must be reinvested in additional
Shares at net asset value. Payments are then made from the liquidation of
Shares at net asset value on the day of the liquidation (which is generally on
or about the 25th of the month) to meet the specified withdrawals. Payments
are generally received three to five days after the date of liquidation. By
completing the "Special Payment Instructions for Distributions" section of the
Shareholder Application included with this Prospectus, a Shareholder may
direct the selected withdrawals to another fund in the Franklin/Templeton
Group, to another person, or directly to a checking account. Liquidation of
Shares may reduce or possibly exhaust the Shares in the Shareholder's account,
to the extent withdrawals exceed Shares earned through dividends and
distributions, particularly in the event of a market decline. No payment
pursuant to a Plan will be made if there are insufficient Shares on deposit on
the date of the scheduled distribution. A subsequent deposit of Shares will
not result in a payment under the Plan retroactive to the distribution date.
As with other redemptions, a liquidation to make a withdrawal payment is a
sale for Federal income tax purposes. The entire Plan payment cannot be
considered as actual yield or income since part of such a Plan payment may be
a return of capital.
Maintaining a Plan concurrently with purchases of additional Shares of the
Fund would be disadvantageous because of the sales charge on the additional
purchases. The Shareholder should ordinarily not make additional investments
of less than $5,000. A Plan may be terminated on written notice by the
Shareholder or the Fund, and it will terminate automatically if all Shares are
liquidated or withdrawn from the account, or upon the Fund's receipt of
notification of the death or incapacity of the Shareholder. Shareholders may
change the amount (but not below $50) and schedule of withdrawal payments or
suspend such payments (for up to one month) by giving written notice to the
Transfer Agent at least seven business days prior to the end of the month
preceding a scheduled payment. Share certificates may not be issued while a
Plan is in effect.
MANAGEMENT OF THE FUND
The Trust is managed by its Board of Trustees and all powers of the Trust
are exercised by or under authority of the Board. Information relating to the
Trustees and executive officers is set forth under the heading "Management of
the Trust" in the SAI.
INVESTMENT MANAGER. The Investment Manager of the Fund is Templeton,
Galbraith & Hansberger Ltd., Nassau, Bahamas. The Investment Manager is an
indirect wholly owned subsidiary of Franklin Resources, Inc. ("Franklin").
Through its subsidiaries, Franklin is engaged in various aspects of the
financial services industry.
The Investment Manager furnishes the Fund with investment research, advice
and supervision and has responsibility for management of the Fund's portfolio.
The Investment Manager does not furnish any overhead items or facilities for
the Fund, although such expenses are paid by some investment advisers of other
investment companies. As compensation for its services, the Fund pays the
Investment Manager a monthly fee, equal on an annual basis to 0.75% of its
average daily net assets during the year. This fee is higher than advisory
fees paid by most other U.S. investment companies, primarily because investing
in securities of companies in foreign markets, many of which are not widely
followed by professional analysts, requires the Investment Manager to invest
additional time and incur added expense in developing specialized resources,
including research facilities. The Fund also pays its own operating expenses,
including: (1) its pro rata portion of the fees and expenses of the
disinterested Trustees; (2) interest expenses; (3) taxes and governmental
fees; (4) brokerage commissions and other expenses incurred in acquiring or
disposing of portfolio securities; (5) the
15
<PAGE>
expenses of registering and qualifying its Shares for sale with the Securities
and Exchange Commission ("SEC") and with various state securities commissions;
(6) expenses of its independent public accountants and legal counsel; (7)
insurance premiums; (8) fees and expenses of the Custodian and Transfer Agent
and any related services; (9) expenses of obtaining quotations of portfolio
securities and of pricing Shares; (10) its pro rata portion of the expenses of
maintaining the Trust's legal existence and of Shareholders' meetings; (11)
expenses of preparation and distribution to existing Shareholders of periodic
reports, proxy materials and prospectuses; (12) payments made pursuant to the
Fund's Distribution Plan (see "Plan of Distribution"); and (13) fees and
expenses of membership in industry organizations.
The Investment Manager and its affiliates serve as advisers for a wide
variety of public investment mutual funds and private clients in many nations.
The Investment Manager and its predecessors have been investing globally over
the past 52 years and provide investment management and advisory services to a
worldwide client base, including over 3.0 million mutual fund shareholders,
foundations and endowments, employee benefit plans and individuals. The
Investment Manager and its affiliates have approximately 3,200 employees in
ten different countries and a global network of over 50 investment research
sources. Many different selection methods are used for different funds and
clients, and many are changed and improved by the Investment Manager's
research on superior selection methods. Management of the Fund is supported by
the Templeton organization's large staff of research analysts, traders and
other investment specialists based in Fort Lauderdale, Nassau, New York,
Edinburgh, Toronto, Hong Kong, Melbourne and Singapore. Templeton's research
analysts use a disciplined, long term approach to value oriented global and
international investing. Securities are selected for the Fund's portfolio from
a list of eligible securities maintained and constantly updated by Templeton's
analysts on the basis of fundamental company-by-company analysis, which
utilizes a global database of company information. Management believes that
the Templeton organization's team approach benefits Fund investors by bringing
together many disciplines and leveraging the organization's extensive
resources. Currently, the lead portfolio manager for the Fund is Dorian B.
Foyil, Vice President of the Investment Manager and head of Templeton's
Research Technology Group. Prior to joining the Templeton organization, Mr.
Foyil was a research analyst for four years with UBS Phillips & Drew in
London, England. Mark G. Holowesko, Executive Vice President of the Investment
Manager, will also exercise significant portfolio management responsibilities
with respect to the Fund. Mr. Holowesko is responsible for coordinating equity
research worldwide for the Investment Manager. Prior to joining the Templeton
organization, Mr. Holowesko worked with Roy West Trust Corporation (Bahamas)
Limited as an investment administrator. His duties at Roy West included
managing trust and individual accounts, as well as research of worldwide
equity markets. Further information concerning the Investment Manager is
included under the heading "Investment Management and Other Services" in the
SAI.
BUSINESS MANAGER. Templeton Global Investors, Inc. provides certain
administrative facilities and services for the Fund, including payment of
salaries of officers, preparation and maintenance of books and records,
preparation of tax returns and financial reports, monitoring compliance with
regulatory requirements and monitoring tax deferred retirement plans. For its
services, the Fund pays the Business Manager a monthly fee equivalent on an
annual basis to 0.15% of the combined average daily net assets of the Funds
included in the Trust (the Fund and Templeton Global Infrastructure Fund),
reduced to 0.135% of such combined assets in excess of $200 million, to 0.10%
of such assets in excess of $700 million, and to 0.075% of such assets in
excess of $1,200 million.
TRANSFER AGENT. Franklin/Templeton Investor Services, Inc. serves as
transfer agent and dividend disbursing agent for the Fund.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Fund's
assets.
PLAN OF DISTRIBUTION. The Fund has a plan of distribution or "12b-1 Plan"
under which it may reimburse FTD for its costs and expenses for activities
primarily intended to result in the sale of Fund Shares. Expenditures by the
Fund under the plan may not exceed 0.35% annually of the Fund's average daily
net assets. Under the plan, costs and expenses not reimbursed in any one given
month (including costs and expenses not reimbursed because they exceeded the
limit of 0.35% per annum of the Fund's average daily net assets) may be
reimbursed in subsequent months or years, subject to applicable law.
16
<PAGE>
BROKERAGE COMMISSIONS. The Fund's brokerage policies are described under the
heading "Brokerage Allocation" in the SAI. The Fund's brokerage policies
provide that the receipt of research services from a broker and the sale of
Shares by a broker are factors which may be taken into account in allocating
securities transactions, so long as the prices and execution provided by the
broker equal the best available within the scope of the Fund's brokerage
policies.
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The capitalization of the Trust
consists of an unlimited number of Shares of beneficial interest, par value
$0.01 per Share. The Board of Trustees is authorized, in its discretion, to
classify and allocate the unissued Shares of the Trust in an unlimited number
of separate series and may in the future divide existing series into two or
more classes. Each Share entitles the holder to one vote.
The Fund will not ordinarily issue certificates for Shares purchased. Share
certificates representing the whole (not fractional) Shares are issued only
upon the specific request of the Shareholder made in writing to the Transfer
Agent. No charge is made for the issuance of one certificate for all or some
of the Shares purchased in a single order.
MEETINGS OF SHAREHOLDERS. The Trust is not required to hold annual meetings
of Shareholders and may elect not to do so. The Trust will call a special
meeting of Shareholders for the purpose of considering the removal of a person
serving as Trustee if requested in writing to do so by the holders of not less
than 10% of the Trust's outstanding Shares. The Trust is required to assist
Shareholder communications in connection with the calling of Shareholder
meetings to consider removal of a Trustee or Trustees.
DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gains distributions (if
any) are usually paid in October and (if necessary) in December representing
all or substantially all of the Fund's net investment income and any net
realized capital gains. Income dividends and capital gain distributions paid
by the Fund, other than on those Shares whose owners keep them registered in
the name of a broker-dealer, are automatically reinvested on the payable date
in whole or fractional Shares of the Fund at net asset value as of the ex-
dividend date, unless a Shareholder makes a written or telephonic request for
payments in cash. Income dividends and capital gains distributions will be
paid in cash on Shares during the time their owners keep them registered in
the name of a broker-dealer, unless the broker-dealer has made arrangements
with the Transfer Agent for reinvestment.
Prior to purchasing Shares of the Fund, the impact of dividends or capital
gains distributions which have been declared but not yet paid should be
carefully considered. Any dividend or capital gains distribution paid shortly
after a purchase by a Shareholder prior to the record date will have the
effect of reducing the per Share net asset value of the Shares by the amount
of the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, generally will be
subject to tax.
Checks are forwarded by first-class mail to the address of record. The
proceeds of any such checks which are not accepted by the addressee and
returned to the Fund will be reinvested for the Shareholder's account in whole
or fractional Shares at the net asset value next computed after the check has
been received by the Transfer Agent. Subsequent distributions automatically
will be reinvested at net asset value as of the ex-dividend date in additional
whole or fractional Shares.
FEDERAL TAX INFORMATION. The Fund intends to elect to be treated and to
qualify each year as a regulated investment company under Subchapter M of the
Code. See the SAI for a summary of requirements that must be satisfied to so
qualify. A regulated investment company generally is not subject to Federal
income tax on income and gains distributed in a timely manner to its
shareholders. The Fund intends to distribute to Shareholders substantially all
of its net investment income and realized capital gains, which generally will
be taxable income or capital gains in their hands. Distributions declared in
October, November or December to Shareholders of record
17
<PAGE>
on a date in such month and paid during the following January will be treated
as having been received by Shareholders on December 31 in the year such
distributions were declared. The Fund will inform Shareholders each year of
the amount and nature of such income or gains. A more detailed description of
tax consequences to Shareholders is contained in the SAI under the heading
"Tax Status."
The Fund may be required to withhold Federal income tax at the rate of 31%
of all taxable distributions (including redemptions) paid to Shareholders who
fail to provide the Fund with their correct taxpayer identification number or
to make required certifications or where the Fund or the Shareholder has been
notified by the Internal Revenue Service that the Shareholder is subject to
backup withholding. Corporate Shareholders and certain other Shareholders
specified in the Code are exempt from backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
Shareholder's Federal income tax liability.
INQUIRIES. Shareholders' inquiries will be answered promptly. They should be
addressed to Franklin/Templeton Investor Services, Inc., 700 Central Avenue,
P.O. Box 33030, St. Petersburg, Florida 33733-8030--telephone (800) 354-9191
or (813) 823-8712. Transcripts of Shareholder accounts less than three years
old are provided on request without charge; a fee of $15 per account is
charged for transcripts going back more than three years from the date the
request is received by the Transfer Agent.
PERFORMANCE INFORMATION. The Fund may include its total return in
advertisements or reports to Shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the average
annual compounded rate of return on a hypothetical investment in the Fund over
a period of 1, 5 and 10 years (or up to the life of the Fund), will reflect
the deduction of the maximum initial sales charge and deduction of a
proportional share of Fund expenses (on an annual basis), and will assume that
all dividends and distributions are reinvested when paid. Total return may be
expressed in terms of the cumulative value of an investment in the Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Fund, see the SAI.
18
<PAGE>
INSTRUCTIONS AND IMPORTANT NOTICE
SUBSTITUTE W-9 INSTRUCTIONS INFORMATION
GENERAL. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the IRS.
OBTAINING A NUMBER. If you do not have a Social Security Number Taxpayer
Identification Number, you must obtain Form SS-5 or Form SS-4 from your local
Social Security or IRS office and apply for one. If you have checked the
"Awaiting TIN" box and signed the certification, withholding will apply to
payments relating to your account unless you provide a certified TIN within 60
days.
WHAT SSN TIN TO GIVE. Please refer to the following guidelines:
<TABLE>
<CAPTION>
ACCOUNT TYPE GIVE SSN OF ACCOUNT TYPE GIVE EMPLOYER ID # OF
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
. Individual Individual . Trust, Estate, or Trust, Estate, or
Pension Plan Trust Pension Plan Trust
- ------------------------------------------------------------------------------------------
. Joint Individual Owner who will be . Corporation, Corporation,
paying tax or first- Partnership, or Partnership, or other
named individual other organization organization
- ------------------------------------------------------------------------------------------
. Unif. Gift/Transfer Minor . Broker nominee Broker nominee
to Minor
- ------------------------------------------------------------------------------------------
. Sole Proprietor Owner of business
- ------------------------------------------------------------------------------------------
. Legal Guardian Ward, Minor, or
Incompetent
- ------------------------------------------------------------------------------------------
</TABLE>
EXEMPT RECIPIENTS. Please provide your TIN and check the "Exempt Recipient"
box if you are an exempt recipient. Exempt recipients generally include:
A corporation A real estate investment trust
A financial institution A common trust fund operated by
a bank under section 584(a)
An organization exempt from tax An exempt charitable remainder
under section 501(a), or an trust or a non-exempt trust
individual retirement plan described in section 4947(a)(1)
A registered dealer in An entity registered at all
securities or commodities times under the Investment
registered in the U.S. or a U.S. Company Act of 1940
possession
IRS PENALTIES. If you do not supply us with your SSN TIN, you will be subject
to an IRS $50 penalty unless your failure is due to reasonable cause and not
willful neglect. If you fail to report certain income on your Federal income
tax return, you will be treated as negligent and subject to an IRS 20% penalty
on any underpayment of tax attributable to such negligence, unless there was
reasonable cause for the resulting underpayment and you acted in good faith.
If you falsify information on this form or make any other false statement
resulting in no backup withholding on an account which should be subject to
backup withholding, you may be subject to an IRS $500 penalty and certain
criminal penalties including fines and imprisonment.
SUBSTITUTE W-8 INSTRUCTIONS INFORMATION
EXEMPT FOREIGN PERSON. Check the "Exempt Foreign Person" box if you qualify as
a non-resident alien or foreign entity that is not subject to certain U.S.
information return reporting or to backup withholding rules. Dividends paid to
your account may be subject to withholding of up to 30%. You are an "Exempt
Foreign Person" if you are not (1) a citizen or resident of the U.S., or (2) a
U.S. corporation, partnership, estate, or trust. In the case of an individual,
an "Exempt Foreign Person" is one who has been physically present in the U.S.
for less than 31 days during the current calendar year. An individual who is
physically present in the U.S. for at least 31 days during the current
calendar year will still be treated as an "Exempt Foreign Person," provided
that the total number of days physically present in the current calendar year
and the two preceding calendar years does not exceed 183 days (counting all of
the days in the current calendar year, only one-third of the days in the first
preceding calendar year and only one-sixth of the days in the second preceding
calendar year). In addition, lawful permanent residents or green card holders
may not be treated as "Exempt Foreign Persons." If you are an individual or an
entity, you must not now be, or at this time expect to be, engaged in a U.S.
trade or business with respect to which any gain derived from transactions
effected by the Fund/Payer during the calendar year is effectively connected
to the U.S. (or your transactions are exempt from U.S. taxes under a tax
treaty).
PERMANENT ADDRESS. The Shareholder Application must contain your permanent
address if you are an "Exempt Foreign Person." If you are an individual,
provide your permanent address. If you are a partnership or corporation,
provide the address of your principal office. If you are an estate or trust,
provide the address of your permanent residence or the principal office of any
fiduciary.
NOTICE OF CHANGE IN STATUS. If you become a U.S. citizen or resident after you
have provided certification of your foreign status, or if you cease to be an
"Exempt Foreign Person," you must notify the Fund/Payer within 30 days of your
change in status. Reporting will then begin on the account(s) listed, and
backup withholding may also begin unless you certify to the Fund/Payer that
(1) the tax payer identification number you have given is correct, and (2) the
Internal Revenue Service has not notified you that you are subject to backup
withholding because you failed to report certain interest or dividend income.
You may use Form W-9, "Payer's Request for Taxpayer Identification Number and
Certification," to make these certifications. If an account is no longer
active, you do not have to notify a Fund/Payer or broker of your change in
status unless you also have another account with the same Fund/Payer that is
still active. If you receive interest from more than one Fund/Payer or have
dealings with more than one broker or barter exchange, file a certificate with
each. If you have more than one account with the same Fund/Payer, the
Fund/Payer may require you to file a separate certificate for each account.
WHEN TO FILE. File these certifications with the Fund before a payment is made
to you, unless you have already done this in either of the two preceding
calendar years. Only certifications that are in proper order will be treated
as having been filed with the Fund.
HOW OFTEN YOU MUST FILE. This certificate generally remains in effect for
three calendar years. A Fund/Payer or broker, however, may require that a new
certificate be filed each time a payment is made. On joint accounts for which
each joint owner is a foreign person, each must provide a certification of
foreign status.
19
<PAGE>
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of
a resolution or other certificate of authority to authorize the purchase as
well as sale (redemption) of shares and withdrawals by checks or drafts. You
may use the following form of resolution or you may prefer to use your own. It
is understood that the Fund, Franklin/Templeton Distributors, Inc.,
Franklin/Templeton Investor Services, Inc., the custodian bank and their
affiliates may rely upon these authorizations until revoked or amended by
written notice delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly
elected _________________________________ of __________________________________
TITLE CORPORATE NAME
a ______________________ organized under the laws of the State of _____________
TYPE OF ORGANIZATION STATE
and that the following is a true and correct copy of a resolution adopted by
the Board of Directors at a meeting duly called and held on ___________________
DATE
RESOLVED, that the _________________________________________________ of this
OFFICERS' TITLES
Corporation or Association are authorized to open an account in the name of
the Corporation or Association with one or more of the Franklin Group of
Funds(R) or Templeton Group ("Funds") and to deposit such funds of this
Corporation or Association in this account as they deem necessary or
desirable; that the persons authorized below may endorse checks and other
instruments for deposit to said account or accounts; and
FURTHER RESOLVED, that any of the following ________ officers are authorized
NUMBER
to sign any share assignment on behalf of this Corporation or Association and
to take any other actions as may be necessary to sell or redeem its shares in
the Funds or to sign checks or drafts withdrawing funds from the account; and
FURTHER RESOLVED, that this Corporation or Association shall hold harmless,
indemnify, and defend the Funds, their custodian bank, Franklin/Templeton
Distributors, Inc., Franklin/Templeton Investor Services, Inc., and their
affiliates, from any claim, loss or liability resulting in whole or in
part, directly or indirectly, from their reliance from time to time upon
any certifications by the secretary or any assistant secretary of this
Corporation or Association as to the names of the individuals occupying
such offices and their acting in reliance upon these resolutions until
actual receipt by them of a certified copy of a resolution of the Board of
Directors of the Corporation or Association modifying or revoking any or
all such resolutions.
The undersigned further certifies that the below named persons, whose
signatures appear opposite their names and office titles, are duly elected
officers of the Corporation or Association. (Attach additional list if
necessary)
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME OF CORPORATION OR ASSOCIATION DATE
Certified from minutes ________________________________________________________
NAME AND TITLE
CORPORATE SEAL (if appropriate)
20
<PAGE>
NOTES
---------
21
<PAGE>
NOTES
---------
22
<PAGE>
NOTES
--------
23
<PAGE>
TEMPLETON GLOBAL
RISING DIVIDENDS
FUND
PRINCIPAL UNDERWRITER:
Franklin/Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-354-9191
Sales Information
1-800-292-9293
This Prospectus is not an offering of
the securities herein described in any
state in which the offering is not
authorized. No sales representative,
dealer, or other person is authorized
to give any information or make any
representations other than those
contained in this Prospectus. Further
information may be obtained from the
Principal Underwriter.
[RECYCLED PAPER LOGO APPEARS HERE]
TL14 P 3/94
TEMPLETON
GLOBAL
RISING DIVIDENDS
FUND
Prospectus
March 14, 1994
[LOGO OF TEMPLETON WORLDWIDE APPEARS HERE]
<PAGE>
[LOGO OF TEMPLETON APPEARS HERE]
Mail to: Franklin Templeton Distributors, Inc.
P.O. Box 33031 St. Petersburg, Florida 33733-8031
(800) 393-3001
Please do not use this form for any Retirement Plan for which Templeton Funds
Trust Company or its affiliate serves as custodian or trustee or any of the
following Templeton Funds: Templeton American Trust: Templeton Money Fund;
Templeton Institutional Funds or Templeton Capital Accumulator Fund. Please
request separate Applications and/or Prospectuses.
================================================================================
SHAREHOLDER APPLICATION OR REVISION [_] Please check the box if this is a
revision and see Section 8
================================================================================
<TABLE>
<S> <C> <C>
Date ___________________ [_] Real Estate Securities Fund $______ [_] Global Opportunities Trust $______
[_] Growth Fund $_______ [_] Smaller Companies Growth Fund ______ [_] Americas Government Securities Fund ______
[_] World Fund _________ [_] Income Fund ______ [_] Japan Fund ______
[_] Foreign Fund _______ [_] Global Infrastructure Fund ______ [_] Other ______
[_] Global Rising Dividends Fund ______ [_] Developing Markets Trust ______
</TABLE>
================================================================================
1 ACCOUNT REGISTRATION (PLEASE PRINT)
================================================================================
[_] INDIVIDUAL OR JOINT ACCOUNT
__________________________________________________________ _____-_______-______
First Name Middle Initial Last Name Social Security
Number (SSN)
__________________________________________________________ _____-_______-______
Joint Owner(s) (Joint ownership means "Joint Tenants Social Security
With Rights of Survivorship" unless otherwise specified) Number (SSN)
================================================================================
[_] GIFT/TRANSFER TO A MINOR
__________________ As Custodian For ____________________________________________
Minor's Name (one only)
_____________________ Uniform Gifts/Transfers to Minors Act _____-______-_______
State of Residence Minor's Social
Security Number
Please Note: Custodian's Signature, not Minor's, is required in Section 4.
================================================================================
[_] TRUST, CORPORATION, PARTNERSHIP, OR OTHER ENTITY
______________________________________________________________-_________________
Name Taxpayer Identification Number (TIN)
________________________________________________________________________________
Name of Beneficiary (if to be included Date of Trust Document (must be
in the Registration) completed for registration)
________________________________________________________________________________
Name of Each Trustee (if to be included in the Registration)
================================================================================
2 ADDRESS
================================================================================
__________________________________________________ Daytime Phone (___)_________
Street Address Area Code
____________________________________________-_____ Evening Phone (___)_________
City State Zip Code Area Code
I am a Citizen of: [_] U.S. [_] _____________________________
Country of Residence
================================================================================
3 INITIAL INVESTMENT ($100 minimum initial investment)
================================================================================
Check(s) enclosed for $____________ (Payable to Franklin Templeton Distributors,
Inc. or the Fund(s) indicated above.)
================================================================================
4 SIGNATURE AND TAX CERTIFICATIONS (All registered owners must sign
application)
================================================================================
The Fund reserves the right to refuse to open an account without either a
certified Taxpayer Identification Number ("TIN") or a certification of foreign
status. Failure to provide tax certifications in this section may result in
backup withholding on payments relating to your account and/or in your inability
to qualify for treaty withholding rates.
I am(We are) not subject to backup withholding because I(we) have not been
notified by the IRS that I am(we are) subject to backup withholding as a result
of a failure to report all interest or dividends or because the IRS has notified
me(us) that I am(we are) no longer subject to backup withholding. (If you are
currently subject to backup withholding as a result of a failure to report all
interest or dividends, please cross out the preceding statement.)
[_] The number shown above is my(our) correct TIN, or that of the Minor named in
Section 1.
[_] Awaiting TIN. I am(We are) waiting for a number to be issued to me(us).
I(We) understand that if I(we) do not provide a TIN to the Fund within 60
days, the Fund is required to commence 31% backup withholding until I(we)
provide a certified TIN.
[_] Exempt Recipient. Individuals cannot be exempt. Check this box only after
reading the instructions to see whether you qualify as an exempt recipient.
(You should still provide a TIN.)
[_] Exempt Foreign Person. Check this box only if the following statement
applies: "I am(we are) neither a citizen nor a resident of the United
States. I(we) certify to the best of my(our) knowledge and belief, I(we)
qualify as an exempt foreign person and/or entity as described in the
instructions."
Permanent address for tax purposes:
________________________________________________________________________________
Street Address City State Country Postal Code
PLEASE NOTE: The IRS only allows one TIN to be listed on an account. On joint
accounts, it is preferred that the primary account owner (or person listed first
on the account) list his/her number as requested above.
CERTIFICATION - Under the penalties of perjury, I(we) certify that (1) the
information provided on this application is true, correct and complete, (2)
I(we) have read the prospectus(es) for the Fund(s) in which I am(we are)
investing and agree to the terms thereof, and (3) I am(we are) of legal age or
an emancipated minor. I(we) acknowledge that Shares of the Fund(s) are not
insured or guaranteed by any agency or institution and that an investment in the
Shares involves risks, including the possible loss of principal.
X_____________________________________ X________________________________________
Signature Signature
X_____________________________________ X________________________________________
Signature Signature
Please make a photocopy of this application for your records.
================================================================================
5 BROKER/DEALER USE ONLY (PLEASE PRINT)
================================================================================
+ +
+ We hereby submit this application for the purchase of shares of the Fund +
+ indicated above in accordance with the terms of our selling agreement with +
+ Franklin Templeton Distributors, Inc. ("FTD"), and with the Prospectus for +
+ the Fund. We agree to notify FTD of any purchases made under a Letter of +
+ Intent or Cumulative Quantity Discount. +
+ +------------------------------+ +
+ +Templeton Dealer Number + +
+ + + +
+ +------------------------------+ +
+ +
+ +--------------------------------------------------------------------------+ +
+ + WIRE ORDER ONLY: The attached check for $_____ should be applied against + +
+ + Wire Order + +
+ + + +
+ + Confirmation Number ______________ Dated ___________ For ________ Shares + +
+ +--------------------------------------------------------------------------+ +
+ +
+ Securities Dealer Name _____________________________________________________ +
+ +
+ Main Office Address _____________ Main Office Telephone Number(___)_________ +
+ +
+ Branch Number _____ Representative Number _____ Representative Name ________ +
+ +
+ Branch Address _______________________ Branch Telephone Number(___)_________ +
+ +
+ Authorized Signature, Securities Dealer _______________ Title ______________ +
+==============================================================================+
+ +
+ ACCEPTED: Franklin Templeton Distributors, Inc. By ____________ Date _______ +
+==============================================================================+
Please see reverse side for Shareholder Account Privileges:
<TABLE>
<S> <C> <C> <C>
[X] Distribution Options [X] Special Instructions for Distributions [X] Telephone Exchange Service [X] Letter of Intent
[X] Systematic Withdrawal Plan [X] Automatic Investment Plan [X] Cumulative Quantity Discount
</TABLE>
This application must be preceded or accompanied by a prospectus for the Fund(s)
being purchased.
<PAGE>
================================================================================
6. DISTRIBUTION OPTIONS (Check one)
================================================================================
Check one - if no box is checked, all dividends and capital gains will be
reinvested in additional shares of the Fund.
[_] Reinvest all dividends and capital gains.
[_] Pay capital gains in cash and reinvest dividends.
[_] Pay all dividends in cash and reinvest capital gains.
[_] Pay all dividends and capital gains in cash.
================================================================================
7. OPTIONAL SHAREHOLDER PRIVILEGES
================================================================================
A. SPECIAL PAYMENT INSTRUCTIONS FOR DISTRIBUTIONS (Check one box)
[_] Pay Distributions, as noted in Section 6, to another Franklin or Templeton
Fund.
Fund Name ____________________________ Existing Account Number ____________
[_] Send my Distributions to the person, named below, instead of as registered
in Section 1.
Name ___________________________ Street Address ___________________________
City ___________________________ State _________________ Zip Code _________
================================================================================
B. SYSTEMATIC WITHDRAWAL PLAN
Please withdraw from my Franklin Templeton account $_______($50 minimum)
[_] Monthly [_] Quarterly [_] Semi-Annually or [_] Annually as set forth in
the Prospectus, starting in __________________(Month).
Send the proceeds to: [_] Address of Record OR [_] the Franklin Templeton
Fund or person specified in Section 7(A) - Special Payment Instructions for
Distributions.
================================================================================
C. TELEPHONE TRANSACTIONS
Telephone Exchange Privilege: If the Fund does not receive specific
instructions from the shareholder, either in writing or by telephone, the
Telephone Exchange Privilege (see the prospectus) is automatically extended
to each account. The shareholder should understand, however, that the Fund
and Franklin Templeton Investor Services, Inc. ("FTI") or Templeton Funds
Trust Company and their agents will not be liable for any loss, injury,
damage or expense as a result of acting upon instructions communicated by
telephone reasonably believed to be genuine. The shareholder agrees to hold
the Fund and its agents harmless from any loss, claims, or liability arising
from its or their compliance with such instructions. The shareholder
understands that this option is subject to the terms and conditions set
forth in the prospectus of the fund to be acquired.
[_] No, I do NOT wish to participate in the Telephone Exchange Privilege or
authorize the Fund or its agents, including FTI or Templeton Funds Trust
Company, to act upon instructions received by telephone to exchange shares
for shares of any other account(s) within the Franklin Templeton Group of
Funds.
Telephone Redemption Privilege: This is available to shareholders who
specifically request it and who complete the Franklin Templeton Telephone
Redemption Authorization Agreement in the back of the Fund's prospectus.
================================================================================
D. AUTOMATIC INVESTMENT PLAN
Important: Attach an unassigned, voided check (for Checking Accounts) or a
Savings Account deposit slip here, and complete the information below.
I(We) would like to establish an Automatic Investment Plan (the "Plan") as
described in the Prospectus. I(We) agree to reimburse FTI and/or FTD for any
expenses or losses that they may incur in connection with my(our) Plan,
including any caused by my(our) bank's failure to act in accordance with
my(our) request. If my(our) bank makes any erroneous payment or fails to
make a payment after shares are purchased on my(our) behalf, any such
purchase may be cancelled and I(we) hereby authorize redemptions and/or
deductions from my(our) account for that purpose.
Debit my(our) bank account monthly for $______($25 minimum) on or about
the [_] 1st [_] 5th [_] 15th or [_] 20th day starting _____________ (month),
to be invested in (name of Fund)__________________________ Account Number
(if known)_____________________
================================================================================
E. INSTRUCTIONS TO BANK - AUTOMATIC INVESTMENT PLAN AUTHORIZATION
To: __________________________________ __________________________________
Name of Your Bank ABA Number
_______________________________ __________________ ___________ ___________
Street Address City State Zip Code
I(we) authorize you to charge my(our) Checking/Savings Account and to make
payment to FTD, upon instructions from FTD. I(We) agree that in making
payment for such charges your rights shall be the same as if each were a
charge made and signed personally by me(us). This authority shall remain in
effect until you receive written notice from me(us) changing its terms or
revoking it. Until you actually receive such notice, I(we) agree that you
shall be fully protected in paying any charges under this authority. I(we)
further agree that if any such charge is not made, whether with or with out
cause and whether intentionally or inadvertently, you shall be under no
liability whatsoever.
X_____________________________________________________ ___________________
Signature(s) EXACTLY as shown on your bank records Date
________________________________________________ _________________________
Print Name(s) Account Number
_______________________________ __________________ ___________ ___________
Your Street Address City State Zip Code
================================================================================
F. LETTER OF INTENT (LOI)
[_] I(We) agree to the terms of the LOI and provisions for reservations of
shares and grant FTD the security interest set forth in the Prospectus.
Although I am (we are) not obligated to do so, it is my(our) intention to
invest over a 13 month period in shares of one or more Franklin or Templeton
Funds (including all Money Market Funds in the Franklin Templeton Group) an
aggregate amount at least equal to that which is checked below:
[_] $50,000-99,999 (except for Income Fund)
[_] $100,000-249,999
[_] $250,000-499,999
[_] $500,000-999,999
[_] $1,000,000 or more
Purchases made within the last 90 days will be included as part of your LOI.
Please write in your Account Number(s) ___________ ___________ __________
================================================================================
G. CUMULATIVE QUANTITY DISCOUNT
Shares may be purchased at the Offering Price applicable to the dollar
amount of the sale added to the higher of (1) the value (calculated at the
applicable Offering Price) or (2) the purchase price, of any other Shares of
the Fund and/or other Funds in the Franklin Templeton Group owned at that
time by the purchaser, his or her spouse, and their children under age 21,
including all Money Market Funds in the Franklin Templeton Group as stated
in the Prospectus. In order for this Cumulative Quantity Discount to be made
available, the Shareholder or his or her Securities Dealer must notify FTI
or FTD of the total holdings in the Franklin Templeton Group each time an
order is placed.
[_] I(We) own shares of more than one Fund in the Franklin Templeton Group and
qualify for the Cumulative Quantity Discount described above and in the
Prospectus.
My(Our) other Account Number(s) are ____________ ____________ ____________
================================================================================
8. ACCOUNT REVISION (If Applicable)
If you are using this application to revise your Account Registration, or
wish to have Distributions sent to an address other than the address on your
existing Account's Registration, a Signature Guarantee is required.
Signatures of all registered owners must be guaranteed by an "eligible
guarantor" as defined in the "How to Sell Shares of the Fund" section in the
Fund's Prospectus. A Notary Public is not an acceptable guarantor.
X__________________________________________ ______________________________
Signature(s) of Registered Account Owners Account Number(s)
X__________________________________________ ______________________________
X__________________________________________
X__________________________________________ ______________________________
Signature Guarantee Stamp
NOTE: For any change in registration, please send us any outstanding
Certificates by Registered Mail.
================================================================================
<PAGE>
TEMPLETON PROSPECTUS -- MAY 1, 1995
GLOBAL INFRASTRUCTURE FUND
- -------------------------------------------------------------------------------
INVESTMENT The investment objective of Templeton Global Infrastructure
OBJECTIVE Fund (the "Fund") is long-term capital growth. The Fund seeks
AND POLICIES its objective by investing primarily in securities of domestic
and foreign companies that are principally engaged in or
related to the development, operation or rehabilitation of the
physical and social infrastructures of various nations
throughout the world. THE FUND MAY BORROW MONEY FOR INVESTMENT
PURPOSES, WHICH MAY INVOLVE GREATER RISK AND ADDITIONAL COSTS
TO THE FUND. IN ADDITION, THE FUND MAY INVEST UP TO 15% OF ITS
ASSETS IN ILLIQUID SECURITIES, INCLUDING UP TO 10% OF ITS
ASSETS IN RESTRICTED SECURITIES, WHICH MAY INVOLVE GREATER
RISK AND INCREASED FUND EXPENSES. SEE "RISK FACTORS." The Fund
is a series of Templeton Global Investment Trust.
- -------------------------------------------------------------------------------
PURCHASE OF Please complete and return the Shareholder Application. If you
SHARES need assistance in completing this form, please call our
Account Services Department. The Fund offers two classes to
its investors: Templeton Global Infrastructure Fund--Class I
("Class I") and Templeton Global Infrastructure Fund--Class II
("Class II"). Investors can choose between Class I Shares,
which generally bear a higher front-end sales charge and lower
ongoing Rule 12b-1 distribution fees ("Rule 12b-1 fees"), and
Class II Shares, which generally have a lower front-end sales
charge and higher ongoing Rule 12b-1 fees. Investors should
consider the differences between the two classes, including
the impact of sales charges and distribution fees, in choosing
the more suitable class given their anticipated investment
amount and time horizon. See "How to Buy Shares of the Fund--
Alternative Purchase Arrangements." The minimum initial
investment is $100 ($25 minimum for subsequent investments).
- -------------------------------------------------------------------------------
PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Fund that a prospective investor ought to know before
investing. Investors are advised to read and retain this
Prospectus for future reference. A Statement of Additional
Information ("SAI") dated May 1, 1995 has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated
in its entirety by reference in and made a part of this
Prospectus. The SAI is available without charge upon request
to Franklin Templeton Distributors, Inc., P.O. Box 33030, St.
Petersburg, Florida 33733-8030 or by calling the Fund
Information Department.
- -------------------------------------------------------------------------------
FUND INFORMATION DEPARTMENT--1-800-292-9293
- -------------------------------------------------------------------------------
TEMPLETON "STAR" SERVICE (24 hours, seven days a week access to current
prices, shareholder account balances/values, last transaction and duplicate
account statements) -- 1-800-654-0123
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXPENSE TABLE........ 2
FINANCIAL HIGHLIGHTS. 3
GENERAL DESCRIPTION.. 4
Investment Objective
and Policies........ 4
INVESTMENT TECH-
NIQUES.............. 5
Temporary Invest-
ments............... 6
Borrowing............ 6
Loans of Portfolio
Securities.......... 6
Options on Securities
or Indices.......... 6
Forward Foreign
Currency Contracts
and Options on
Foreign Currencies.. 6
Futures Contracts.... 7
Repurchase Agree-
ments............... 7
Depositary Receipts.. 8
Illiquid and Re-
stricted Securities. 8
RISK FACTORS......... 8
HOW TO BUY SHARES OF
THE FUND............ 10
Alternative Purchase
Arrangements........ 10
Deciding Which Class
to Purchase......... 11
Offering Price....... 11
Class I.............. 11
Cumulative Quantity
Discount............ 13
Letter of Intent..... 13
Group Purchases...... 13
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Class II............. 14
Net Asset Value
Purchases (Both
Classes)............ 14
Description of
Special Net Asset
Value Purchases..... 15
Additional Dealer
Compensation
(Both Classes)...... 16
Purchasing Class I
and Class II Shares. 16
Automatic Investment
Plan................ 17
Institutional Ac-
counts.............. 17
Account Statements... 17
Templeton STAR Serv-
ice................. 17
Retirement Plans..... 18
Net Asset Value...... 18
EXCHANGE PRIVILEGE... 18
Exchanges of Class I
Shares.............. 19
Exchanges of Class II
Shares.............. 19
Transfers............ 20
Conversion Rights.... 20
Exchanges by Timing
Accounts............ 20
HOW TO SELL SHARES OF
THE FUND............ 20
Reinstatement Privi-
lege................ 22
Systematic Withdrawal
Plan................ 23
Redemptions by Tele-
phone............... 23
Contingent Deferred
Sales Charge........ 24
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
TELEPHONE TRANSAC-
TIONS............... 25
Verification Proce-
dures............... 25
Restricted Accounts.. 25
General.............. 25
MANAGEMENT OF THE
FUND................ 25
Investment Manager... 26
Business Manager..... 26
Transfer Agent....... 27
Custodian............ 27
Plans of Distribu-
tion................ 27
Brokerage Commis-
sions............... 28
GENERAL INFORMATION.. 28
Description of
Shares/Share
Certificates........ 28
Voting Rights........ 28
Meetings of Share-
holders............. 28
Dividends and Distri-
butions............. 28
Federal Tax Informa-
tion................ 29
Inquiries............ 29
Performance Informa-
tion................ 29
Statements and Re-
ports............... 29
WITHHOLDING INFORMA-
TION................ 30
CORPORATE RESOLUTION. 31
AUTHORIZATION AGREE-
MENT................ 32
THE FRANKLIN TEMPLE-
TON GROUP........... 33
</TABLE>
- -------------------------------------------------------------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
EXPENSE TABLE
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a Shareholder will bear directly or indirectly
in connection with an investment in the Fund. The figures are estimates of the
Fund's expenses for the current fiscal year, restated to reflect current sales
charges and Rule 12b-1 fees for each class.
<TABLE>
<CAPTION>
CLASS I CLASS II
------- --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage
of Offering Price)....................................... 5.75% 1.00%/1/
Deferred Sales Charge..................................... None/2/ 1.00%/3/
Exchange Fee (per transaction)............................ $5.00/4/ $5.00/4/
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees........................................... 0.75% 0.75%
Rule 12b-1 Fees/5/........................................ 0.35% 1.00%
Other Expenses (audit, legal, business management,
transfer agent and custodian) ........................... 1.90% 1.90%
Total Fund Operating Expenses ............................ 3.00% 3.65%
</TABLE>
- -------
/1/ Although Class II has a lower front-end sales charge than Class I, over time
the higher Rule 12b-1 fee for Class II may cause Shareholders to pay more
for Class II Shares than for Class I Shares. Given the maximum front-end
sales charge and the rate of Rule 12b-1 fees for each class, it is estimated
that this would take less than six years for Shareholders who maintain total
Shares valued at less than $50,000 in the Franklin Templeton Funds.
Shareholders with larger investments in the Franklin Templeton Funds will
reach the cross-over point more quickly.
/2/ Class I investments of $1 million or more are not subject to a front-end
sales charge; however, a contingent deferred sales charge of 1%, which has
not been reflected in the Example below, is generally imposed on certain
redemptions within a "contingency period" of 12 months of the calendar month
following such investments. See "How to Sell Shares of the Fund--Contingent
Deferred Sales Charge."
/3/ Class II Shares redeemed within a "contingency period" of 18 months of the
calendar month following such investments are subject to a 1% contingent
deferred sales charge. See "How to Sell Shares of the Fund--Contingent
Deferred Sales Charge."
/4/ $5.00 fee imposed only on Timing Accounts as described under "Exchange
Privilege." All other exchanges are processed without a fee.
/5/ Annual Rule 12b-1 fees may not exceed 0.35% of the Fund's average net assets
attributable to Class I Shares and 1.00% of the Fund's average net assets
attributable to Class II Shares. Consistent with the National Association of
Securities Dealers, Inc.'s rules, it is possible that the combination of
front-end sales charges and Rule 12b-1 fees could cause long-term
Shareholders to pay more than the economic equivalent of the maximum front-
end sales charges permitted under those same rules.
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual's own
investment in the Fund. Rather, the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and
expenses. For a more detailed discussion of these matters, investors should
refer to the appropriate sections of this Prospectus.
EXAMPLE
As required by SEC regulations, the following example illustrates the
expenses, including the maximum front-end sales charge and applicable
contingent deferred sales charge, that apply to a $1,000 investment in the
Fund over various time periods assuming (1) a 5% annual rate of return and (2)
redemption at the end of each time period.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
-------- -----------
<S> <C> <C>
Class I.............................................. $69 $95
Class II............................................. $33 $49
</TABLE>
THIS EXAMPLE IS BASED ON THE ESTIMATED ANNUAL OPERATING EXPENSES, INCLUDING
FEES SET BY CONTRACT, SHOWN ABOVE AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, WHICH MAY BE MORE OR LESS THAN
THOSE SHOWN. The operating expenses are borne by the Fund and only indirectly
by Shareholders as a result of their investment in the Fund. (See "Management
of the Fund" for a description of the Fund's expenses.) In addition, federal
securities regulations require the example to assume an annual return of 5%,
but the Fund's actual return may be more or less than 5%.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following table of selected financial information for the period March
14, 1994 to March 31, 1994 has been audited by McGladrey & Pullen, LLP,
independent certified public accountants, whose report is incorporated by
reference and which appears in the Fund's 1994 Annual Report to Shareholders.
Information for the six months ended September 30, 1994 has not been audited.
This statement should be read in conjunction with the other financial
statements and notes thereto included in the Fund's Semiannual Report to
Shareholders dated September 30, 1994, which contains further information
about the Fund's performance, and which is available to Shareholders upon
request and without charge. Information regarding Class II Shares will be
included in this table after they have been offered to the public for a
reasonable period of time.
<TABLE>
<CAPTION>
SIX MONTHS MARCH 14, 1994
PER SHARE OPERATING PERFORMANCE ENDED (COMMENCEMENT OF
(for a Share outstanding throughout the SEPTEMBER 30, 1994 OPERATIONS) TO
period) (UNAUDITED)+ MARCH 31, 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.01 $10.00
- ------------------------------------------------------------------------------
Income from investment operations:
Net investment income .07 .009
Net realized and unrealized gain .26 .001
------- ------
Total from investment operations .33 .01
------- ------
Change in net asset value .33 .01
- ------------------------------------------------------------------------------
Net asset value, end of period $ 10.34 $10.01
- ------------------------------------------------------------------------------
TOTAL RETURN* 3.30% 0.10%
RATIOS/SUPPLEMENT DATA
Net assets, end of period (000) $11,970 $ 101
Ratio of expenses to average net assets 3.75%** 32.02%**
Ratio of expenses, net reimbursement, to
average net assets 1.25%** 1.25%**
Ratio of net investment income to average
net assets 1.56%** 1.89%**
Portfolio turnover rate 3.15% --
- ------------------------------------------------------------------------------
</TABLE>
* Total return does not reflect sales charges. Not annualized.
** Annualized.
+ Based on monthly weighted average Shares outstanding.
3
<PAGE>
GENERAL DESCRIPTION
Templeton Global Investment Trust (the "Trust") was organized as a business
trust under the laws of Delaware on December 21, 1993, and is registered under
the Investment Company Act of 1940 (the "1940 Act") as an open-end management
investment company. It has three series of shares, each of which is a separate
mutual fund: Templeton Global Infrastructure Fund (the "Fund") and Templeton
Global Rising Dividends Fund, both diversified funds, and Templeton Americas
Government Securities Fund, a non-diversified fund. Prospectuses for Templeton
Global Rising Dividends Fund and Templeton Americas Government Securities Fund
are available upon request and without charge from the Principal Underwriter.
The Fund has two classes of Shares of beneficial interest with a par value of
$.01: Templeton Global Infrastructure Fund--Class I and Templeton Global
Infrastructure Fund--Class II. All Fund Shares outstanding before May 1, 1995
have been redesignated as Class I Shares, and will retain their previous
rights and privileges, except for legally required modifications to
Shareholder voting procedures, as discussed in "General Information--Voting
Rights."
Shares of the Fund may be purchased (minimum investment of $100 initially
and $25 thereafter) at the current public Offering Price. The current public
Offering Price of the Class I Shares is equal to the net asset value (see "How
to Buy Shares of the Fund--Net Asset Value"), plus a variable sales charge not
exceeding 5.75% of the Offering Price depending upon the amount invested. The
current public Offering Price of the Class II Shares is equal to the net asset
value, plus a sales charge of 1.0% of the amount invested. (See "How to Buy
Shares of the Fund.")
INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is
long-term capital growth. The Fund seeks to achieve this objective by
investing at least 65% of its total assets in securities of domestic and
foreign companies that are principally engaged in or related to the
development, operation or rehabilitation of the physical and social
infrastructures of various nations throughout the world. The Fund's investment
objective and the investment restrictions set forth under "Investment
Objectives and Policies--Investment Restrictions" in the SAI are fundamental
and may not be changed without Shareholder approval. All other investment
policies and practices described in this Prospectus are not fundamental and
may be changed by the Board of Trustees without Shareholder approval.
The Fund's investment objective is based on the belief that the development
of the physical and social infrastructures of world economies is essential for
economic growth and must be undertaken by all countries to achieve and
maintain competitive industrial bases. A company is "principally engaged in or
related to the development, operation or rehabilitation of physical and social
infrastructures of various nations throughout the world" if at least 50% of
its assets (marked-to-market), gross income or net profits are attributable to
activities related to the following industries, among others: communications;
production of building materials; power generation; public utilities;
distribution of goods and services; toll road operation and development; the
manufacturing of steel and other metals; air, sea, land and rail
transportation; rail, aircraft and seacraft manufacturing and rehabilitation;
port ownership and operation; operation of water utilities and waste water
treatment facilities; industrial fabrication; bridge erection; heating,
ventilation and air conditioning (HVAC) manufacturing and installation;
manufacturing and operation of pollution control equipment; operation of
medical facilities; development and construction of housing; operation of
broadcast media; and the manufacturing, operation, installation and
maintenance of technology-related infrastructure such as local and wide-area
network software and other essential components in the movement of
information. Companies providing construction materials or equipment, or
engineering, construction and contracting services, would also be included, as
would companies providing funding or expertise necessary for the completion of
infrastructure projects.
The evolving long-term international trend favoring more market-oriented
economies challenges countries with developing markets to upgrade their
national economies in order to compete in the international marketplace. This
trend may be facilitated by local or international political, economic or
financial developments that could benefit companies engaged in the development
of these countries' national economies. Certain of these countries,
particularly countries such as Mexico and the countries of the Pacific Basin,
have experienced relatively high rates of economic growth in recent years. The
development of the local infrastructures in these countries is a crucial
element in their continued growth. For example, Japan, Hong Kong, Singapore,
Taiwan, South Korea, Thailand, Malaysia, Indonesia and the Philippines have
all recently made substantial, long-term commitments to the development of
their infrastructures.
4
<PAGE>
Many investors, particularly individuals, lack the information, capability
or inclination to invest in foreign capital markets. It also may not be
permissible for such investors to invest directly in certain markets. Unlike
many intermediary investment vehicles, such as closed-end investment companies
that invest in a single country, the Fund will seek to allocate investment
risk among the capital markets of a number of countries. Under normal
circumstances, the Fund will invest at least 65% of its total assets in
issuers domiciled in at least three different nations (one of which may be the
United States). The Fund will not necessarily seek to diversify investments on
a geographical basis or on the basis of the level of economic development of
any particular country. While there exists much information indicating that
foreign capital markets may experience growth as a result of a renewed
international commitment to the development of economic infrastructures, there
can be no assurance, of course, that such growth will occur or that the
securities purchased by the Fund will provide long-term capital growth.
Consistent with its investment objective, the Fund expects to invest at
least 65% of its total assets in securities of issuers listed on United States
or foreign securities exchanges or the NASDAQ system that are principally
engaged in or related to infrastructure industries. The Fund will generally
invest in equity securities of such issuers, defined as common stock,
preferred stock, securities convertible into or exchangeable for such
securities, warrants or rights to subscribe to or purchase such securities,
and sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
(collectively, "Depositary Receipts"). The Fund may also invest in debt
securities (defined as bonds, notes, debentures, commercial paper, time
deposits and bankers' acceptances) of issuers involved in or related to
infrastructure industries. There is no limitation on the percentage of the
Fund's assets that may be invested in debt securities, subject to the Fund's
investment objective. Certain debt securities can provide the potential for
capital appreciation based on various factors such as changes in interest
rates, economic and market conditions, improvement in an issuer's ability to
repay principal and pay interest, and ratings upgrades. Additionally,
convertible bonds offer the potential for capital appreciation through the
conversion feature, which enables the holder of the bond to benefit from
increases in the market price of the securities into which they are
convertible. Debt securities purchased by the Fund may be rated in any
category by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P"), or may be unrated by any rating agency. Such securities
may include high-risk, lower quality debt securities, commonly referred to as
"junk bonds." As an operating policy, which may be changed by the Board of
Trustees, the Fund will not invest more than 5% of its total assets in debt
securities rated Baa or lower by Moody's or BBB or lower by S&P. Debt
securities are subject to certain market and credit risks. See "Investment
Objectives and Policies -- Debt Securities" in the SAI.
The Fund may also lend its portfolio securities and borrow money for
investment purposes ( i.e., "leverage" its portfolio). In addition, the Fund
may enter into transactions in options on securities, securities indices and
foreign currencies, forward foreign currency contracts, and futures contracts
and related options. These are generally referred to as derivative instruments
and involve special risk factors, which are described below. When deemed
appropriate by the Fund's investment manager, Templeton Investment Counsel,
Inc. (the "Investment Manager"), the Fund may invest cash balances in
repurchase agreements and other money market investments to maintain liquidity
in an amount to meet expenses or for day-to-day operating purposes. These
investment techniques are described below and under the heading "Investment
Objectives and Policies" in the SAI.
The Fund invests for long-term growth of capital and does not emphasize
short-term trading profits. Accordingly, the Fund expects to have an annual
portfolio turnover rate not exceeding 50%. There can be no assurance that the
Fund's investment objective will be achieved.
INVESTMENT TECHNIQUES
The Fund is authorized to use the various investment techniques described
below. Although these strategies are regularly used by some investment
companies and other institutional investors in various markets, some of these
strategies cannot at the present time be used to a significant extent by the
Fund in some of the markets in which the Fund will invest and may not be
available for extensive use in the future.
5
<PAGE>
TEMPORARY INVESTMENTS. For temporary defensive purposes, the Fund may invest
up to 100% of its total assets in the following money market securities,
denominated in U.S. dollars or in the currency of any foreign country, issued
by entities organized in the United States or any foreign country: debt
obligations issued or guaranteed by the U.S. Government or the governments of
foreign countries, their agencies or instrumentalities; short-term time
deposits with banks; repurchase agreements with banks and broker-dealers with
respect to U.S. Government obligations; and finance company and corporate
commercial paper, and other short-term corporate obligations, in each case
rated Prime-1 by Moody's or A or better by S&P or, if unrated, of comparable
quality as determined by the Investment Manager.
BORROWING. The Fund may borrow up to one-third of the value of its total
assets from banks to increase its holdings of portfolio securities. Under the
1940 Act, the Fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of the
Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value,
and money borrowed will be subject to interest and other costs (which may
include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of its total
assets to generate income for the purpose of offsetting operating expenses.
Such loans must be secured by collateral (consisting of any combination of
cash, U.S. Government securities or irrevocable letters of credit) in an
amount at least equal (on a daily marked-to-market basis) to the current
market value of the securities loaned. The Fund may terminate the loans at any
time and obtain the return of the securities loaned within five business days.
The Fund will continue to receive any interest or dividends paid on the loaned
securities and will continue to retain any voting rights with respect to the
securities. In the event that the borrower defaults on its obligation to
return borrowed securities, because of insolvency or otherwise, the Fund could
experience delays and costs in gaining access to the collateral and could
suffer a loss to the extent that the value of the collateral falls below the
market value of the borrowed securities.
OPTIONS ON SECURITIES OR INDICES. To increase its return or to hedge all or
a portion of its portfolio investments, the Fund may write ( i.e., sell)
covered put and call options and purchase put and call options on securities
or securities indices that are traded on United States and foreign exchanges
or in the over-the-counter markets. An option on a security is a contract that
permits the purchaser of the option, in return for the premium paid, the right
to buy a specified security (in the case of a call option) or to sell a
specified security (in the case of a put option) from or to the writer of the
option at a designated price during the term of the option. An option on a
securities index permits the purchaser of the option, in return for the
premium paid, the right to receive from the seller cash equal to the
difference between the closing price of the index and the exercise price of
the option. The Fund may write a call or put option only if the option is
"covered." This means that so long as the Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or
hold a call at the same or lower exercise price, for the same exercise period,
and on the same securities as the written call. A put is covered if the Fund
maintains liquid assets with a value equal to the exercise price in a
segregated account, or holds a put on the same underlying securities at an
equal or greater exercise price. The value of the underlying securities on
which options may be written at any one time will not exceed 15% of the total
assets of the Fund. The Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of its total assets at
the time of purchase.
FORWARD FOREIGN CURRENCY CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES. The
Fund may enter into forward foreign currency exchange contracts ("forward
contracts") to attempt to minimize the risk to the Fund from adverse changes
in the relationship between the U.S. dollar and foreign currencies. A forward
contract is an obligation to purchase or sell a specific currency for an
agreed price at a future date which is individually negotiated and privately
traded by currency traders and their customers.
6
<PAGE>
The Fund will enter into forward contracts only under two circumstances.
First, when the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to "lock in" the
U.S. dollar price of the security in relation to another currency by entering
into a forward contract to buy the amount of foreign currency needed to settle
the transaction. Second, when the Investment Manager believes that the
currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to
sell or buy the amount of the former foreign currency approximating the value
of some or all of the Fund's portfolio securities denominated in such foreign
currency. The second investment practice is generally referred to as "cross-
hedging." The Fund has no specific limitation on the percentage of assets it
may commit to forward contracts, subject to its stated investment objective
and policies, except that the Fund will not enter into a forward contract if
the amount of assets set aside to cover forward contracts would impede
portfolio management or the Fund's ability to meet redemption requests.
Although forward contracts will be used primarily to protect the Fund from
adverse currency movements, they also involve the risk that anticipated
currency movements will not be accurately predicted.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines
in the U.S. dollar value of foreign currency-denominated portfolio securities
and against increases in the U.S. dollar cost of such securities to be
acquired. As in the case of other kinds of options, however, the writing of an
option on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to the Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Fund are traded on U.S. and
foreign exchanges or over-the-counter.
FUTURES CONTRACTS. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a
specified debt security at a set price on a future date. An index futures
contract is an agreement to take or make delivery of an amount of cash based
on the difference between the value of the index at the beginning and at the
end of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.
When the Fund enters into a futures contract, it must make an initial
deposit, known as "initial margin," as a partial guarantee of its performance
under the contract. As the value of the security, index or currency
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation it
may have under the contract. In addition, when the Fund enters into a futures
contract, it will segregate assets or "cover" its position in accordance with
the 1940 Act. (See "Investment Objectives and Policies -- Futures Contracts"
in the SAI.) With respect to positions in futures and related options that do
not constitute "bona fide hedging" positions, the Fund will not enter into a
futures contract or related option contract if, immediately thereafter, the
aggregate initial margin deposits relating to such positions plus premiums
paid by it for open futures option positions, less the amount by which any
such options are "in-the-money," would exceed 5% of the Fund's total assets.
REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, the Fund may, without limit, enter into repurchase
agreements with U.S. banks and broker-dealers. Under a repurchase agreement,
the Fund acquires a security from a U.S. bank or a registered broker-dealer
and simultaneously agrees to resell the security back to the bank or broker-
dealer at a specified time and price. The repurchase price is in excess of the
purchase price by an amount which reflects an agreed-upon rate of return,
which is not tied to the coupon rate on the underlying security. Under the
1940 Act, repurchase agreements are considered to be loans collateralized by
the underlying security and therefore will be fully collateralized. However,
if the seller should default on its obligation to repurchase the underlying
security, the Fund may experience delay or difficulty in exercising its rights
to realize upon the security and might incur a loss if the value of the
security declines, as well as incur disposition costs in liquidating the
security.
7
<PAGE>
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts typically issued by a U.S.
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs and GDRs are typically issued by foreign banks
or trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
foreign or a United States corporation. Generally, Depositary Receipts in
registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements
to have its securities traded in the form of Depositary Receipts. In
unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value
of the Depositary Receipts. Depositary Receipts also involve the risks of
other investments in foreign securities, as discussed below. For purposes of
the Fund's investment policies, the Fund's investments in Depositary Receipts
will be deemed to be investments in the underlying securities.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its
total assets in illiquid securities, for which there is a limited trading
market and for which a low trading volume of a particular security may result
in abrupt and erratic price movements. The Fund may be unable to dispose of
its holdings in illiquid securities at then-current market prices and may have
to dispose of such securities over extended periods of time. The Fund may also
invest in securities that are sold (i) in private placement transactions
between their issuers and their purchasers and that are neither listed on an
exchange nor traded over-the-counter, or (ii) in transactions between
qualified institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended. Such restricted securities are subject to contractual or
legal restrictions on subsequent transfer. As a result of the absence of a
public trading market, such restricted securities may in turn be less liquid
and more difficult to value than publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from the sales could, due to illiquidity, be less than those
originally paid by the Fund or less than their fair value. In addition,
issuers whose securities are not publicly traded may not be subject to the
disclosure and other investor protection requirements that may be applicable
if their securities were publicly traded. If any privately placed or Rule 144A
securities held by the Fund are required to be registered under the securities
laws of one or more jurisdictions before being resold, the Fund may be
required to bear the expenses of registration. The Fund will limit its
investment in restricted securities to 10% of its total assets, except that
Rule 144A securities determined by the Board of Trustees to be liquid are not
subject to this limitation.
RISK FACTORS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Fund, nor
can there be any assurance that the Fund's investment objective will be
attained. As with any investment in securities, the value of, and income from,
an investment in the Fund can decrease as well as increase, depending on a
variety of factors which may affect the values and income generated by the
Fund's portfolio securities, including general economic conditions and market
factors. In addition to the factors which affect the value of individual
securities, a Shareholder may anticipate that the value of the Shares of the
Fund will fluctuate with movements in the broader equity and bond markets. A
decline in the stock market of any country in which the Fund is invested may
also be reflected in declines in the price of Shares of the Fund. Changes in
currency valuations will also affect the price of Shares of the Fund. History
reflects both decreases and increases in worldwide stock markets and currency
valuations, and these may reoccur unpredictably in the future. Additionally,
investment decisions made by the Investment Manager will not always be
profitable or prove to have been correct. The Fund is not intended as a
complete investment program.
8
<PAGE>
The Fund has the right to purchase securities in any foreign country,
developed or developing. Investors should consider carefully the substantial
risks involved in investing in securities issued by companies and governments
of foreign nations, which are in addition to the usual risks inherent in
domestic investments. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations (including, for example, withholding taxes on interest and dividends)
or other taxes imposed with respect to investments in foreign nations, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), foreign investment controls on daily stock
market movements, default in foreign government securities, political or
social instability or diplomatic developments which could affect investment in
securities of issuers in foreign nations. Some countries may withhold portions
of interest and dividends at the source. In addition, in many countries there
is less publicly available information about issuers than is available in
reports about companies in the United States. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, and auditing practices and requirements may not be comparable to
those applicable to United States companies. The Fund may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. Further, the Fund may encounter difficulties or be unable to
vote proxies, exercise shareholder rights, pursue legal remedies, and obtain
judgments in foreign courts. Commission rates in foreign countries, which are
sometimes fixed rather than subject to negotiation as in the United States,
are likely to be higher. Foreign securities markets also have different
clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when assets of the Fund
are uninvested and no return is earned thereon. The inability of the Fund to
make intended security purchases due to settlement problems could cause the
Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses
to the Fund due to subsequent declines in value of the portfolio security or,
if the Fund has entered into a contract to sell the security, could result in
possible liability to the purchaser. In many foreign countries there is less
government supervision and regulation of business and industry practices,
stock exchanges, brokers and listed companies than in the United States. There
is an increased risk, therefore, of uninsured loss due to lost, stolen, or
counterfeit stock certificates. In addition, the foreign securities markets of
many of the countries in which the Fund may invest may also be smaller, less
liquid, and subject to greater price volatility than those in the United
States. As an open-end investment company, the Fund is limited in the extent
to which it may invest in illiquid securities. See "Investment Objectives and
Policies -- Risk Factors" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they trade. These
economies also have been and may continue to be adversely affected by economic
conditions in the countries with which they trade.
The Fund usually effects currency exchange transactions on a spot ( i.e.,
cash) basis at the spot rate prevailing in the foreign exchange market.
However, some price spread on currency exchange transactions (to cover service
charges) will be incurred when the Fund converts assets from one currency to
another.
The Fund is authorized to invest in debt securities rated in any category by
S&P or Moody's and securities which are unrated by any rating agency. See
"Investment Objectives and Policies--Debt Securities" in the SAI. As an
operating policy, which may be changed
9
<PAGE>
by the Board of Trustees without Shareholder approval, the Fund will not
invest more than 5% of its total assets in debt securities rated lower than
BBB by S&P or Baa by Moody's. The Board of Trustees may consider a change in
this operating policy if, in its judgment, economic conditions change such
that a higher level of investment in high-risk, lower quality debt securities
would be consistent with the interests of the Fund and its Shareholders. High-
risk, lower quality debt securities, commonly referred to as "junk bonds," are
regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation and may be in default. Unrated debt securities are not
necessarily of lower quality than rated securities, but they may not be
attractive to as many buyers. Regardless of rating levels, all debt securities
considered for purchase (whether rated or unrated) will be carefully analyzed
by the Investment Manager to insure, to the extent possible, that the planned
investment is sound. The Fund may, from time to time, invest up to 5% of its
total assets in defaulted debt securities if, in the opinion of the Investment
Manager, the issuer may resume interest payments in the near future.
Leveraging by means of borrowing may exaggerate the effect of any increase
or decrease in the value of portfolio securities on the Fund's net asset
value, and money borrowed will be subject to interest and other costs (which
may include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
Successful use of futures contracts and related options is subject to
special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation
between movements in the securities or foreign currency on which the futures
or options contract is based and movements in the securities or currency in
the Fund's portfolio. Successful use of futures or options contracts is
further dependent on the Investment Manager's ability to correctly predict
movements in the securities or foreign currency markets, and no assurance can
be given that its judgment will be correct. Successful use of options on
securities or stock indices is subject to similar risk considerations. In
addition, by writing covered call options, the Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price.
There are further risk factors, including possible losses through the
holding of securities in domestic and foreign custodian banks and
depositories, described elsewhere in this Prospectus and in the SAI.
HOW TO BUY SHARES OF THE FUND
Shares of the Fund may be purchased at the Offering Price through any broker
which has a dealer agreement with Franklin Templeton Distributors, Inc.
("FTD"), the Principal Underwriter for Shares of the Fund, or directly from
FTD upon receipt by FTD of a completed Shareholder Application and check. The
minimum initial investment is $100, and subsequent investments must be $25 or
more. These minimums may be waived when the Shares are being purchased through
retirement plans providing for regular periodic investments, as described
below under "Retirement Plans."
ALTERNATIVE PURCHASE ARRANGEMENTS. The difference between Class I and Class
II Shares lies primarily in their front-end and contingent deferred sales
charges and Rule 12b-1 fees as described below.
Class I. All Fund Shares outstanding before the implementation of the
multiclass structure have been redesignated as Class I Shares, and will retain
their previous rights and privileges. Class I Shares are generally subject to
a variable sales charge upon purchase and not subject to any sales charge upon
redemption. Class I Shares are subject to Rule 12b-1 fees of up to an annual
maximum of 0.35% of average daily net assets of such Shares. With this
multiclass structure, Class I Shares have higher front-end sales charges than
Class II Shares and comparatively lower Rule 12b-1 fees. Class I Shares may be
purchased at reduced front-end sales charges, or
10
<PAGE>
at net asset value if certain conditions are met. In most circumstances,
contingent deferred sales charges will not be assessed against redemptions of
Class I Shares. See "Management of the Fund" and "How to Sell Shares of the
Fund" for more information.
Class II. The current public Offering Price of Class II Shares is equal to
the net asset value, plus a front-end sales charge of 1.0% of the amount
invested. Class II Shares are also subject to a contingent deferred sales
charge of 1.0% if Shares are redeemed within 18 months of the calendar month
following purchase. In addition, Class II Shares are subject to Rule 12b-1
fees of up to a maximum of 1.0% of average daily net assets of such Shares.
Class II Shares have lower front-end sales charges than Class I Shares and
comparatively higher Rule 12b-1 fees. See "How to Sell Shares of the Fund--
Contingent Deferred Sales Charge."
Purchases of Class II Shares are limited to purchases below $1 million. Any
purchases of $1 million or more will automatically be invested in Class I
Shares, since that is more beneficial to investors. Such purchases, however,
may be subject to a contingent deferred sales charge. Investors may exceed $1
million in Class II Shares by cumulative purchases over a period of time.
Investors who intend to make investments exceeding $1 million, however, should
consider purchasing Class I Shares through a Letter of Intent instead of
purchasing Class II Shares.
DECIDING WHICH CLASS TO PURCHASE. Investors should carefully evaluate their
anticipated investment amount and time horizon prior to determining which
class of Shares to purchase. Generally, an investor who expects to invest less
than $50,000 in the Franklin Templeton Funds and who expects to make
substantial redemptions within approximately six years or less of investment
should consider purchasing Class II Shares. However, the higher annual Rule
12b-1 fees on the Class II Shares will result in slightly higher operating
expenses and lower income dividends for Class II Shares, which will accumulate
over time to outweigh the difference in front-end sales charges. For this
reason, Class I Shares may be more attractive to long-term investors even if
no sales charge reductions are available to them.
Investors who qualify to purchase Class I Shares at reduced sales charges
definitely should consider purchasing Class I Shares, especially if they
intend to hold their Shares approximately six years or more. Investors who
qualify to purchase Class I Shares at reduced sales charges but who intend to
hold their Shares less than approximately six years should evaluate whether it
is more economical to purchase Class I Shares through a Letter of Intent or
under Cumulative Quantity Discount rather than purchasing Class II Shares.
INVESTORS INVESTING $1 MILLION OR MORE IN A SINGLE PAYMENT AND OTHER INVESTORS
WHO QUALIFY TO PURCHASE CLASS I SHARES AT NET ASSET VALUE WILL BE PRECLUDED
FROM PURCHASING CLASS II SHARES.
Each class represents the same interest in the investment portfolio of the
Fund and has the same rights, except that each class has a different sales
charge, bears the separate expenses of its Rule 12b-1 distribution plan, and
has exclusive voting rights with respect to such plan. The two classes also
have separate exchange privileges.
In determining which Shares are more appropriate for a Shareholder's
investment objectives and income needs, a Shareholder should also consider
that the higher Rule 12b-1 fees for Class II will generally result in lower
dividends and consequently lower yields for Class II Shares as compared to
Class I Shares.
OFFERING PRICE. Shares of both classes of the Fund are offered at their
respective public Offering Prices, which are determined by adding the net
asset value per share plus a front-end sales charge, next computed (i) after
the Shareholder's securities dealer receives the order which is promptly
transmitted to the Fund or (ii) after receipt of an order by mail from the
Shareholder directly in proper form (which generally means a completed
Shareholder Application accompanied by a negotiable check).
CLASS I. The sales charge for Class I Shares is a variable percentage of the
Offering Price depending upon the amount of the sale. A description of the
method of calculating net asset value per share is included under the caption
"Net Asset Value" below.
11
<PAGE>
The price to the public on purchases of Class I Shares made by a single
purchaser, by an individual, his or her spouse and their children under age
21, or by a single trust or fiduciary account other than an employee benefit
plan holding Shares of the Fund on or before February 1, 1995, is the net
asset value per Share plus a sales charge not exceeding 5.75% of the Offering
Price (equivalent to 6.10% of the net asset value), which is reduced on larger
sales as shown below:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
---------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE OF THE NET ASSET VALUE OF THE OFFERING PRICE
AT OFFERING PRICE SHARES PURCHASED SHARES PURCHASED RETAINED BY DEALERS/1/,/3/
- ----------------- --------------------- ----------------------- --------------------------
<S> <C> <C> <C>
Less than $50,000....... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000............... 4.50% 4.71% 3.75%
$100,000 but less than
$250,000............... 3.50% 3.63% 2.80%
$250,000 but less than
$500,000............... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000............. 2.00% 2.04% 1.60%
$1,000,000 or more...... none none (see below)/2/
</TABLE>
- -------
/1/ Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
/2/ The following commissions will be paid by FTD, from its own resources, to
securities dealers who initiate and are responsible for purchases of $1
million or more: 1% on sales of $1 million but less than $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.
/3/ At the discretion of FTD, all sales charges may at times be reallowed to the
securities dealer. If 90% or more of the sales commission is allowed, such
securities dealer may be deemed to be an underwriter as that term is defined
in the Securities Act of 1933.
No front-end sales charge applies on investments of $1 million or more, but
a contingent deferred sales charge of 1% is imposed on certain redemptions of
all or a portion of investments of $1 million or more within 12 months of the
calendar month following such investments ("contingency period"). See "How to
Sell Shares of the Fund--Contingent Deferred Sales Charge."
The size of a transaction which determines the applicable sales charge on
the purchase of Class I Shares is determined by adding the amount of the
Shareholder's current purchase plus the cost or current value (whichever is
higher) of a Shareholder's existing investment in one or more of the funds in
the Franklin Group of Funds(R) and the Templeton Family of Funds. Included for
these aggregation purposes are (a) the mutual funds in the Franklin Group of
Funds except Franklin Valuemark Funds and Franklin Government Securities Trust
(the "Franklin Funds"); (b) 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); and (c) the U.S.-
registered mutual funds in the Templeton Family of Funds except Templeton
Capital Accumulator Fund, Inc., Templeton Variable Annuity Fund, and Templeton
Variable Products Series Fund (the "Templeton Funds"). (Franklin Funds and
Templeton Funds are collectively referred to as the "Franklin Templeton
Funds.") Sales charge reductions based upon aggregate holdings of (a), (b) and
(c) above ("Franklin Templeton Investments") may be effective only after
notification to FTD that the investment qualifies for a discount.
Other Payments to Securities Dealers. FTD, or one of its affiliates, may
make payments, from its own resources, of up to 1% of the amount purchased to
securities dealers who initiate and are responsible for purchases made at net
asset value by certain designated retirement plans (as defined below)
(excluding IRA and IRA rollovers), certain non-designated plans (as defined
below), certain trust companies and trust departments of banks and certain
retirement plans of organizations with collective retirement plan assets of
$10 million or more. See definitions under "Description of Special Net Asset
Value Purchases" below and as set forth in the SAI.
12
<PAGE>
A sales charge of 4% of the Offering Price (4.17% of the net asset value) is
applicable to all purchases of Shares made for any qualified or non-qualified
employee benefit plan which is a Shareholder in the Fund on or before February
1, 1995. Of the 4% sales charge applicable to such purchases, 3.20% of the
Offering Price will be retained by dealers.
CUMULATIVE QUANTITY DISCOUNT. The schedule of reduced sales charges also may
be applied to qualifying sales of Class I Shares on a cumulative basis. For
this purpose, the dollar amount of the sale is added to the higher of (i) the
value (calculated at the applicable Offering Price) or (ii) the purchase
price, of 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. In addition,
the aggregate investments of a trustee or other fiduciary account (for an
account under exclusive investment authority) may be considered in determining
whether a reduced sales charge is available, even though there may be a number
of beneficiaries of the account. For example, if the investor held Class I
Shares valued at $40,000 (or, if valued at less than $40,000, had been
purchased for $40,000) and purchased an additional $20,000 of the Fund's Class
I Shares, the sales charge for the $20,000 purchase would be at the rate of
4.50%. It is FTD's policy to give investors the best sales charge rate
possible; however, there can be no assurance that an investor will receive the
appropriate discount unless, at the time of placing the purchase order, the
investor or the dealer makes a request for the discount and gives FTD
sufficient information to determine whether the purchase will qualify for the
discount. On telephone orders from dealers for the purchase of Class I Shares
to be registered in "street name," FTD will accept the dealer's instructions
with respect to the applicable sales charge rate to be applied. The Cumulative
Quantity Discount may be amended or terminated at any time.
LETTER OF INTENT. Investors may also reduce sales charges on all investments
in Class I Shares 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
Class I Shares of the Fund or any other Franklin Templeton Fund. 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 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 determining whether the terms of the LOI have been completed. For a further
description of the LOI, see "Purchase, Redemption and Pricing of Shares --
Letter of Intent" in the SAI.
GROUP PURCHASES. An individual who is a member of a qualified group may also
purchase Class I Shares of the Fund at the reduced sales charge applicable to
the group as a whole. The sales charge is based upon the aggregate dollar
value of Class I Shares previously purchased and still owned by the group,
plus the amount of the current purchase. For example, if members of the group
had previously invested and still held $80,000 of Class I Shares and now were
investing $25,000, the sales charge would be 3.50%. Information concerning the
current sales charge applicable to a group may be obtained by contacting FTD.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund Shares at a discount, and
(iii) satisfies uniform criteria which enable FTD to realize economies of
scale in its costs of distributing Shares. A qualified group must have more
than 10 members, must be available to arrange for group meetings between
representatives of the Fund or FTD and the members, must agree to include
sales and other materials related to the Fund in its publications and mailings
to members at reduced or no cost to FTD, and must seek to arrange for payroll
deduction or other bulk transmission of investments to the Fund.
If an investor selects a payroll deduction plan, subsequent investments will
be automatic and will continue until such time as the investor notifies the
Fund and the investor's employer to discontinue further investments. Due to
the varying procedures to prepare,
13
<PAGE>
process and forward the payroll deduction information to the Fund, there may
be a delay between the time of the payroll deduction and the time the money
reaches the Fund. The investment in the Fund will be made at the Offering
Price per Share determined on the day that both the check and payroll
deduction data are received in required form by the Fund.
CLASS II. Unlike Class I Shares, the front-end sales charges and dealer
concessions for Class II Shares do not vary depending on the amount of
purchase. The total sales charges or underwriting commissions and dealer
concessions for Class II Shares are set forth below.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
--------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE OF THE NET ASSET VALUE OF THE OFFERING PRICE
AT OFFERING PRICE SHARES PURCHASED SHARES PURCHASED RETAINED BY DEALERS*
- ----------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C>
any amount (less than $1
million)............... 1.00% 1.01% 1.00%
</TABLE>
- -------
* FTD, or one of its affiliates, may make additional payments to securities
dealers, from its own resources, of up to 1.0% of the amount invested.
During the first year following a purchase of Class II Shares, FTD will keep
a portion of the Rule 12b-1 fees assessed on those Shares to partially
recoup fees FTD pays to securities dealers.
Class II Shares redeemed within 18 months of their purchase will be assessed
a contingent deferred sales charge of 1.0% on the lesser of the then-current
net asset value or the net asset value of such Shares at the time of purchase,
unless such charge is waived as described under "How To Sell Shares of the
Fund--Contingent Deferred Sales Charge."
NET ASSET VALUE PURCHASES (BOTH CLASSES). Class I Shares may be purchased
without the imposition of either a front-end sales charge ("net asset value")
or a contingent deferred sales charge by (i) officers, trustees, directors,
and full-time employees of the Fund, any of the Franklin Templeton Funds, or
of the Franklin Templeton Group, and their spouses and family members,
including any subsequent payments made by such parties after cessation of
employment; (ii) companies exchanging Shares with or selling assets pursuant
to a merger, acquisition or exchange offer; (iii) insurance company separate
accounts for pension plan contracts; (iv) accounts managed by the Franklin
Templeton Group; (v) shareholders of Templeton Institutional Funds, Inc.
reinvesting redemption proceeds from that fund under an employee benefit plan
qualified under Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code"), in Shares of the Fund; (vi) certain unit investment trusts and
unit holders of such trusts reinvesting their distributions from the trusts in
the Fund; (vii) registered securities dealers and their affiliates, for their
investment account only; and (viii) registered personnel and employees of
securities dealers, and their spouses and family members, in accordance with
the internal policies and procedures of the employing securities dealer.
For either Class I or Class II, the same class of Shares of the Fund may be
purchased at net asset value by persons who have redeemed, within the previous
120 days, their Shares of the Fund or another of the Franklin Templeton Funds
which were purchased with a front-end sales charge or assessed a contingent
deferred sales charge on redemption. If a different class of Shares is
purchased, the full front-end sales charge must be paid at the time of
purchase of the new Shares. An investor may reinvest an amount not exceeding
the redemption proceeds. While credit will be given for any contingent
deferred sales charge paid on the Shares redeemed and subsequently
repurchased, a new contingency period will begin. Shares of the Fund redeemed
in connection with an exchange into another fund (see "Exchange Privilege")
are not considered "redeemed" for this privilege. In order to exercise this
privilege, a written order for the purchase of Shares of the Fund must be
received by the Fund or the Fund's Transfer Agent within 120 days after the
redemption. The 120 days, however, do not begin to run on redemption proceeds
placed immediately after redemption in a Franklin Bank Certificate of Deposit
("CD") until the CD (including any rollover) matures. Reinvestment at net
asset value may also be handled by a securities dealer or other financial
institution, who may charge the Shareholder a fee for this service. The
redemption is a taxable transaction but reinvestment without a sales charge
may affect the amount of gain or loss recognized and the tax basis of the
Shares reinvested. If there has been a loss on the redemption, the loss may be
disallowed if a reinvestment in the same fund is made within a
14
<PAGE>
30-day period. Information regarding the possible tax consequences of such a
reinvestment is included under "General Information--Federal Tax Information"
of this Prospectus and in the SAI.
For either Class I or Class II, the same class of Shares of the Fund or of
another of the Franklin Templeton Funds may be purchased at net asset value
and without a contingent deferred sales charge by persons who have received
dividends and capital gain distributions in cash from investments in that
class of Shares of the Fund within 120 days of the payment date of such
distribution. To exercise this privilege, a written request to reinvest the
distribution must accompany the purchase order. Additional information may be
obtained from Account Services at 1-800-393-3001. See "General Information--
Dividends and Distributions."
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by investors who have, within
the past 60 days, redeemed an investment in a mutual fund which is not part of
the Franklin Templeton Funds and which charged the investor a contingent
deferred sales charge upon redemption, and which has investment objectives
similar to those of the Fund.
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by broker-dealers who have
entered into a supplemental agreement with FTD, or by registered investment
advisers affiliated with such broker-dealers, on behalf of their clients who
are participating in a comprehensive fee program (also known as a wrap fee
program).
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by anyone who has taken a
distribution from an existing retirement plan already invested in the Franklin
Templeton Funds (including former participants of the Franklin Templeton
Profit Sharing 401(k) plan), to the extent of such distribution. In order to
exercise this privilege, a written order for the purchase of Shares of the
Fund must be received by Franklin Templeton Trust Company ("FTTC"), the Fund,
or Franklin Templeton Investor Services, Inc. (the "Transfer Agent") within
120 days after the plan distribution.
Class I Shares may also be purchased at net asset value and without the
imposition of a contingent deferred sales charge by any state, county or city,
or any instrumentality, department, authority or agency thereof which has
determined that the Fund is a legally permissible investment and which is
prohibited by applicable investment laws from paying a sales charge or
commission in connection with the purchase of shares of any registered
management investment company (an "eligible governmental authority"). SUCH
INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISERS TO DETERMINE WHETHER AND TO
WHAT EXTENT THE SHARES OF THE FUND CONSTITUTE LEGAL INVESTMENTS FOR THEM.
Municipal investors considering investment of proceeds of bond offerings into
the Fund should consult with expert counsel to determine the effect, if any,
of various payments made by the Fund or its investment manager or arbitrage
rebate calculations. If an investment by an eligible governmental authority at
net asset value is made through a securities dealer who has executed a dealer
agreement with FTD, FTD or one of its affiliates may make a payment, out of
its own resources, to such securities dealer in an amount not to exceed 0.25%
of the amount invested. Contact Franklin Templeton Institutional Services for
additional information.
DESCRIPTION OF SPECIAL NET ASSET VALUE PURCHASES. Class I Shares may also be
purchased at net asset value and without the imposition of a contingent
deferred sales charge by certain designated retirement plans, including
profit-sharing, pension, 401(k) and simplified employee pension plans
("designated 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 million. Employee benefit plans not designated
above or qualified under Section 401 of the Code ("non-designated plans") 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
Purchases," which enable FTD to realize economies of scale in its sales
efforts and sales-related expenses.
15
<PAGE>
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by trust companies and bank
trust departments for funds over which they exercise exclusive discretionary
investment authority and which are held in a fiduciary, agency, advisory,
custodial or similar capacity. Such purchases are subject to minimum
requirements with respect to amount of purchase, which may be established by
FTD. Currently, those criteria require that the amount invested or to be
invested during the subsequent 13-month period in the Fund or any of the
Franklin Templeton Investments must total at least $1 million. Orders for such
accounts will be accepted by mail accompanied by a check, or by telephone or
other means of electronic data transfer directly from the bank or trust
company, with payment by federal funds received by the close of business on
the next business day following such order.
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge 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.
Refer to the SAI for further information regarding net asset value purchases
of Class I Shares.
ADDITIONAL DEALER COMPENSATION (BOTH CLASSES). FTD, or one of its
affiliates, from its own resources, may also provide additional compensation
to securities dealers in connection with sales of shares of the Franklin
Templeton Funds. Compensation may include financial assistance to securities
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising, sales campaigns and/or
shareholder services and programs regarding one or more of the Franklin
Templeton Funds and other dealer-sponsored programs or events. In some
instances, this compensation may be made available only to certain securities
dealers whose representatives have sold or are expected to sell significant
amounts of shares of the Franklin Templeton Funds. Compensation may include
payment for travel expenses, including lodging, incurred in connection with
trips taken by invited registered representatives and members of their
families to locations within or outside of the United States for meetings or
seminars of a business nature. Securities dealers may not use sales of the
Fund's Shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. In addition, FTD or its
affiliates may make ongoing payments to brokerage firms, financial
institutions (including banks) and others to facilitate the administration and
servicing of shareholder accounts. None of the aforementioned additional
compensation is paid for by the Fund or its Shareholders.
Ongoing payments will be made to qualifying dealers at the annual rate of
0.25% of the average daily net asset value of Class I Shares, and 1.00% of the
average daily net asset value of Class II Shares, registered in the name of
that broker-dealer as nominee or held in a Shareholder account that designates
that broker-dealer as dealer of record. These payments are made in order to
promote selling efforts and to compensate dealers for providing certain
services, including processing purchase and redemption transactions,
establishing Shareholder accounts and providing certain information and
assistance with respect to the Fund. For purchases on or after February 1,
1995 of Class I Shares that are subject to a contingent deferred sales charge,
the dealer will receive ongoing payments beginning in the thirteenth month
after the date of the purchase. For all purchases of Class II Shares that are
subject to a contingent deferred sales charge, the dealer will receive
payments representing a service fee (0.25% of average daily net asset value of
the Shares) beginning in the first month after the date of the purchase, and
will receive payments representing compensation for distribution (0.75% of
average daily net asset value of the Shares) beginning in the thirteenth month
after the date of the purchase.
PURCHASING CLASS I AND CLASS II SHARES. When placing purchase orders,
investors should clearly indicate which class of Shares they intend to
purchase. A purchase order that fails to specify a class will automatically be
invested in Class I Shares. Purchases of $1 million or more in a single
payment will be invested in Class I Shares. There are no conversion features
attached to either class of Shares.
Investors who qualify to purchase Class I Shares at net asset value should
purchase Class I rather than Class II Shares. See the section "Net Asset Value
Purchases (Both Classes)" and "Description of Special Net Asset Value
Purchases" above for a discussion of when Shares may be purchased at net asset
value.
16
<PAGE>
As to telephone orders placed with FTD by dealers, the dealer must receive
the investor's order before the close of the New York Stock Exchange ("NYSE")
and transmit it to FTD by 5:00 p.m., New York time, for the investor to
receive that day's Offering Price. Payment for such orders must be by check in
U.S. currency and must be promptly submitted to FTD. Orders mailed to FTD by
dealers or individual investors are effected at the net asset value of the
Fund's Shares next computed after the purchase order accompanied by payment
has been received by FTD. Such payment must be by check in U.S. currency drawn
on a commercial bank in the United States and, if over $100,000, may not be
deemed to have been received until the proceeds have been collected unless the
check is certified or issued by such bank. Any subscription may be rejected by
FTD or by the Fund.
The Fund may impose a $10 charge against a Shareholder account in the event
that a check or draft submitted for the purchase of Fund Shares is returned
unpaid to the Fund.
Investors should promptly check the confirmation advice that is mailed after
each purchase (or redemption) in order to ensure that it has been accurately
recorded in the investor's account.
AUTOMATIC INVESTMENT PLAN. Investors may accumulate Fund Shares regularly
each month by means of automatic debits to their checking accounts ($25
minimum). Forms for this purpose are in the Shareholder Application in this
Prospectus. Such a plan is voluntary and may be discontinued by written notice
to FTD, which must be received at least 10 days prior to the collection date,
or by FTD upon written notice to the investor at least 30 days prior to the
collection date.
INSTITUTIONAL ACCOUNTS. Institutional investors will likely be required to
complete an institutional account application. There may be additional methods
of opening accounts, purchasing, redeeming or exchanging Shares of the Fund
available for institutional accounts. To obtain an institutional account
application or additional information regarding institutional accounts,
contact Franklin Templeton Institutional Services at 1-800-321-8563.
ACCOUNT STATEMENTS. Shareholder accounts are opened in accordance with the
Shareholder's registration instructions. Transactions in the account, such as
additional investments and dividend reinvestments, will be reflected on
regular confirmation statements from the Transfer Agent.
TEMPLETON STAR SERVICE. From a touch tone phone, Templeton and Franklin
Shareholders may access an automated system (day or night) which offers the
following features.
By calling the Templeton STAR Service, Shareholders may obtain current price
and yield information specific to a Templeton Fund, regardless of class, or
Franklin Class II shares; obtain account information; and request duplicate
confirmation or year-end statements and money fund checks, if applicable.
By calling the Franklin TeleFACTS system, Class I Shareholders may obtain
current price, yield or other performance information specific to a Franklin
Fund; process an exchange into an identically registered Franklin account;
obtain account information; and request duplicate confirmation or year-end
statements, money fund checks, if applicable, and deposit slips.
Share prices and account information specific to Templeton Class I or II
Shares and Franklin Class II shares may also be accessed on TeleFACTS by
Franklin Class I and Class II shareholders.
The Templeton STAR Service is accessible by calling 1-800-654-0123. The
TeleFACTS system is accessible by calling 1-800-247-1753. Templeton Class I
and Class II Share codes for the Fund, which will be needed to access system
information, are 413 and 513, respectively. The system's automated operator
will prompt the caller with easy to follow step-by-step instructions from the
main menu. Other features may be added in the future.
17
<PAGE>
RETIREMENT PLANS. Shares of the Fund may be purchased through various
retirement plans including the following plans for which FTTC or its affiliate
acts as trustee or custodian: IRAs, Simplified Employee Pensions, 403(b)
plans, qualified plans for corporations, self-employed individuals and
partnerships, and 401(k) plans. For further information about any of the
plans, agreements, applications and annual fees, contact Franklin Templeton
Distributors, Inc. To determine which retirement plan is appropriate, an
investor should contact his or her tax adviser.
NET ASSET VALUE. The net asset value per Share of each class of the Fund is
determined as of the scheduled closing time of the NYSE (generally 4:00 p.m.,
New York time) each day the NYSE is open for trading, by dividing the value of
the Fund's securities plus any cash and other assets (including accrued
interest and dividends receivable) less all liabilities (including accrued
expenses) by the number of Shares outstanding, adjusted to the nearest whole
cent. A security listed or traded on a recognized stock exchange or NASDAQ is
valued at its last sale price on the principal exchange on which the security
is traded. The value of a foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded, or as of the scheduled closing time of the NYSE (generally 4:00 p.m.,
New York time), if that is earlier, and that value is then converted into its
U.S. dollar equivalent at the foreign exchange rate in effect at noon, New
York time, on the day the value of the foreign security is determined. If no
sale is reported at that time, the mean between the current bid and asked
price is used. Occasionally, events which affect the values of such securities
and such exchange rates may occur between the times at which they are
determined and the close of the NYSE, and will therefore not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at fair value as determined by the management and approved in
good faith by the Board of Trustees. All other securities for which over-the-
counter market quotations are readily available are valued at the mean between
the current bid and asked price. Securities for which market quotations are
not readily available and other assets are valued at fair value as determined
by the management and approved in good faith by the Board of Trustees.
Each of the Fund's classes will bear, pro-rata, all of the common expenses
of the Fund. The net asset value of all outstanding Shares of each class of
the Fund will be computed on a pro-rata basis for each outstanding Share based
on the proportionate participation in the Fund represented by the value of
Shares of such classes, except that the Class I and Class II Shares will bear
the Rule 12b-1 expenses payable under their respective plans. Due to the
specific distribution expenses and other costs that will be allocable to each
class, the dividends paid to each class of the Fund may vary.
EXCHANGE PRIVILEGE
A Shareholder may exchange Shares for the same class of shares of other
Franklin Templeton Funds which are eligible for sale in the Shareholder's
state of residence and in conformity with such fund's stated eligibility
requirements and investment minimums. Some funds, however, may not offer Class
II shares. Class I Shares may be exchanged for Class I shares of any Franklin
Templeton Funds. Class II Shares may be exchanged for Class II shares of any
Franklin Templeton Funds. No exchanges between different classes of shares
will be allowed. A contingent deferred sales charge will not be imposed on
exchanges. If the exchanged Shares were subject to a contingent deferred sales
charge in the original fund purchased, and Shares are subsequently redeemed
within 12 months (Class I Shares) or 18 months (Class II Shares) of the
calendar month of the original purchase date, a contingent deferred sales
charge will be imposed. The period will be tolled (or stopped) for the period
Class I 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."
Exchange purchases are subject to the minimum investment requirements of the
fund purchased and no sales charge generally applies. Exchanges of the same
class of shares are made on the basis of the net asset values of the class
involved, except as set forth below. Exchanges of shares of a class which were
originally purchased without a sales charge will be charged a sales charge in
accordance with the terms of the prospectus of the fund and the class of
shares being purchased, unless the original investment on
18
<PAGE>
which no sales charge was paid was transferred in from a fund on which the
investor paid a sales charge. Exchanges of shares from the Franklin Templeton
Money Funds are subject to applicable sales charges on the funds being
purchased, unless the Franklin Templeton Money Fund shares were acquired by an
exchange from a fund having a sales charge, or by reinvestment of dividends or
capital gain distributions. Exchanges of Class I Shares of the Fund which were
purchased with a lower sales charge to a fund which has a higher sales charge
will be charged the difference, unless the shares were held in the original
fund for at least six months prior to executing the exchange. All exchanges
are permitted only after at least 15 days have elapsed from the date of the
purchase of the Shares to be exchanged.
A Shareholder may exchange Shares by writing to the Transfer Agent (see "How
to Sell Shares of the Fund"), by contacting his or her investment dealer or --
if the Shareholder Application indicates that the Shareholder has not
declined the option -- by telephoning 1-800-393-3001. Telephone exchange
instructions must be received by FTD by the scheduled closing time of the NYSE
(generally 4:00 p.m., New York time). Telephonic exchanges can involve only
Shares in non-certificated form. Shares held in certificate form are not
eligible, but may be returned and qualify for these services. All accounts
involved in a telephonic exchange must have the same registration and dividend
option as the account from which the Shares are being exchanged. The Fund and
the Transfer Agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Please refer to "Telephone
Transactions -- Verification Procedures." Forms for declining the telephone
exchange privilege and prospectuses of the other funds in the Franklin
Templeton Group may be obtained from FTD. Exchange redemptions and purchases
are processed simultaneously at the Share prices next determined after the
exchange order is received. (See "How to Buy Shares of the Fund -- Offering
Price.") A gain or loss for tax purposes generally will be realized upon the
exchange, depending on the tax basis of the Shares redeemed.
This exchange privilege is available only in states where shares of the fund
being acquired may legally be sold and may be modified, limited or terminated
at any time by the Fund upon 60 days' written notice. A Shareholder who wishes
to make an exchange should first obtain and review a current prospectus of the
fund into which he or she wishes to exchange. Broker-dealers who process
exchange orders on behalf of their customers may charge a fee for their
services. Such fee may be avoided by making requests for exchange directly to
the Transfer Agent.
EXCHANGES OF CLASS I SHARES. The contingency period of Class I Shares will
be tolled (or stopped) for the period such Shares are exchanged into and held
in a Franklin or Templeton money market fund. If a Class I account has Shares
subject to a contingent deferred sale charge, Class I Shares will be exchanged
into the new account on a "first-in, first-out" basis. See also "How to Sell
Shares of the Fund--Contingent Deferred Sales Charge."
EXCHANGES OF CLASS II SHARES. When an account is composed of Class II Shares
subject to the contingent deferred sales charge, and Shares that are not, the
Shares will be transferred proportionately into the new fund. Shares received
from reinvestment of dividends and capital gains are referred to as "free
Shares," Shares which were originally subject to a contingent deferred sales
charge but to which the contingent deferred sales charge no longer applies are
called "matured Shares," and Shares still subject to the contingent deferred
sales charge are referred to as "CDSC liable Shares." CDSC liable Shares held
for different periods of time are considered different types of CDSC liable
Shares. For instance, if a Shareholder has $1,000 in free Shares, $2,000 in
matured Shares, and $3,000 in CDSC liable Shares, and the Shareholder
exchanges $3,000 into a new fund, $500 will be exchanged from free Shares,
$1,000 from matured Shares, and $1,500 from CDSC liable Shares. Similarly, if
CDSC liable Shares have been purchased at different periods, a proportionate
amount will be taken from Shares held for each period. If, for example, the
Shareholder holds $1,000 in Shares bought three months ago, $1,000 bought six
months ago, and $1,000 bought nine months ago, and the Shareholder exchanges
$1,500 into a new fund, $500 from each of these Shares will be exchanged into
the new fund.
The only money market fund exchange option available to Class II
Shareholders is the Franklin Templeton Money Fund II ("Money Fund II"), a
series of the Franklin Templeton Money Fund Trust. No drafts (checks) may be
written on Money Fund II accounts, nor may Shareholders purchase shares of
Money Fund II directly. Class II Shares exchanged for shares of Money Fund II
will continue to age
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and a contingent deferred sales charge will be assessed if CDSC liable Shares
are redeemed. No other money market funds are available for Class II
Shareholders for exchange purposes. Class I Shares may be exchanged for shares
of any of the money market funds in the Franklin Templeton Funds except Money
Fund II. Draft writing privileges and direct purchases are allowed on these
money market funds as described in their respective prospectuses.
To the extent Shares are exchanged proportionately, as opposed to another
method, such as "first-in, first-out," or free Shares followed by CDSC liable
Shares, the exchanged Shares may, in some instances, be CDSC liable even
though a redemption of such Shares, as discussed elsewhere herein, may no
longer be subject to a CDSC. The proportional method is believed by management
to more closely meet and reflect the expectations of Class II Shareholders in
the event Shares are redeemed during the contingency period. For federal
income tax purposes, the cost basis of Shares redeemed or exchanged is
determined under the Code without regard to the method of transferring Shares
chosen by the Fund for purposes of exchanging or redeeming Shares.
TRANSFERS. Transfers between accounts in the same fund and class are treated
as non-monetary and non-taxable events, and are not subject to a contingent
deferred sales charge. The transferred Shares will continue to age from the
date of original purchase. Like exchanges, Class II Shares will be moved
proportionately from each type of Share in the original account.
CONVERSION RIGHTS. It is not presently anticipated that Class II Shares will
be converted to Class I Shares. A Shareholder may, however, sell Class II
Shares and use the proceeds to purchase Class I Shares, subject to all
applicable sales charges.
EXCHANGES BY TIMING ACCOUNTS. In the case of market timing or allocation
services ("Timing Accounts"), FTD will deduct an administrative service of
$5.00 per exchange. Timing Accounts generally include accounts administered so
as to redeem or purchase Shares based upon certain predetermined market
indicators. In accordance with the terms of their respective prospectuses,
certain funds in the Franklin Templeton Group do not accept or may place
differing limitations than those described below on exchanges by Timing
Accounts.
The Fund reserves the right to temporarily or permanently terminate the
exchange privilege or reject any specific purchase order for any Timing
Account or any person whose transactions seem to follow a timing patter who:
(i) makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1% of the Fund's net assets Accounts under
common ownership or control, including accounts administered so as to redeem
to purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
In addition, the Fund reserves the right to refuse the purchase side of
exchange requests by any Timing Account, person, or group if, in the
Investment Manager's judgment, the Fund would be unable to invest effectively
in accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A Shareholder's exchanges into the Fund may
be restricted or refused if the Fund receives or anticipates simultaneous
orders affecting significant portions of the Fund's assets. In particular, a
pattern of exchanges that coincides with a "market timing" strategy may be
disruptive to the Fund and therefore may be refused.
Finally, as indicated above, the Fund and FTD reserve the right to refuse
any order for the purchase of Shares.
HOW TO SELL SHARES OF THE FUND
Shares will be redeemed, without charge, on request of the Shareholder in
"Proper Order" to the Transfer Agent. "PROPER ORDER" MEANS THAT THE REQUEST TO
REDEEM MUST MEET ALL OF THE FOLLOWING REQUIREMENTS:
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1. Except as provided below under "Redemptions by Telephone," it must be in
writing, signed by the Shareholder(s) exactly in the manner as the Shares are
registered, and must specify either the number of Shares, or the dollar amount
of Shares, to be redeemed and sent to Franklin Templeton Investor Services,
Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030;
2. The signature(s) of the redeeming Shareholder(s) must be guaranteed by an
"eligible guarantor," including (1) national or state banks, savings
associations, savings and loan associations, trust companies, savings banks,
industrial loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing agencies; (3)
securities broker-dealers which are members of a national securities exchange
or a clearing agency or which have minimum net capital of $100,000; or (4)
institutions that participate in the Securities Transfer Agent Medallion
Program ("STAMP") or other recognized signature medallion program. A notarized
signature will not be sufficient for the request to be in Proper Order. If the
Shares are registered in more than one name, the signature of each of the
redeeming Shareholders must be guaranteed. A signature guarantee is not
required for redemptions of $50,000 or less, requested by and payable to all
Shareholders of record, to be sent to the address of record for that account.
However, the Fund reserves the right to require signature guarantees on all
redemptions. A signature guarantee is required in connection with any written
request for transfer of Shares. Also, a signature guarantee is required if the
Fund or the Transfer Agent believes that a signature guarantee would protect
against potential claims based on the transfer instructions, including, for
example, when (a) the current address of one or more joint owners of an
account cannot be confirmed; (b) multiple owners have a dispute or give
inconsistent instructions to the Fund; (c) the Fund has been notified of an
adverse claim; (d) the instructions received by the Fund are given by an
agent, not the actual registered owner; (e) the Fund determines that joint
owners who are married to each other are separated or may be the subject of
divorce proceedings; or (f) the authority of a representative of a
corporation, partnership, association, or other entity has not been
established to the satisfaction of the Fund;
3. Any outstanding certificates must accompany the request together with a
stock power signed by the Shareholder(s), with signature(s) guaranteed as
described in Item 2 above;
4. Liquidation requests of corporate, partnership, trust and custodianship
accounts, and accounts under court jurisdiction, require the following
documentation to be in proper form:
. Corporation--(i) Signature guaranteed letter of instruction from the
authorized officer(s) of the corporation, and (ii) a corporate
resolution in a form satisfactory to the Transfer Agent;
. Partnership--(i) Signature guaranteed letter of instruction from a
general partner, if necessary, (ii) pertinent pages from the
partnership agreement identifying the general partners or other
documentation in a form satisfactory to the Transfer Agent;
. Trust--(i) Signature guaranteed letter of instruction from the
trustee(s), and (ii) a copy of the pertinent pages of the trust
document listing the trustee(s) or a certificate of incumbency if the
trustee(s) are not listed on the account registration;
. Custodial (other than a retirement account)--Signature guaranteed
letter of instruction from the custodian;
. Accounts under court jurisdiction--Check court documents and the
applicable state law since these accounts have varying requirements,
depending upon the state of residence; and
5. Redemption of Shares held in a retirement plan for which FTTC or its
affiliate acts as trustee or custodian must conform to the distribution
requirements of the plan and the Fund's redemption requirements above.
Distributions from such plans are subject to additional requirements under the
Code, and certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. For example, distributions from
retirement plans are subject to withholding requirements under the Code, and
the IRS Form W-4P (available from the Transfer Agent) may be required to be
submitted to the Transfer Agent with the distribution request, or the
distribution will be delayed. Franklin Templeton Investor Services, Inc. and
its affiliates assume no responsibility to determine whether a distribution
satisfies the conditions of applicable tax laws and will not be responsible
for any penalties assessed.
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To avoid delay in redemption or transfer, Shareholders having questions
about these requirements should contact the Account Services Department by
calling 1-800-393-3001 or 813-823-8712.
The redemption price will be the net asset value of the Shares next computed
after the redemption request in Proper Order is received by the Transfer
Agent. Payment of the redemption price ordinarily will be made by check (or by
wire at the sole discretion of the Transfer Agent if wire transfer is
requested, including name and address of the bank and the Shareholder's
account number to which payment of the redemption proceeds is to be wired)
within seven days after receipt of the redemption request in Proper Order.
However, if Shares have been purchased by check, the Fund will make redemption
proceeds available when a Shareholder's check received for the Shares
purchased has been cleared for payment by the Shareholder's bank, which,
depending upon the location of the Shareholder's bank, could take up to 15
days or more. The check will be mailed by first-class mail to the
Shareholder's registered address (or as otherwise directed). Remittance by
wire (to a commercial bank account in the same name(s) as the Shares are
registered) or express mail, if requested, are subject to a handling charge of
$15, which will be deducted from the redemption proceeds.
The Fund, through FTD, also repurchases Shares (whether in certificate or
book-entry form) through securities dealers. The Fund normally will accept
orders to repurchase such Shares by wire or telephone from dealers for their
customers at the net asset value next computed after the dealer has received
the certificate holder's request for repurchase, if the dealer received such
request before closing time of the NYSE on that day. Dealers have the
responsibility of submitting such repurchase requests by calling not later
than 5:00 p.m., New York time, on such day in order to obtain that day's
applicable redemption price. Repurchase of Shares is for the convenience of
Shareholders and does not involve a charge by the Fund; however, securities
dealers may impose a charge on the Shareholder for transmitting the notice of
repurchase to the Fund. The Fund reserves the right to reject any order for
repurchase, which right of rejection might adversely affect Shareholders
seeking redemption through the repurchase procedure. Ordinarily, payment will
be made to the securities dealer within seven days after receipt of a
repurchase order and Share certificate (if any) in "Proper Order" as set forth
above. The Fund also will accept, from member firms of the NYSE, orders to
repurchase Shares for which no certificates have been issued by wire or
telephone without a redemption request signed by the Shareholder, provided the
member firm indemnifies the Fund and FTD from any liability resulting from the
absence of the Shareholder's signature. Forms for such indemnity agreement can
be obtained from FTD.
The Fund may involuntarily redeem an investor's Shares if the net asset
value of such Shares is less than $100, provided that involuntary redemptions
will not result from fluctuations in the value of an investor's Shares. In
addition, the Fund may involuntarily redeem the Shares of any investor who has
failed to provide the Fund with a certified taxpayer identification number or
such other tax-related certifications as the Fund may require. A notice of
redemption, sent by first-class mail to the investor's address of record, will
fix a date not less than 30 days after the mailing date, and Shares will be
redeemed at net asset value at the close of business on that date, unless
sufficient additional Shares are purchased to bring the aggregate account
value up to $100 or more, or unless a certified taxpayer identification number
(or such other information as the Fund has requested) has been provided, as
the case may be. A check for the redemption proceeds will be mailed to the
investor at the address of record.
REINSTATEMENT PRIVILEGE. 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 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 Franklin Templeton Group, within 120 days after the date of the redemption
or dividend or distribution. However, if a Shareholder's original investment
was in Class I shares of a fund with a lower sales charge, or no sales charge,
the Shareholder must pay the difference. While credit will be given for any
contingent deferred sales charge paid on the Shares redeemed, a new
contingency period will begin. Shares of the Fund redeemed in connection with
an exchange into another fund (see "Exchange Privilege") are not considered
"redeemed" for this privilege. In order to exercise this privilege, a written
order for the purchase of Shares
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of the Fund must be received by the Fund or the Fund's Transfer Agent within
120 days after the redemption. The 120 days, however, do not begin to run on
redemption proceeds placed immediately after redemption in a CD until the CD
(including any rollover) matures. The amount of gain or loss resulting from a
redemption may be affected by exercise of the reinstatement privilege if the
Shares redeemed were held for 90 days or less, or if a Shareholder reinvests
in the same fund within 30 days. Reinvestment will be at the next calculated
net asset value after receipt.
SYSTEMATIC WITHDRAWAL PLAN. A Shareholder may establish a Systematic
Withdrawal Plan ("Plan") and receive periodic payments from the account
provided that the net asset value of the Shares held by the Shareholder is at
least $5,000. There are no service charges for establishing or maintaining a
Plan. The minimum amount which the Shareholder may withdraw is $50 per
withdrawal transaction although this is merely the minimum amount allowed
under the Plan and should not be mistaken for a recommended amount. The Plan
may be established on a monthly, quarterly, semiannual or annual basis. If the
Shareholder establishes a Plan, any capital gain distributions and income
dividends paid by the Fund to the Shareholder's account must be reinvested for
the Shareholder's account in additional Shares at net asset value. Payments
are then made from the liquidation of Shares at net asset value on the day of
the liquidation (which is generally on or about the 25th of the month) to meet
the specified withdrawals. Payments are generally received three to five days
after the date of liquidation. By completing the "Special Payment Instructions
for Distributions" section of the Shareholder Application included with this
Prospectus, a Shareholder may direct the selected withdrawals to another of
the Franklin Templeton Funds, to another person, or directly to a checking
account. Liquidation of Shares may reduce or possibly exhaust the Shares in
the Shareholder's account, to the extent withdrawals exceed Shares earned
through dividends and distributions, particularly in the event of a market
decline. If the withdrawal amount exceeds the total Plan balance, the account
will be closed and the remaining balance will be sent to the Shareholder. As
with other redemptions, a liquidation to make a withdrawal payment is a sale
for federal income tax purposes. Because the amount withdrawn under the Plan
may be more than the Shareholder's actual yield or income, part of such a Plan
payment may be a return of the Shareholder's investment.
Maintaining a Plan concurrently with purchases of additional Shares of the
Fund would be disadvantageous because of the sales charge on the additional
purchases. Also, redemptions of Class I Shares and Class II Shares may be
subject to a contingent deferred sales charge if the Shares are redeemed
within 12 months (Class I Shares) or 18 months (Class II Shares) of the
calendar month of the original purchase date. The Shareholder should
ordinarily not make additional investments of less than $5,000 or three times
the annual withdrawals under the Plan during the time such a Plan is in
effect.
With respect to Class I Shares, the contingent deferred sales charge is
waived for redemptions through a Systematic Withdrawal Plan set up prior to
February 1, 1995. With respect to Systematic Withdrawal Plans set up on or
after February 1, 1995, the applicable contingent deferred sales charge is
waived for Class I and Class II Share redemptions of up to 1% monthly of an
account's net asset value (12% annually, 6% semiannually, 3% quarterly). For
example, if a Class I account maintained an annual balance of $1,000,000, only
$120,000 could be withdrawn through a once-yearly Systematic Withdrawal Plan
free of charge; any amount over that $120,000 would be assessed a 1% (or
applicable) contingent deferred sales charge. Likewise, if a Class II account
maintained an annual balance of $10,000, only $1,200 could be withdrawn
through a once-yearly Systematic Withdrawal Plan free of charge.
A Plan may be terminated on written notice by the Shareholder or the Fund,
and it will terminate automatically if all Shares are liquidated or withdrawn
from the account, or upon the Fund's receipt of notification of the death or
incapacity of the Shareholder. Shareholders may change the amount (but not
below $50) and schedule of withdrawal payments or suspend one such payment by
giving written notice to the Transfer Agent at least seven business days prior
to the end of the month preceding a scheduled payment. Share certificates may
not be issued while a Plan is in effect.
REDEMPTIONS BY TELEPHONE. Shareholders who file a Telephone Redemption
Authorization Agreement (the "Agreement") (a copy of which is included in this
Prospectus) may redeem Shares of the Fund by telephone, subject to the
Restricted Account exception noted under "Telephone Transactions -- Restricted
Accounts." The Fund and the Transfer Agent will employ reasonable procedures
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<PAGE>
to confirm that instructions given by telephone are genuine. Shareholders,
however, bear the risk of loss in certain cases as described under "Telephone
Transactions -- Verification Procedures."
For Shareholder accounts with a completed Agreement on file, redemptions of
uncertificated Shares or Shares which have previously been deposited with the
Fund or the Transfer Agent may be made for up to $50,000 per day per Fund
account. Telephone redemption requests received before the scheduled closing
time of the NYSE (generally 4:00 p.m., New York time), on any business day
will be processed that same day. The redemption check will be sent within
seven days, made payable to all the registered owners on the account, and will
be sent only to the address of record. Redemption requests by telephone will
not be accepted within 30 days following an address change by telephone. In
that case, a Shareholder should follow the other redemption procedures set
forth in this Prospectus. Institutional accounts which wish to execute
redemptions in excess of $50,000 must complete an Institutional Telephone
Privileges Agreement which is available from Franklin Templeton Institutional
Services by telephoning 1-800-321-8563.
CONTINGENT DEFERRED SALES CHARGE. Class I. In order to recover commissions
paid to securities dealers on investments of $1 million or more, a contingent
deferred sales charge of 1% applies to redemptions of those investments within
the contingency period of 12 months following the calendar month of their
purchase. The charge is 1% of the lesser of the net asset value of the Shares
redeemed (exclusive of reinvested dividends and capital gain distributions) or
the net asset value of such Shares at the time of purchase, and is retained by
FTD. The contingent deferred sales charge is waived in certain instances. See
"How to Buy Shares of the Fund -- Net Asset Value Purchases (Both Classes)."
Class II. Class II Shares redeemed within the contingency period of 18
months of the calendar month following their purchase will be assessed a
contingent deferred sales charge, unless one of the exceptions described below
applies. The charge is 1% of the lesser of the net asset value of the Shares
redeemed (exclusive of reinvested dividends and capital gain distributions) or
the net asset value at the time of purchase of such Shares, and is retained by
FTD. The contingent deferred sales charge is waived in certain instances. See
below.
Class I and Class II. In determining if a contingent deferred sales 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 the
contingency period (12 months in the case of Class I Shares and 18 months in
the case of Class II Shares); (ii) Shares purchased with reinvested dividends
and capital gain distributions; and (iii) other Shares held longer than the
contingency period, and followed by any Shares held less than the contingency
period, on a "first in, first out" basis. For tax purposes, a contingent
deferred sales charge is treated as either a reduction in redemption proceeds
or an adjustment to the cost basis of the Shares redeemed.
The contingent deferred sales charge on each class of Shares is waived, as
applicable, for: exchanges; any account fees; distributions to participants or
beneficiaries in FTTC individual retirement plan accounts due to death,
disability or attainment of age 59 1/2; tax-free returns of excess
contributions from employee benefit plans; distributions from employee benefit
plans, including those due to plan termination or plan transfer; redemptions
through a Systematic Withdrawal Plan set up for Shares prior to February 1,
1995 and, for Systematic Withdrawal Plans set up thereafter, redemptions of up
to 1% monthly of an account's net asset value (3% quarterly, 6% semiannually
or 12% annually); redemptions initiated by the Fund due to a Shareholder's
account falling below the minimum specified account size; and redemptions
following the death of the Shareholder.
All investments made during a calendar month, regardless of when during the
month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Requests for redemptions for a SPECIFIED DOLLAR amount, unless otherwise
specified, 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.
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<PAGE>
TELEPHONE TRANSACTIONS
Shareholders of the Fund and their dealer of record, if any, may be able to
execute various transactions by calling the Transfer Agent at 1-800-393-3001.
All Shareholders will be able to: (i) effect a change in address, (ii) change
a dividend option (see "Restricted Accounts" below), (iii) transfer Fund
Shares in one account to another identically registered account in the Fund,
and (iv) exchange Fund Shares by telephone as described in this Prospectus. In
addition, Shareholders who complete and file an Agreement as described under
"How to Sell Shares of the Fund -- Redemptions by Telephone" will be able to
redeem Shares of the Fund.
VERIFICATION PROCEDURES. The Fund and the Transfer Agent will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. These will include: recording all telephone calls requesting
account activity by telephone, requiring that the caller provide certain
personal and/or account information requested by the telephone service agent
at the time of the call for the purpose of establishing the caller's
identification, and sending a confirmation statement on redemptions to the
address of record each time account activity is initiated by telephone. So
long as the Fund and the Transfer Agent follow instructions communicated by
telephone which were reasonably believed to be genuine at the time of their
receipt, neither they nor their affiliates will be liable for any loss to the
Shareholder caused by an unauthorized transaction. The Fund and the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions in the event such reasonable procedures are not followed.
Shareholders are, of course, under no obligation to apply for or accept
telephone transaction privileges. In any instance where the Fund or the
Transfer Agent is not reasonably satisfied that instructions received by
telephone are genuine, the requested transaction will not be executed, and
neither the Fund, the Transfer Agent, nor their affiliates will be liable for
any losses which may occur because of a delay in implementing a transaction.
RESTRICTED ACCOUNTS. Telephone redemptions and dividend option changes may
not be accepted on FTTC retirement accounts. To assure compliance with all
applicable regulations, special forms are required for any distribution,
redemption, or dividend payment. Although the telephone exchange privilege is
extended to these retirement accounts, a Franklin Templeton Transfer
Authorization Form must be on file in order to transfer retirement plan assets
between the Franklin Group of Funds (R) and the Templeton Family of Funds
within the same plan type. Changes to dividend options for these accounts must
also be made in writing.
To obtain further information regarding distribution or transfer procedures,
including any required forms, FTTC retirement account shareholders may call
toll free 1-800-527-2020 or 1-800-354-9191 (press "2").
GENERAL. During periods of drastic economic or market changes, it is
possible that the telephone transaction privileges will be difficult to
execute because of heavy telephone volume. In such situations, Shareholders
may wish to contact their dealer for assistance, or to send written
instructions to the Fund as detailed elsewhere in this Prospectus.
Neither the Fund nor the Transfer Agent will be liable for any losses
resulting from the inability of a Shareholder to execute a telephone
transaction.
The telephone transaction privilege may be modified or discontinued by the
Fund at any time upon 60 days' written notice to Shareholders.
MANAGEMENT OF THE FUND
The Trust is managed by its Board of Trustees and all powers of the Trust
are exercised by or under authority of the Board. Information relating to the
Trustees and Executive Officers is set forth under the heading "Management of
the Trust" in the SAI.
The Board has carefully reviewed the multiclass structure to ensure that no
material conflict exists between the two classes of Shares. Although the Board
does not expect to encounter material conflicts in the future, the Board will
continue to monitor the Fund and will take appropriate action to resolve such
conflicts if any should later arise.
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In developing the multiclass structure, the Fund has retained the authority
to establish additional classes of Shares. It is the Fund's present intention
to offer only two classes of Shares, but new classes may be offered in the
future.
INVESTMENT MANAGER. The Investment Manager of the Fund is Templeton
Investment Counsel, Inc., Broward Financial Centre, Fort Lauderdale, Florida
33394-3091. The Investment Manager manages the investment and reinvestment of
the Fund's assets. The Investment Manager is an indirect wholly owned
subsidiary of Franklin Resources, Inc. ("Franklin"). Through its subsidiaries,
Franklin is engaged in various aspects of the financial services industry. The
Investment Manager and its affiliates serve as advisers for a wide variety of
public investment mutual funds and private clients in many nations. The
Templeton organization has been investing globally over the past 52 years and,
with its affiliates, provides investment management and advisory services to a
worldwide client base, including over 4.3 million mutual fund shareholders,
foundations, endowments, employee benefit plans and individuals. The
Investment Manager and its affiliates have approximately 4,100 employees in
the United States, Australia, Scotland, Germany, Hong Kong, Luxembourg,
Bahamas, Singapore, Canada and Russia.
The Investment Manager uses a disciplined, long-term approach to value-
oriented global and international investing. It has an extensive global
network of investment research sources. Securities are selected for the Fund's
portfolio on the basis of fundamental company-by-company analysis. Many
different selection methods are used for different funds and clients and these
methods are changed and improved by the Investment Manager's research on
superior selection methods.
The Investment Manager does not furnish any other services or facilities for
the Fund, although such expenses are paid by some investment advisers of other
investment companies. As compensation for its services, the Fund pays the
Investment Manager a fee which, during the most recent fiscal year,
represented 0.75% of its average daily net assets. This fee is higher than
advisory fees paid by most other U.S. investment companies, primarily because
investing in securities of companies in foreign markets, many of which are not
widely followed by professional analysts, requires the Investment Manager to
invest additional time and incur added expense in developing specialized
resources, including research facilities. The Fund also pays its own operating
expenses, including: (1) the fees and expenses of the disinterested Trustees;
(2) interest expenses; (3) taxes and governmental fees; (4) brokerage
commissions and other expenses incurred in acquiring or disposing of portfolio
securities; (5) the expenses of registering and qualifying its Shares for sale
with the SEC and with various state securities commissions; (6) expenses of
its independent public accountants and legal counsel; (7) insurance premiums;
(8) fees and expenses of the Custodian and Transfer Agent and any related
services; (9) expenses of obtaining quotations of portfolio securities and of
pricing Shares; (10) expenses of maintaining the Trust's legal existence and
of Shareholders' meetings; (11) expenses of preparation and distribution to
existing Shareholders of periodic reports, proxy materials and prospectuses;
(12) payments made pursuant to the Fund's Distribution Plans (see "Plans of
Distribution" below); and (13) fees and expenses of membership in industry
organizations.
Currently, the lead portfolio manager for the Fund is Gary Clemons. Prior to
joining the Investment Manager in 1993, Mr. Clemons was a research analyst for
Templeton Quantitative Advisors, Inc. in New York. At Templeton Quantitative
Advisors, Inc., he was also responsible for management of a small
capitalization fund. Daniel L. Jacobs and Mark R. Beveridge exercise secondary
portfolio management responsibilities with respect to the Fund. Mr. Jacobs,
Senior Vice President of the Investment Manager, joined the Templeton
organization in 1984 as portfolio manager and security analyst. Prior to
joining the Templeton organization, Mr. Jacobs was with First National Bank of
Atlanta for eight years, where he was vice president and portfolio manager in
the Institutional Investment Group. His responsibilities included the
management of institutional accounts and international equity portfolios. Mr.
Beveridge, Vice President of the Investment Manager, joined the Templeton
organization in 1985 as a security analyst. Prior to joining the Templeton
organization, Mr. Beveridge was a principal with a financial accounting
software firm based in Miami, Florida. Further information concerning the
Investment Manager is included under the heading "Investment Management and
Other Services" in the SAI.
BUSINESS MANAGER. Templeton Global Investors, Inc. provides certain
administrative facilities and services for the Fund, including payment of
salaries of officers, preparation and maintenance of books and records,
preparation of tax returns and financial reports,
26
<PAGE>
monitoring compliance with regulatory requirements and monitoring tax-deferred
retirement plans. For its services, the Fund pays the Business Manager a
monthly fee equivalent on an annual basis to 0.15% of the combined average
daily net assets of the Funds included in the Trust (the Fund and Templeton
Global Rising Dividends Fund), reduced to 0.135% of such combined assets in
excess of $200 million, to 0.10% of such assets in excess of $700 million, and
to 0.075% of such assets in excess of $1,200 million.
TRANSFER AGENT. Franklin Templeton Investor Services, Inc. serves as
transfer agent and dividend disbursing agent for the Fund.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Fund's
assets.
PLANS OF DISTRIBUTION. A separate Plan of Distribution has been approved and
adopted for each class ("Class I Plan" and "Class II Plan," respectively, or
"Plans") pursuant to Rule 12b-1 under the 1940 Act. The Rule 12b-1 fees
charged to each class will be based solely on the distribution and servicing
fees attributable to that particular class. Any portion of fees remaining from
either Plan after distribution to securities dealers up to the maximum amount
permitted under each Plan may be used by the class to reimburse FTD for
routine ongoing promotion and distribution expenses incurred with respect to
such class. Such expenses may include, but are not limited to, the printing of
prospectuses and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of FTD's overhead
expenses attributable to the distribution of Fund Shares, as well as any
distribution or service fees paid to securities dealers or their firms or
others who have executed a servicing agreement with the Fund, FTD or its
affiliates.
The maximum amount which the Fund may pay to FTD or others under the Class I
Plan for such distribution expenses is 0.35% per annum of Class I's average
daily net assets, payable on a quarterly basis. All expenses of distribution
and marketing in excess of 0.35% per annum will be borne by FTD, or others who
have incurred them, without reimbursement from the Fund. Under the Class I
Plan, costs and expenses not reimbursed in any one given quarter (including
costs and expenses not reimbursed because they exceed the applicable limit of
the Plan) may be reimbursed in subsequent quarters or years, subject to
applicable law.
Under the Class II Plan, the maximum amount which the Fund is permitted to
pay to FTD or others for distribution expenses and related expenses is 0.75%
per annum of Class II's average daily net assets, payable quarterly. All
expenses of distribution, marketing and related services over that amount will
be borne by FTD, or others who have incurred them, without reimbursement by
the Fund. In addition, the Class II Plan provides for an additional payment by
the Fund of up to 0.25% per annum of Class II's average daily net assets as a
servicing fee, payable quarterly. This fee will be used to pay securities
dealers or others for, among other things, assisting in establishing and
maintaining customer accounts and records; assisting with purchase and
redemption requests; receiving and answering correspondence; monitoring
dividend payments from the Fund on behalf of the customers; or similar
activities related to furnishing personal services and/or maintaining
Shareholder accounts.
During the first year after the purchase of Class II Shares, FTD will keep a
portion of the Plan fees assessed on Class II Shares to partially recoup fees
FTD pays to securities dealers. FTD, or its affiliates, may pay, from its own
resources, a commission of up to 1% of the amount invested to securities
dealers who initiate and are responsible for purchases of Class II Shares.
Both Plans also cover any payments to or by the Fund, the Investment
Manager, FTD, or other parties on behalf of the Fund, the Investment Manager
or FTD, to the extent such payments are deemed to be for the financing of any
activity primarily intended to result in the sale of Shares issued by the Fund
within the context of Rule 12b-1. The payments under the Plans are included in
the maximum operating expenses which may be borne by each class of the Fund.
For more information including a discussion of the Board's policies with
regard to the amount of each Plan's fees, please see the SAI.
27
<PAGE>
BROKERAGE COMMISSIONS. The Fund's brokerage policies are described under the
heading "Brokerage Allocation" in the SAI. The Fund's brokerage policies
provide that the receipt of research services from a broker and the sale of
Shares by a broker are factors which may be taken into account in allocating
securities transactions, so long as the prices and execution provided by the
broker equal the best available within the scope of the Fund's brokerage
policies.
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The capitalization of the Trust
consists of an unlimited number of Shares of beneficial interest, par value
$0.01 per Share. The Board of Trustees is authorized, in its discretion, to
classify and allocate the unissued Shares of the Trust in an unlimited number
of separate series and may in the future divide existing series into two or
more classes. Each Share entitles the holder to one vote.
The Fund will not ordinarily issue certificates for Shares purchased. Share
certificates representing the whole (not fractional) Shares are issued only
upon the specific request of the Shareholder made in writing to the Transfer
Agent. No charge is made for the issuance of one certificate for all or some
of the Shares purchased in a single order.
VOTING RIGHTS. Shares of each class represent proportionate interests in the
assets of the Fund and have the same voting and other rights and preferences
as the other class of the Fund for matters that affect the Fund as a whole.
For matters that only affect a certain class of the Fund's Shares, however,
only Shareholders of that class will be entitled to vote. Therefore, each
class of Shares will vote separately on matters (1) affecting only that class,
(2) expressly required to be voted on separately by state law, or (3) required
to be voted on separately by the 1940 Act or the rules adopted thereunder. For
instance, if a change to the Rule 12b-1 plan relating to Class I Shares
requires Shareholder approval, only Shareholders of Class I may vote on
changes to the Rule 12b-1 plan affecting that class. Similarly, if a change to
the Rule 12b-1 plan relating to Class II Shares requires Shareholder approval,
only Shareholders of Class II may vote on the change to such plan. On the
other hand, if there is a proposed change to the investment objective of the
Fund, this affects all Shareholders, regardless of which class of Shares they
hold, and therefore, each Share has the same voting rights.
MEETINGS OF SHAREHOLDERS. The Trust is not required to hold annual meetings
of Shareholders and may elect not to do so. The Trust will call a special
meeting of Shareholders for the purpose of considering the removal of a person
serving as Trustee if requested in writing to do so by the holders of not less
than 10% of the Trust's outstanding Shares. The Fund is required to assist
Shareholder communications in connection with the calling of Shareholder
meetings to consider removal of a Trustee or Trustees.
DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gain distributions (if
any) are usually paid in May and (if necessary) in December representing all
or substantially all of the Fund's net investment income and any net realized
capital gains. According to the requirements of the Code, dividends and
capital gains will be calculated and distributed in the same manner for Class
I and Class II Shares. The per share amount of any income dividends will
generally differ only to the extent that each class is subject to different
Rule 12b-1 fees. Unless otherwise requested, income dividends and capital gain
distributions paid by the Fund, other than on those Shares whose owners keep
them registered in the name of a broker-dealer, are automatically reinvested
on the payment date in whole or fractional Shares at net asset value as of the
ex-dividend date, unless a Shareholder makes a written or telephonic request
for payments in cash. Dividend and capital gain distributions are only
eligible for reinvestment at net asset value in the same class of Shares of
the Fund or the same class of another of the Franklin Templeton Funds. The
processing date for the reinvestment of dividends may vary from month to
month, and does not affect the amount or value of the Shares acquired. Income
dividends and capital gain distributions will be paid in cash on Shares during
the time their owners keep them registered in the name of a broker-dealer,
unless the broker-dealer has made arrangements with the Transfer Agent for
reinvestment.
28
<PAGE>
Prior to purchasing Shares of the Fund, the impact of dividends or capital
gain distributions which have been declared but not yet paid should be
carefully considered. Any dividend or capital gain distribution paid shortly
after a purchase by a Shareholder prior to the record date will have the
effect of reducing the per Share net asset value of the Shares by the amount
of the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, generally will be
subject to tax.
Checks are forwarded by first-class mail to the address of record. The
proceeds of any such checks which are not accepted by the addressee and
returned to the Fund will be reinvested in the Shareholder's account in whole
or fractional Shares at the net asset value next computed after the check has
been received by the Transfer Agent. Subsequent distributions automatically
will be reinvested at net asset value as of the ex-dividend date in additional
whole or fractional Shares.
FEDERAL TAX INFORMATION. The Fund intends to elect to be treated and to
qualify each year as a regulated investment company under Subchapter M of the
Code. See the SAI for a summary of requirements that must be satisfied to so
qualify. A regulated investment company generally is not subject to federal
income tax on income and gains distributed in a timely manner to its
shareholders. The Fund intends to distribute to Shareholders substantially all
of its net investment income and realized capital gains, which generally will
be taxable income or capital gains in their hands. Distributions declared in
October, November or December to Shareholders of record on a date in such
month and paid during the following January will be treated as having been
received by Shareholders on December 31 in the year such distributions were
declared. The Fund will inform Shareholders each year of the amount and nature
of such income or gains. A more detailed description of tax consequences to
Shareholders is contained in the SAI under the heading "Tax Status."
The Fund may be required to withhold federal income tax at the rate of 31%
of all taxable distributions (including redemptions) paid to Shareholders who
fail to provide the Fund with their correct taxpayer identification number or
to make required certifications or where the Fund or the Shareholder has been
notified by the Internal Revenue Service that the Shareholder is subject to
backup withholding. Corporate Shareholders and certain other Shareholders
specified in the Code are exempt from backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
Shareholder's Federal income tax liability.
INQUIRIES. Shareholders' inquiries will be answered promptly. They should be
addressed to Franklin Templeton Investor Services, Inc., P.O. Box 33030, St.
Petersburg, Florida 33733-8030--telephone 1-800-393-3001 or 813-823-8712.
Transcripts of Shareholder accounts less than three-years old are provided on
request without charge; requests for transcripts going back more than three
years from the date the request is received by the Transfer Agent are subject
to a fee of up to $15 per account.
PERFORMANCE INFORMATION. The Fund may include its total return in
advertisements or reports to Shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the average
annual compounded rate of return on a hypothetical investment in the Fund over
a period of 1, 5 and 10 years (or up to the life of the Fund), will reflect
the deduction of the maximum initial sales charge and deduction of a
proportional share of Fund expenses (on an annual basis), and will assume that
all dividends and distributions are reinvested when paid. Total return may be
expressed in terms of the cumulative value of an investment in the Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Fund, see the SAI.
Because Class II Shares were not offered prior to May 1, 1995, no
performance data is available for these Shares. After a sufficient period of
time has passed, Class II performance data will be available.
STATEMENTS AND REPORTS. The Fund's fiscal year ends on March 31. Annual
reports (containing financial statements audited by independent auditors and
additional information regarding the Fund's performance) and semiannual
reports (containing unaudited financial statements) are sent to Shareholders
each year. Additional copies may be obtained, without charge, upon request to
the Account Services Department. The Fund also sends to each Shareholder a
confirmation statement after every transaction that affects the Shareholder's
account and a year-end historical confirmation statement.
29
<PAGE>
INSTRUCTIONS AND IMPORTANT NOTICE
SUBSTITUTE W-9 INSTRUCTIONS INFORMATION
GENERAL. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service ("IRS").
OBTAINING A NUMBER. If you do not have a Social Security Number/Taxpayer
Identification Number ("SSN/TIN"), you must obtain Form SS-5 or Form SS-4 from
your local Social Security or IRS office and apply for one. If you have
checked the "Awaiting TIN" box and signed the certification, withholding will
apply to payments relating to your account unless you provide a certified TIN
within 60 days.
WHAT SSN/TIN TO GIVE. Please refer to the following guidelines:
<TABLE>
<CAPTION>
ACCOUNT TYPE GIVE SSN OF ACCOUNT TYPE GIVE TAXPAYER ID # OF
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
. Individual Individual . Trust, Estate, or Trust, Estate, or
Pension Plan Trust Pension Plan Trust
- -------------------------------------------------------------------------------------
. Joint Actual owner of account, . Corporation, Corporation,
Individual or if combined funds, Partnership, or other Partnership, or other
the first-named organization organization
individual
- -------------------------------------------------------------------------------------
. Unif. Minor . Broker nominee Broker nominee
Gift/Transfer
to Minor
- -------------------------------------------------------------------------------------
. Sole Owner of business
Proprietor
- -------------------------------------------------------------------------------------
. Legal Ward, Minor, or
Guardian Incompetent
- -------------------------------------------------------------------------------------
</TABLE>
EXEMPT RECIPIENTS. Please provide your TIN and check the "Exempt Recipient"
box if you are an exempt recipient. Exempt recipients generally include:
A corporation A real estate investment trust
A financial institution A common trust fund operated by a
bank under section 584(a)
An organization exempt from tax An entity registered at all times
under section 501(a), or an under the Investment Company Act of
individual retirement plan 1940
A registered dealer in securities or
commodities registered in the U.S.
or a U.S. possession
IRS PENALTIES. If you do not supply us with your SSN/TIN, you will be subject
to an IRS $50 penalty unless your failure is due to reasonable cause and not
willful neglect. If you fail to report certain income on your Federal income
tax return, you will be treated as negligent and subject to an IRS 20% penalty
on any underpayment of tax attributable to such negligence, unless there was
reasonable cause for the resulting underpayment and you acted in good faith.
If you falsify information on this form or make any other false statement
resulting in no backup withholding on an account which should be subject to
backup withholding, you may be subject to an IRS $500 penalty and certain
criminal penalties including fines and imprisonment.
SUBSTITUTE W-8 INSTRUCTIONS INFORMATION
EXEMPT FOREIGN PERSON. Check the "Exempt Foreign Person" box if you qualify as
a non-resident alien or foreign entity that is not subject to certain U.S.
information return reporting or to backup withholding rules. Dividends paid to
your account may be subject to withholding of up to 30%. Generally, you are an
"Exempt Foreign Person" if you are not (1) a citizen or resident of the U.S.,
or (2) a U.S. corporation, partnership, estate, or trust. In the case of an
individual, an "Exempt Foreign Person" is one who has been physically present
in the U.S. for less than 31 days during the current calendar year. An
individual who is physically present in the U.S. for at least 31 days during
the current calendar year will still be treated as an "Exempt Foreign Person,"
provided that the total number of days physically present in the current
calendar year and the two preceding calendar years does not equal or exceed
183 days (counting all of the days in the current calendar year, only one-
third of the days in the first preceding calendar year and only one-sixth of
the days in the second preceding calendar year). In addition, lawful permanent
residents or green card holders may not be treated as "Exempt Foreign
Persons." If you are an individual or an entity, you must not now be, or at
this time expect to be, engaged in a U.S. trade or business with respect to
which any gain derived from transactions effected by the Fund/Payer during the
calendar year is effectively connected to the U.S.
PERMANENT ADDRESS. The Shareholder Application must contain your permanent
address if you are an "Exempt Foreign Person." If you are an individual,
provide your permanent address. If you are a partnership or corporation,
provide the address of your principal office. If you are an estate or trust,
provide the address of your permanent residence or the principal office of any
fiduciary.
NOTICE OF CHANGE IN STATUS. If you become a U.S. citizen or resident after you
have provided certification of your foreign status, or if you cease to be an
"Exempt Foreign Person," you must notify the Fund/Payer within 30 days of your
change in status. Reporting will then begin on the account(s) listed, and
backup withholding may also begin unless you certify to the Fund/Payer that
(1) the tax payer identification number you have given is correct, and (2) the
IRS has not notified you that you are subject to backup withholding because
you failed to report certain interest or dividend income. You may use Form W-
9, "Payer's Request for Taxpayer Identification Number and Certification," to
make these certifications. If an account is no longer active, you do not have
to notify a Fund/Payer or broker of your change in status unless you also have
another account with the same Fund/Payer that is still active. If you receive
from more than one Fund/Payer or have dealings with more than one broker or
barter exchange, file a certificate with each. If you have more than one account
with the same Fund/Payer, the Fund/Payer may require you to file a separate
certificate for each account.
WHEN TO FILE. File these certifications with the Fund before a payment is made
to you, unless you have already done this in either of the two preceding
calendar years. Only certifications that are in proper order will be treated
as having been filed with the Fund.
HOW OFTEN YOU MUST FILE. This certificate generally remains in effect for
three calendar years. A Fund/Payer or broker, however, may require that a new
certificate be filed each time a payment is made. On joint accounts for which
each joint owner is a foreign person, each must provide a certification of
foreign status.
1/94
30
<PAGE>
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of
a resolution or other certificate of authority to authorize the purchase as
well as sale (redemption) of shares and withdrawals by checks or drafts. You
may use the following form of resolution or you may prefer to use your own. It
is understood that the Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly
elected _________________________________ of __________________________________
TITLE CORPORATE NAME
a ______________________________ organized under the laws of the State of _____
TYPE OF ORGANIZATION STATE
and that the following is a true and correct copy of a resolution adopted by
the Board of Directors at a meeting duly called and held on ___________________
DATE
RESOLVED, that the _________________________________________________ of this
OFFICERS' TITLES
Corporation or Association are authorized to open an account in the name of
the Corporation or Association with one or more of the Franklin Group of
Funds(R) or Templeton Family of Funds (collectively, the "Funds") and to
deposit such funds of this Corporation or Association in this account as
they deem necessary or desirable; that the persons authorized below may
endorse checks and other instruments for deposit to said account or
accounts; and
FURTHER RESOLVED, that any of the following ______ officers are authorized to
NUMBER
sign any share assignment on behalf of this Corporation or Association and
to take any other actions as may be necessary to sell or redeem its shares in
the Funds or to sign checks or drafts withdrawing funds from the account; and
FURTHER RESOLVED, that this Corporation or Association shall hold harmless,
indemnify, and defend the Funds, their custodian bank, Franklin Templeton
Distributors, Inc., Franklin Templeton Investor Services, Inc., and their
affiliates, from any claim, loss or liability resulting in whole or in
part, directly or indirectly, from their reliance from time to time upon
any certifications by the secretary or any assistant secretary of this
Corporation or Association as to the names of the individuals occupying
such offices and their acting in reliance upon these resolutions until
actual receipt by them of a certified copy of a resolution of the Board of
Directors of the Corporation or Association modifying or revoking any or
all such resolutions.
The undersigned further certifies that the below named persons, whose
signatures appear opposite their names and office titles, are duly elected
officers of the Corporation or Association. (Attach additional list if
necessary.)
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME OF CORPORATION OR ASSOCIATION DATE
Certified from minutes ________________________________________________________
NAME AND TITLE
CORPORATE SEAL (if appropriate)
31
<PAGE>
THE FRANKLIN TEMPLETON TELEPHONE REDEMPTION AUTHORIZATION AGREEMENT
You may use Franklin Templeton's telephone redemption privilege to redeem
uncertificated Franklin Templeton Fund shares for up to $50,000 (or your
Shareholder account balance, whichever is less) per day, per fund account in
accordance with the terms of the Fund's Prospectus.
The telephone redemption privilege is available only to Shareholders who
specifically request it. If you would like to add this redemption privilege to
the other telephone transaction privileges automatically available to Franklin
Templeton Fund shareholders, please sign and return this authorization to
Franklin Templeton Investor Services, Inc. ("Services"), transfer agent and
shareholder servicing agent for the Franklin Templeton Funds.
SHAREHOLDER AUTHORIZATION: I/We request the telephone redemption privilege
under the terms described below and in the prospectus for each investment
company in the Franklin Templeton Group of Funds (a "Franklin Templeton Fund"
or a "Fund"), now opened or opened at a later date, holding shares registered
as follows:
- ------------------------------------- ---------------------------------------
PRINT NAME(S) AS SHOWN IN YOUR ACCOUNT REGISTRATION ("SHAREHOLDER")
- ------------------------------------- ---------------------------------------
ACCOUNT NUMBER(S)
I/We authorize each Fund and Services to honor and act upon telephone requests
given as provided in this agreement to redeem shares from any
Shareholder account:
- ------------------------------------- ---------------------------------------
SIGNATURE(S) AND DATE
- ------------------------------------- ---------------------------------------
PRINT NAME(S) (AND TITLE/CAPACITY, IF APPLICABLE)
VERIFICATION PROCEDURES: I/We understand and agree that: (1) each Fund and
Services will employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine and that if these
confirmation procedures are not followed, the Fund or Services may be liable
for any losses due to unauthorized or fraudulent telephone instructions; (2)
the confirmation procedures will include the recording of telephone calls
requesting redemptions, requiring that the caller provide certain personal
and/or account information requested by the telephone service agent at the
time of the call for the purpose of establishing the caller's identification,
and the sending of confirmation statements to the address of record each time
a redemption is initiated by telephone; and (3) so long as the Fund and
Services follow the confirmation procedures in acting on instructions
communicated by telephone which were reasonably believed to be genuine at the
time of receipt, neither they, nor their parent or affiliates, will be liable
for any loss, damages or expenses caused by an unauthorized or fraudulent
redemption request.
JOINTLY OWNED/CO-TRUSTEE ACCOUNTS: Each of us signing this agreement as either
joint owners or co-trustees authorizes each Fund and Services to honor
telephone redemption requests given by ANY ONE of the signers, or our
investment representative of record, if any, ACTING ALONE.
APPOINTMENT OF ATTORNEY-IN-FACT: In order to issue telephone redemption
requests acting alone, each of us individually makes the following
appointment: I hereby appoint the other joint owner(s)/co-trustee(s) as my
agent(s) (attorney[s]-in-fact) with full power and authority to individually
act for me in any lawful way with respect to the issuance of instructions to a
Fund or Services in accordance with the telephone redemption privilege we have
requested by signing this agreement. This appointment shall not be affected by
my subsequent disability or incompetency and shall remain in effect until it
is revoked by either written notice from any one of us delivered to a Fund or
Services by registered mail, return receipt requested, or by a Fund or
Services upon receipt of any information that causes a Fund or Services to
believe in good faith that there is or that there may be a dispute among any
of us with respect to the Franklin Templeton Fund account(s) covered by this
agreement. Each of us agrees to notify the Fund or Services immediately upon
the death of any of the signers.
CORPORATE/PARTNERSHIP/TRUST/RETIREMENT ACCOUNTS: The Shareholder and each of
us signing this agreement on behalf of the Shareholder represent and warrant
to each Franklin Templeton Fund and Services that the Shareholder has the
authority to enter into this agreement and that each of us is duly authorized
to execute this agreement on behalf of the Shareholder. The Shareholder agrees
that its election of the telephone redemption privilege means that a Fund or
Services may honor a telephone redemption request given by ANY
officer/partner/member/administrator/or agent of the Shareholder ACTING ALONE.
RESTRICTED ACCOUNTS: Telephone redemptions may not be accepted on Franklin
Templeton Trust Company retirement accounts.
PLEASE RETURN THIS FORM TO:
Franklin Templeton Investor Services, Inc., Attn.: Telephone Redemptions
Dept., 700 Central Avenue, St. Petersburg, Florida 33701-3628.
32
<PAGE>
The Franklin Templeton Group
Literature Request -- Call today for a free descriptive brochure and
prospectus on any of the funds listed below. The prospectus contains more
complete information, including fees, charges and expenses, and should be read
carefully before investing or sending money.
TEMPLETON FUNDS
American Trust
American Government Securities Fund
Developing Markets Trust
Foreign Fund
Global Infrastructure Fund
Global Opportunities Trust
Global Rising Dividends Fund
Growth Fund
Income Fund
Japan Fund
Money Fund
Real Estate Securities Fund
Smaller Companies Growth Fund
World Fund
FRANKLIN FUNDS
SEEKING TAX-FREE INCOME
Federal Intermediate Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund***
Puerto Rico Tax-Free Income Fund
FRANKLIN STATE-SPECIFIC FUNDS
SEEKING TAX-FREE INCOME
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan***
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee**
Texas
Virginia
Washington**
FRANKLIN FUNDS
SEEKING CAPITAL GROWTH
California Growth Fund
DynaTech Fund
Equity Fund
Global Health Care Fund
Gold Fund
Growth Fund
International Equity Fund
Pacific Growth Fund
Real Estate Securities Fund
Small Cap Growth Fund
FRANKLIN FUNDS SEEKING
GROWTH AND INCOME
Balance Sheet Investment Fund
Convertible Securities Fund
Equity Income Fund
Global Utilities Fund
Income Fund
Premier Return Fund
Rising Dividends Fund
Strategic Income Fund
Utilities Fund
FRANKLIN FUNDS SEEKING
HIGH CURRENT INCOME
AGE High Income Fund
German Government Bond Fund
Global Government Income Fund
Investment Grade Income Fund
U.S. Government Securities Fund
FRANKLIN FUNDS SEEKING HIGH CURRENT
INCOME AND STABILITY OF PRINCIPAL
Adjustable Rate Securities Fund
Adjustable U.S. Government Securities Fund
Short-Intermediate U.S. Government Securities Fund
FRANKLIN FUNDS FOR NON-U.S. INVESTORS
Tax-Advantaged High Yield Securities Fund
Tax-Advantaged International Bond Fund
Tax-Advantaged U.S. Government Securities Fund
FRANKLIN TEMPLETON INTERNATIONAL
CURRENCY FUNDS
Global Currency Fund
Hard Currency Fund
High Income Currency Fund
FRANKLIN MONEY MARKET FUNDS
California Tax-Exempt Money Fund
Federal Money Fund
IFT U.S. Treasury Money Market Portfolio
Money Fund
New York Tax-Exempt Money Fund
Tax-Exempt Money Fund
FRANKLIN FUND FOR CORPORATIONS
Corporate Qualified Dividend Fund
FRANKLIN TEMPLETON VARIABLE ANNUITIES
Franklin Valuemark
Franklin Templeton Valuemark Income
Plus (an intermediate annuity)
Toll-free 1-800/DIAL BEN (1-800/342-5236)
* Two or more fund options available: Long-term portfolio, intermediate-term
portfolio, a portfolio of municipal securities, and a high yield portfolio
(CA).
** The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
*** Portfolio of insured municipal securities.
33
<PAGE>
NOTES
-----
34
<PAGE>
NOTES
-----
35
<PAGE>
- --------------------------
TEMPLETON GLOBAL
INFRASTRUCTURE FUND
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-393-3001
Fund Information
1-800-292-9293
Institutional Services
1-800-321-8563
This Prospectus is not
an offering of the
securities herein
described in any state
in which the offering
is not authorized. No
sales representative,
dealer, or other person
is authorized to give
any information or make
any representations
other than those
contained in this
Prospectus. Further
information may be
obtained from the
Principal Underwriter.
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[RECYCLED LOGO APPEARS HERE]
TL13 P95 05/95
TEMPLETON
GLOBAL
INFRASTRUCTURE
FUND
Prospectus
May 1, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
<PAGE>
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
Mail to: FRANKLIN TEMPLETON DISTRIBUTORS, INC.
P.O. Box 33031 St. Petersburg, Florida 33733-8031 (800) 393-3001
Please do not use this form for any Retirement Plan for which Franklin Templeton
Trust Company or its affiliate serves as custodian or trustee, or for any of the
following Templeton Funds: Templeton Money Fund, Templeton Institutional Funds
or Templeton Capital Accumulator Fund. Please request separate Applications
and/or Prospectuses.
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SHAREHOLDER APPLICATION OR REVISION
[_] Please check the box if this is a revision and see Section 8
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Please check Class I or Class II, if applicable, next to your Fund selection.
Class I and Class II shares have different sales charges and operating expenses,
among other differences, as described in each Fund's prospectus.
Date __________________
<TABLE>
<CAPTION>
CLASS CLASS
I II I II
<S> <C> <C> <C>
[_] [_] AMERICAN TRUST $______ [_] [_] GLOBAL INFRASTRUCTURE FUND $______
[_] AMERICAS GOVERNMENT SECURITIES FUND ______ [_] [_] GLOBAL OPPORTUNITIES TRUST ______
[_] [_] DEVELOPING MARKETS TRUST ______ [_] [_] GLOBAL RISING DIVIDENDS FUND ______
[_] [_] FOREIGN FUND ______ [_] [_] GROWTH FUND ______
<CAPTION>
CLASS CLASS
I II I II
<S> <C> <C> <C>
[_] [_] INCOME FUND $______ [_] [_] WORLD FUND $______
[_] JAPAN FUND ______ [_] [_] OTHER: ______
[_] [_] REAL ESTATE SECURITIES FUND ______ ____________________
[_] [_] SMALLER COMPANIES GROWTH FUND ______
</TABLE>
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1 ACCOUNT REGISTRATION (PLEASE PRINT)
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[_] INDIVIDUAL OR JOINT ACCOUNT
__________________________________________________ ________-________-__________
First Name Middle Initial Last Name Social Security Number (SSN)
__________________________________________________ ________-________-__________
Joint Owner(s) (Joint ownership means "Joint Social Security Number (SSN)
Tenants With Rights of Survivorship unless
otherwise specified) All owners must sign Section 4.
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[_] GIFT/TRANSFER TO A MINOR
_______________________________ As Custodian For________________________________
Name of Custodian (one only) Minor's Name (one only)
_____________Uniform Gifts/Transfers to Minors Act________-________-____________
State of Residence Minor's Social Security Number
Please Note: Custodian's Signature, not Minor's, is required in Section 4.
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[_] TRUST, CORPORATION, PARTNERSHIP, RETIREMENT PLAN, OR OTHER ENTITY
__________________________________________ ____________-_______________________
Name Taxpayer Identification Number (TIN)
___________________________________________ ___________________________________
Name of Beneficiary (if to be included in Date of Trust Document (must be
the Registration) completed for registration)
________________________________________________________________________________
Name of Each Trustee (if to be included in the Registration)
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2 ADDRESS
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___________________________________________ Daytime Phone (___)________________
Street Address Area Code
____________________________________-______ Evening Phone (___)________________
City State Zip Code Area Code
I am a Citizen of: [_] U.S. [_]______________________________
Country of Residence
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3 INITIAL INVESTMENT ($100 minimum initial investment)
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Check(s) enclosed for $___________________ . (Payable to Franklin Templeton
Distributors, Inc. or the Fund(s)
indicated above.)
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4 SIGNATURE AND TAX CERTIFICATIONS
(All registered owners must sign application)
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The Fund reserves the right to refuse to open an account without either a
certified Taxpayer Identification Number ("TIN") or a certification of foreign
status. Failure to provide tax certifications in this section may result in
backup withholding on payments relating to your account and/or in your inability
to qualify for treaty withholding rates.
I am(We are) not subject to backup withholding because I(we) have not been
notified by the IRS that I am(we are) subject to backup withholding as a result
of a failure to report all interest or dividends or because the IRS has notified
me(us) that I am(we are) no longer subject to backup withholding. (If you are
currently subject to backup withholding as a result of a failure to report all
interest or dividends, please cross out the preceding statement.)
[_] The number shown above is my(our) correct TIN, or that of the Minor named in
Section 1.
[_] AWAITING TIN. I am(We are) waiting for a number to be issued to me(us).
I(We) understand that if I(we) do not provide a TIN to the Fund within 60
days, the Fund is required to commence 31% backup withholding until I(we)
provide a certified TIN.
[_] EXEMPT RECIPIENT. Individuals cannot be exempt. Check this box only after
reading the instructions to see whether you qualify as an exempt recipient.
(You should still provide a TIN.)
[_] EXEMPT FOREIGN PERSON. Check this box only if the following statement
applies: "I am(we are) neither a citizen nor a resident of the United
States. I(we) certify to the best of my(our) knowledge and belief, I(we)
qualify as an exempt foreign person and/or entity as described in the
instructions."
Permanent address for tax purposes:
________________________________________________________________________________
Street Address City State Country Personal Code
PLEASE NOTE: The IRS only allows one TIN to be listed on an account. On joint
accounts, it is preferred that the primary account owner (or person listed first
on the account) list his/her number as requested above.
CERTIFICATION - Under the penalties of perjury, I(we) certify that (1) the
information provided on this application is true, correct and complete, (2)
I(we) have read the prospectus(es) for the Fund(s) in which I am(we are)
investing and agree to the terms thereof, and (3) I am(we are) of legal age or
an emancipated minor. I (we) acknowledge that Shares of the Fund(s) are not
insured or guaranteed by any agency or institution and that an investment in the
Shares involves risks, including the possible loss of principal.
X X
- ---------------------------------------- ---------------------------------------
Signature Signature
X X
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Signature Signature
Please make a photocopy of this application for your records.
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5 BROKER/DEALER USE ONLY (PLEASE PRINT)
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-----------------------
We hereby submit this application for the purchase of Templeton Dealer Number
shares of the Fund indicated above in accordance with
the terms of our selling agreement with Franklin -----------------------
Templeton Distributors, Inc. ("FTD"), and with the
Prospectus for the Fund. We agree to notify FTD of any
Purchases of Class I shares which may be eligible for
reduced or eliminated sales charges.
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WIRE ORDER ONLY: The attached check for $_______ should be applied against
Wire Order
Confirmation Number ___________ Dated___________ For__________ Shares
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Securities Dealer Name__________________________________________________________
Main Office Address________________ Main Office Telephone Number (___)__________
Branch Number________ Representative Number ________ Representative Name________
Branch Address_________________________ Branch Telephone Number (___)___________
Authorized Signature, Securities Dealer______________________ Title_____________
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ACCEPTED: Franklin Templeton Distributors, Inc. By___________ Date______________
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Please see reverse side for Shareholder Account Privileges:
[_] Distribution Options [_] Special Instructions for Distributions
[_] Systematic Withdrawal Plan [_] Automatic Investment Plan
[_] Telephone Exchange Service [_] Letter of Intent
[_] Cumulative Quantity Discount
This application must be preceded or accompanied by a prospectus for
the Fund(s) being purchased.
<PAGE>
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6 DISTRIBUTION OPTIONS (Check one)
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Check one - if no box is checked, all dividends and capital gains will be
reinvested in additional shares of the Fund.
[_] Reinvest all dividends [_] Pay all dividends in cash
and capital gains. and reinvest capital gains.
[_] Pay capital gains in cash [_] Pay all dividends and
and reinvest dividends. capital gains in cash.
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7 OPTIONAL SHAREHOLDER PRIVILEGES
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A. SPECIAL PAYMENT INSTRUCTIONS FOR DISTRIBUTIONS (Check one box)
[_] Pay Distributions, as noted in Section 6, to another Franklin or Templeton
Fund.
Fund Name______________________ Existing Account Number___________________
[_] Send my Distributions to the person, named below, instead of as registered
in Section 1.
Name___________________________ Street Address____________________________
City___________________________ State____________________Zip Code_________
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B. SYSTEMATIC WITHDRAWAL PLAN
Please withdraw from my Franklin Templeton account $_____($50 minimum)
[_]Monthly [_]Quarterly [_]Semi-Annually or [_]Annually as set forth in the
Prospectus, starting in ______________(Month). The net asset value of the
shares held must be at least $5,000 at the time the plan is established.
Additional restrictions may apply to Class II or other shares subject to
contingent deferred sales charge, as described in the prospectus. Send the
proceeds to: [_]Address of Record OR [_]the Franklin Templeton Fund or person
specified in Section 7(A) - Special Payment Instructions for Distributions.
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C. TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE: If the Fund does not receive specific
instructions from the shareholder, either in writing or by telephone, the
Telephone Exchange Privilege (see the prospectus) is automatically extended
to each account. The shareholder should understand, however, that the Fund
and Franklin Templeton Investor Services, Inc. ("FTI") or Templeton Funds
Trust Company and their agents will not be liable for any loss, injury,
damage or expense as a result of acting upon instructions communicated by
telephone reasonably believed to be genuine. The shareholder agrees to hold
the Fund and its agents harmless from any loss, claims, or liability arising
from its or their compliance with such instructions. The shareholder
understands that this option is subject to the terms and conditions set forth
in the prospectus of the fund to be acquired.
[_]No, I do NOT wish to participate in the Telephone Exchange Privilege or
authorize the Fund or its agents, including FTI or Templeton Funds Trust
Company, to act upon instructions received by telephone to exchange shares
for shares of any other account(s) within the Franklin Templeton Group of
Funds.
Telephone Redemption Privilege: This is available to shareholders who
specifically request it and who complete the Franklin Templeton Telephone
Redemption Authorization Agreement in the back of the Fund's prospectus.
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D. AUTOMATIC INVESTMENT PLAN
IMPORTANT: ATTACH AN UNSIGNED, VOIDED CHECK (FOR CHECKING ACCOUNTS) OR A
SAVINGS ACCOUNT DEPOSIT SLIP HERE, AND COMPLETE THE INFORMATION BELOW. I(We)
would like to establish an Automatic Investment Plan (the"Plan") as described
in the Prospectus. I(We) agree to reimburse FTI and/or FTD for any expenses
or losses that they may incur in connection with my(our) plan, including any
caused by my(our) bank's failure to act in accordance with my(our) request.
If my(our) bank makes any erroneous payment or fails to make a payment after
shares are purchased on my(our) behalf, any such purchase may be cancelled
and I(we) hereby authorize redemptions and/or deductions from my(our) account
for that purpose.
Debit my(our) bank account monthly for $__________($25 minimum) on or about
the [_]1st [_]5th [_]15th or [_]20th day starting_______(month), to be
invested in (name of Fund)___________________Account Number (if known)_______
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E. INSTRUCTIONS TO BANK - AUTOMATIC INVESTMENT PLAN AUTHORIZATION
To:__________________________________ ______________________________________
Name of Your Bank ABA Number
___________________________ _________________ ____________ ______________
Street Address City State Zip Code
I(We) authorize you to charge my(our) Checking/Savings Account and to make
payment to FTD, upon instructions from FTD. I(We) agree that in making payment
for such charges your rights shall be the same as if each were a charge made and
signed personally by me(us). This authority shall remain in effect until you
receive written notice from me(us) changing its terms or revoking it. Until you
actually receive such notice, I(we) agree that you shall be fully protected in
paying any charge under this authority. I(we) further agree that if any such
charge is not made, whether with or without cause and whether intentionally or
inadvertently, you shall be under no liability whatsoever.
X_________________________________________________ ___________________________
Signature(s) EXACTLY as shown on your bank records Date
______________________________________ _______________________________________
Print Name(s) Account Number
______________________________ _________________ ____________ ______________
Street Address City State Zip Code
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F. LETTER OF INTENT (LOI) -- APPLICABLE TO CLASS I SHARES ONLY
[_]I(We) agree to the terms of the LOI and provisions for reservations of
Shares and grant FTD the security interest set forth in the Prospectus.
Although I am(we are) not obligated to do so, it is my(our) intention to
invest over a 13 month period in shares of one or more Franklin or Templeton
Funds (including all Money Market Funds in the Franklin Templeton Group) an
aggregate amount at least equal to that which is checked below:
<TABLE>
<S> <C> <C> <C> <C>
[_]$50,000-99,999 (except for Income Fund) [_]$100,000-249,999 [_]$250,000-499,999 [_]$500,000-999,999 [_]$1,000,0000 or more
</TABLE>
Purchases made within the last 90 days will be included as part of your LOI.
Please write in your Account Number(s)____________ ____________ ____________
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G. CUMULATIVE QUANTITY DISCOUNT -- APPLICABLE TO CLASS I SHARES ONLY
Shares may be purchased at the Offering Price applicable to the dollar amount
of the sale added to the higher of (1) the value (calculated at the
applicable Offering Price) or (2) the purchase price, of any other Shares of
the Fund and/or other Funds in the Franklin Templeton Group owned at that
time by the purchaser, his or her spouse, and their children under age 21,
including all Money Market Funds in the Franklin Templeton Group as stated in
the Prospectus. in order for this Cumulative Quantity Discount to be made
available, the Shareholder or his or her Securities Dealer must notify FTI or
FTD of the total holdings in the Franklin Templeton Group each time an order
is placed.
[_]I(We) own shares of more than one Fund in the Franklin Templeton Group and
qualify for the Cumulative Quantity Discount described above and in the
Prospectus.
My(Our) other Account Number(s) are ___________ ___________ _______________
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8 ACCOUNT REVISION (If Applicable)
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If you are using this application to revise your Account Registration, or wish
to have Distributions sent to an address other than the address on your existing
Account's Registration, a Signature Guarantee is required. Signatures of all
registered owners must be guaranteed by an "eligible guarantor" as defined in
the "How to Sell Shares of the Fund" section in the Fund's Prospectus. A Notary
Public is not an acceptable guarantor.
X________________________________________ ____________________________________
Signature(s) of Registered Account Owners Account Number(s)
X________________________________________ ____________________________________
X________________________________________
X________________________________________ ____________________________________
Signature Guarantee Stamp
NOTE: For any change in registration, please send us any outstanding
Certificates by Registered Mail.
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TLGOF APP 05/95
TEMPLETON GLOBAL INVESTMENT TRUST
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1995
IS NOT A PROSPECTUS. IT SHOULD
BE READ IN CONJUNCTION WITH THE PROSPECTUSES OF
TEMPLETON GLOBAL RISING DIVIDENDS FUND,
TEMPLETON GLOBAL INFRASTRUCTURE FUND
AND TEMPLETON AMERICAS GOVERNMENT
SECURITIES FUND, EACH DATED MAY 1, 1995, EACH AS
SUPPLEMENTED FROM TIME TO TIME, WHICH MAY BE OBTAINED
WITHOUT CHARGE UPON REQUEST TO THE PRINCIPAL UNDERWRITER,
FRANKLIN TEMPLETON DISTRIBUTORS, INC.,
700 CENTRAL AVENUE, P.O. BOX 33030
ST. PETERSBURG, FLORIDA 33733-8030
TOLL FREE TELEPHONE: (800) 237-0738
TABLE OF CONTENTS
General Information and History -Management Fees
Investment Objectives and -The Investment Managers
Policies -Sub-Advisory Agreement
-Investment Policies -Business Manager
-Repurchase Agreements -Custodian and Transfer
-Debt Securities Agent
-Convertible Securities -Legal Counsel
-Futures Contracts -Independent Accountants
-Options on Securities, Indices -Reports to Shareholders
and Futures Brokerage Allocation
-Foreign Currency Hedging Purchase, Redemption and
Transactions Pricing of
-Investment Restrictions Shares
-Additional Restrictions -Ownership and Authority
-Risk Factors Disputes
-Trading Policies -Tax Deferred Retirement
-Personal Securities Plans
Transactions -Letter of Intent
Management of the Trust -Special Net Asset Value
Trustee Compensation Purchases
Principal Shareholders Tax Status
Investment Management and Other Principal Underwriter
Services Description of Shares
-Investment Management Performance Information
Agreements Financial Statements
GENERAL INFORMATION AND HISTORY
Templeton Global Investment Trust (the "Trust") was
organized as a Delaware business trust on December 21, 1993, and
is registered under the Investment Company Act of 1940 (the "1940
Act") as an open-end management investment company with two
diversified series of Shares, Templeton Global Rising Dividends
Fund ("Rising Dividends Fund") and Templeton Global
Infrastructure Fund ("Infrastructure Fund"), and one non-
diversified series of Shares, Templeton Americas Government
Securities Fund ("Americas Government Securities Fund"),
(collectively, the "Funds").
INVESTMENT OBJECTIVES AND POLICIES
Investment Policies. The investment objective and policies
of each Fund are described in each Fund's Prospectus under the
heading "General Description--Investment Objective and Policies."
Repurchase Agreements. Repurchase agreements are contracts
under which the buyer of a security simultaneously commits to
resell the security to the seller at an agreed-upon price and
date. Under a repurchase agreement, the seller is required to
maintain the value of the securities subject to the repurchase
agreement at not less than their repurchase price. The
investment manager of each Fund (Templeton, Galbraith &
Hansberger Ltd. ("TGH") in the case of Rising Dividends Fund,
Templeton Investment Counsel, Inc. ("TICI") in the case of
Infrastructure Fund, and TICI, through its Templeton Global Bond
Managers division, in the case of Americas Government Securities
Fund (collectively, the "Investment Managers")) will monitor the
value of such securities daily to determine that the value equals
or exceeds the repurchase price. Repurchase agreements may
involve risks in the event of default or insolvency of the
seller, including possible delays or restrictions upon a Fund's
ability to dispose of the underlying securities. A Fund will
enter into repurchase agreements only with parties who meet
creditworthiness standards approved by the Board of Trustees,
i.e., banks or broker-dealers which have been determined by a
Fund's Investment Manager to present no serious risk of becoming
involved in bankruptcy proceedings within the time frame
contemplated by the repurchase transaction.
Debt Securities. The Funds may invest in debt securities
that are rated in any rating category by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's") or that are unrated by any rating agency. As an
operating policy, which may be changed by the Board of Trustees
without Shareholder approval, neither Rising Dividends Fund nor
Infrastructure Fund will invest more than 5% of its assets in
debt securities rated lower than Baa by Moody's or BBB by S&P.
The market value of debt securities generally varies in response
to changes in interest rates and the financial condition of each
issuer. During periods of declining interest rates, the value of
debt securities generally increases. Conversely, during periods
of rising interest rates, the value of such securities generally
declines. These changes in market value will be reflected in a
Fund's net asset value.
Bonds which are rated Baa by Moody's are considered as
medium grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well. Bonds which are rated C by Moody's are the lowest rated
class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment
standing.
Bonds rated BBB by S&P are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for bonds
in this category than in higher rated categories. Bonds rated D
by S&P are the lowest rated class of bonds, and generally are in
payment default. The D rating also will be used upon the filing
of a bankruptcy petition if debt service payments are
jeopardized.
Although they may offer higher yields than do higher rated
securities, high risk, low rated debt securities (commonly
referred to as "junk bonds") and unrated debt securities
generally involve greater volatility of price and risk of
principal and income, including the possibility of default by, or
bankruptcy of, the issuers of the securities. In addition, the
markets in which low rated and unrated debt securities are traded
are more limited than those in which higher rated securities are
traded. The existence of limited markets for particular
securities may diminish a Fund's ability to sell the securities
at fair value either to meet redemption requests or to respond to
a specific economic event such as a deterioration in the
creditworthiness of the issuer. Reduced secondary market
liquidity for certain low rated or unrated debt securities may
also make it more difficult for a Fund to obtain accurate market
quotations for the purposes of valuing the Fund's portfolio.
Market quotations are generally available on many low rated or
unrated securities only from a limited number of dealers and may
not necessarily represent firm bids of such dealers or prices for
actual sales.
Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and
liquidity of low rated debt securities, especially in a thinly
traded market. Analysis of the creditworthiness of issuers of
low rated debt securities may be more complex than for issuers of
higher rated securities, and the ability of a Fund to achieve its
investment objective may, to the extent of investment in low
rated debt securities, be more dependent upon such
creditworthiness analysis than would be the case if the Fund were
investing in higher rated securities.
Low rated debt securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions
than investment grade securities. The prices of low rated debt
securities have been found to be less sensitive to interest rate
changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments.
A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in low rated
debt securities prices because the advent of a recession could
lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If the
issuer of low rated debt securities defaults, a Fund may incur
additional expenses seeking recovery.
A Fund may accrue and report interest income on high yield
bonds, such as zero coupon bonds or pay-in-kind securities, even
though it receives no cash interest until the security's maturity
or payment date. In order to qualify for beneficial tax
treatment afforded regulated investment companies, and to
generally be relieved of federal tax liabilities, a Fund must
distribute all of its net income and gains to Shareholders (see
"Tax Status") generally on an annual basis. A Fund may have to
dispose of portfolio securities under disadvantageous
circumstances to generate cash or leverage itself by borrowing
cash in order to satisfy the distribution requirement.
Recent legislation, which requires federally-insured savings
and loan associations to divest their investments in low rated
debt securities, may have a material adverse effect on a Fund's
net asset value and investment practices.
Convertible Securities. The Funds may invest in convertible
securities, including convertible debt and convertible preferred
stock. Convertible securities are fixed income securities which
may be converted at a stated price within a specific amount of
time into a specified number of shares of common stock. These
securities are usually senior to common stock in a corporation's
capital structure, but usually are subordinated to non-
convertible debt securities. In general, the value of a
convertible security is the higher of its investment value (its
value as a fixed income security) and its conversion value (the
value of the underlying shares of common stock if the security is
converted). The investment value of a convertible security
generally increases when interest rates decline and generally
decreases when interest rates rise. The conversion value of a
convertible security is influenced by the value of the underlying
common stock.
Futures Contracts. Each Fund may purchase and sell
financial futures contracts. Although some financial futures
contracts call for making or taking delivery of the underlying
securities, in most cases these obligations are closed out before
the settlement date. The closing of a contractual obligation is
accomplished by purchasing or selling an identical offsetting
futures contract. Other financial futures contracts by their
terms call for cash settlements.
Each Fund may also buy and sell index futures contracts with
respect to any stock or bond index traded on a recognized stock
exchange or board of trade. An index futures contract is a
contract to buy or sell units of an index at a specified future
date at a price agreed upon when the contract is made. The index
futures contract specifies that no delivery of the actual
securities making up the index will take place. Instead,
settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the
contract price and the actual level of the index at the
expiration of the contract.
At the time a Fund purchases a futures contract, an amount
of cash, U.S. Government securities, or other highly liquid debt
securities equal to the market value of the contract will be
deposited in a segregated account with the Fund's custodian.
When writing a futures contract, a Fund will maintain with its
custodian liquid assets that, when added to the amounts deposited
with a futures commission merchant or broker as margin, are equal
to the market value of the instruments underlying the contract.
Alternatively, a Fund may "cover" its position by owning the
instruments underlying the contract or, in the case of an index
futures contract, owning a portfolio with a volatility
substantially similar to that of the index on which the futures
contract is based, or holding a call option permitting the Fund
to purchase the same futures contract at a price no higher than
the price of the contract written by the Fund (or at a higher
price if the difference is maintained in liquid assets with the
Fund's custodian).
Options on Securities, Indices and Futures. Each Fund may
write covered put and call options and purchase put and call
options on securities, securities indices and futures contracts
that are traded on United States and foreign exchanges and in the
over-the-counter markets.
An option on a security or a futures contract is a contract
that gives the purchaser of the option, in return for the premium
paid, the right to buy a specified security or futures contract
(in the case of a call option) or to sell a specified security or
futures contract (in the case of a put option) from or to the
writer of the option at a designated price during the term of the
option. An option on a securities index gives the purchaser of
the option, in return for the premium paid, the right to receive
from the seller cash equal to the difference between the closing
price of the index and the exercise price of the option.
Each Fund may write a call or put option only if the option
is "covered." A call option on a security or futures contract
written by a Fund is "covered" if the Fund owns the underlying
security or futures contract covered by the call or has an
absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities held in its portfolio.
A call option on a security or futures contract is also covered
if a Fund holds a call on the same security or futures contract
and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the
exercise price of the call written or (b) is greater than the
exercise price of the call written if the difference is
maintained by the Fund in cash or high grade U.S. Government
securities in a segregated account with its custodian. A put
option on a security or futures contract written by a Fund is
"covered" if the Fund maintains cash or fixed income securities
with a value equal to the exercise price in a segregated account
with its custodian, or else holds a put on the same security or
futures contract and in the same principal amount as the put
written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.
A Fund will cover call options on securities indices that it
writes by owning securities whose price changes, in the opinion
of the Fund's Investment Manager, are expected to be similar to
those of the index, or in such other manner as may be in
accordance with the rules of the exchange on which the option is
traded and applicable laws and regulations. Nevertheless, where
a Fund covers a call option on a securities index through
ownership of securities, such securities may not match the
composition of the index. In that event, a Fund will not be
fully covered and could be subject to risk of loss in the event
of adverse changes in the value of the index. A Fund will cover
put options on securities indices that it writes by segregating
assets equal to the option's exercise price, or in such other
manner as may be in accordance with the rules of the exchange on
which the option is traded and applicable laws and regulations.
A Fund will receive a premium from writing a put or call
option, which increases its gross income in the event the option
expires unexercised or is closed out at a profit. If the value
of a security, index or futures contract on which a Fund has
written a call option falls or remains the same, the Fund will
realize a profit in the form of the premium received (less
transaction costs) that could offset all or a portion of any
decline in the value of the portfolio securities being hedged.
If the value of the underlying security, index or futures
contract rises, however, a Fund will realize a loss in its call
option position, which will reduce the benefit of any unrealized
appreciation in its investments. By writing a put option, a Fund
assumes the risk of a decline in the underlying security, index
or futures contract. To the extent that the price changes of the
portfolio securities being hedged correlate with changes in the
value of the underlying security, index or futures contract,
writing covered put options will increase a Fund's losses in the
event of a market decline, although such losses will be offset in
part by the premium received for writing the option.
Each Fund may also purchase put options to hedge its
investments against a decline in value. By purchasing a put
option, a Fund will seek to offset a decline in the value of the
portfolio securities being hedged through appreciation of the put
option. If the value of a Fund's investments does not decline as
anticipated, or if the value of the option does not increase, its
loss will be limited to the premium paid for the option plus
related transaction costs. The success of this strategy will
depend, in part, on the accuracy of the correlation between the
changes in value of the underlying security, index or futures
contract and the changes in value of a Fund's security holdings
being hedged.
A Fund may purchase call options on individual securities or
futures contracts to hedge against an increase in the price of
securities or futures contracts that it anticipates purchasing in
the future. Similarly, a Fund may purchase call options on a
securities index to attempt to reduce the risk of missing a broad
market advance, or an advance in an industry or market segment,
at a time when the Fund holds uninvested cash or short-term debt
securities awaiting investment. When purchasing call options, a
Fund will bear the risk of losing all or a portion of the premium
paid if the value of the underlying security, index or futures
contract does not rise.
There can be no assurance that a liquid market will exist
when a Fund seeks to close out an option position. Trading could
be interrupted, for example, because of supply and demand
imbalances arising from a lack of either buyers or sellers, or
the options exchange could suspend trading after the price has
risen or fallen more than the maximum specified by the exchange.
Although a Fund may be able to offset to some extent any adverse
effects of being unable to liquidate an option position, it may
experience losses in some cases as a result of such inability.
The value of over-the-counter options purchased by a Fund, as
well as the cover for options written by a Fund, are considered
not readily marketable and are subject to the Trust's limitation
on investments in securities that are not readily marketable.
See "Investment Objectives and Policies -- Investment
Restrictions."
Foreign Currency Hedging Transactions. In order to hedge
against foreign currency exchange rate risks, each Fund may enter
into forward foreign currency exchange contracts and foreign
currency futures contracts, as well as purchase put or call
options on foreign currencies, as described below. Each Fund may
also conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market.
A Fund may enter into forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk
to the Fund from adverse changes in the relationship between the
U.S. dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers. A Fund
may enter into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S.
dollar price of the security. In addition, for example, when a
Fund believes that a foreign currency may suffer or enjoy a
substantial movement against another currency, it may enter into
a forward contract to sell an amount of the former foreign
currency approximating the value of some or all of its portfolio
securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging."
Because in connection with a Fund's forward foreign currency
transactions, an amount of its assets equal to the amount of the
purchase will be held aside or segregated to be used to pay for
the commitment, a Fund will always have cash, cash equivalents or
high quality debt securities available in an amount sufficient to
cover any commitments under these contracts or to limit any
potential risk. The segregated account will be marked-to-market
on a daily basis. While these contracts are not presently
regulated by the Commodity Futures Trading Commission ("CFTC"),
the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Funds' ability to utilize forward
contracts in the manner set forth above may be restricted.
Forward contracts may limit potential gain from a positive change
in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for a Fund than if it had not
engaged in such contracts.
A Fund may purchase and write put and call options on
foreign currencies for the purpose of protecting against declines
in the dollar value of foreign portfolio securities and against
increases in the dollar cost of foreign securities to be
acquired. As is the case with other kinds of options, however,
the writing of an option on foreign currency will constitute only
a partial hedge up to the amount of the premium received, and a
Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on foreign currency may constitute an
effective hedge against fluctuation in exchange rates, although,
in the event of rate movements adverse to its position, a Fund
may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written
or purchased by a Fund will be traded on U.S. and foreign
exchanges or over-the-counter.
A Fund may enter into exchange-traded contracts for the
purchase or sale for future delivery of foreign currencies
("foreign currency futures"). This investment technique will be
used only to hedge against anticipated future changes in exchange
rates which otherwise might adversely affect the value of a
Fund's portfolio securities or adversely affect the prices of
securities that a Fund intends to purchase at a later date. The
successful use of foreign currency futures will usually depend on
the ability of a Fund's Investment Manager to forecast currency
exchange rate movements correctly. Should exchange rates move in
an unexpected manner, a Fund may not achieve the anticipated
benefits of foreign currency futures or may realize losses.
Investment Restrictions. The Funds have imposed upon
themselves certain investment restrictions which, together with
their investment objectives, are fundamental policies except as
otherwise indicated. No changes in a Fund's investment objective
or these investment restrictions can be made without the approval
of the Shareholders of that Fund. For this purpose, the
provisions of the 1940 Act require the affirmative vote of the
lesser of either (1) 67% or more of that Fund's Shares present at
a Shareholders' meeting at which more than 50% of the outstanding
Shares are present or represented by proxy or (2) more than 50%
of the outstanding Shares of that Fund.
In accordance with these restrictions, each Fund will not:
1. Invest in real estate or mortgages on real estate
(although the Funds may invest in marketable securities
secured by real estate or interests therein); invest in
other open-end investment companies (except in
connection with a merger, consolidation, acquisition or
reorganization); invest in interests (other than
publicly issued debentures or equity stock interests)
in oil, gas or other mineral exploration or development
programs; or purchase or sell commodity contracts
(except futures contracts as described in a Fund's
Prospectus).
2. Purchase any security (other than obligations of the
U.S. Government, its agencies or instrumentalities) if,
as a result, as to 75% of a Fund's total assets (i)
more than 5% of the Fund's total assets would then be
invested in securities of any single issuer, or (ii)
the Fund would then own more than 10% of the voting
securities of any single issuer; provided, however,
that this restriction does not apply to Americas
Government Securities Fund.
3. Act as an underwriter; issue senior securities except
as set forth in investment restriction 6 below; or
purchase on margin or sell short, except that each Fund
may make margin payments in connection with futures,
options and currency transactions.
4. Loan money, except that a Fund may (i) purchase a
portion of an issue of publicly distributed bonds,
debentures, notes and other evidences of indebtedness,
(ii) enter into repurchase agreements and (iii) lend
its portfolio securities.
5. Borrow money, except that a Fund may borrow money from
banks in an amount not exceeding 33-1/3% of the value
of its total assets (including the amount borrowed).
6. Mortgage, pledge or hypothecate its assets (except as
may be necessary in connection with permitted
borrowings); provided, however, this does not prohibit
escrow, collateral or margin arrangements in connection
with its use of options, futures contracts and options
on future contracts.
7. Invest more than 25% of its total assets in a single
industry.
8. Participate on a joint or a joint and several basis in
any trading account in securities. (See "Investment
Objectives and Policies -- Trading Policies" as to
transactions in the same securities for the Funds
and/or other mutual funds and clients with the same or
affiliated advisers.)
If a Fund receives from an issuer of securities held by the
Fund subscription rights to purchase securities of that issuer,
and if the Fund exercises such subscription rights at a time when
the Fund's portfolio holdings of securities of that issuer would
otherwise exceed the limits set forth in Investment Restrictions
2 or 7 above, it will not constitute a violation if, prior to
receipt of securities upon exercise of such rights, and after
announcement of such rights, the Fund has sold at least as many
securities of the same class and value as it would receive on
exercise of such rights.
Additional Restrictions. Each Fund has adopted the
following additional restrictions which are not fundamental and
which may be changed without Shareholder approval, to the extent
permitted by applicable law, regulation or regulatory policy.
Under these restrictions, a Fund may not:
1. Purchase or retain securities of any company in which
Trustees or officers of the Trust or of a Fund's
Investment Manager, individually owning more than 1/2
of 1% of the securities of such company, in the
aggregate own more than 5% of the securities of such
company.
2. Invest more than 5% of the value of its total assets in
securities of issuers which have been in continuous
operation less than three years.
3. Invest more than 5% of its net assets in warrants
whether or not listed on the New York or American Stock
Exchanges, and more than 2% of its net assets in
warrants that are not listed on those exchanges.
Warrants acquired in units or attached to securities
are not included in this restriction.
4. Purchase or sell real estate limited partnership
interests.
5. Purchase or sell interests in oil, gas and mineral
leases (other than securities of companies that invest
in or sponsor such programs).
6. Invest for the purpose of exercising control over
management of any company.
7. Purchase more than 10% of a company's outstanding
voting securities.
8. Invest more than 15% of the Fund's total assets in
securities that are not readily marketable (including
repurchase agreements maturing in more than seven days
and over-the-counter options purchased by the Fund),
including no more than 10% of its total assets in
restricted securities. Rule 144A securities are not
subject to the 10% limitation on restricted securities,
although a Fund will limit its investment in all
restricted securities, including 144A securities, to
15% of its total assets.
Whenever any investment restriction states a maximum
percentage of a Fund's assets which may be invested in any
security or other property, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of the Fund's acquisition of such security or property.
Assets are calculated as described in each Fund's Prospectus
under the heading "How to Buy Shares of the Fund."
Risk Factors. Each Fund has the right to purchase
securities in any foreign country, developed or underdeveloped.
Investors should consider carefully the substantial risks
involved in securities of companies and governments of foreign
nations, which are in addition to the usual risks inherent in
domestic investments.
There may be less publicly available information about
foreign companies comparable to the reports and ratings published
about companies in the United States. Foreign companies are not
generally subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may
not be comparable to those applicable to United States companies.
A Fund, therefore, may encounter difficulty in obtaining market
quotations for purposes of valuing its portfolio and calculating
its net asset value. Foreign markets have substantially less
volume than the New York Stock Exchange and securities of some
foreign companies are less liquid and more volatile than
securities of comparable United States companies. Commission
rates in foreign countries, which are generally fixed rather than
subject to negotiation as in the United States, are likely to be
higher. In many foreign countries there is less government
supervision and regulation of stock exchanges, brokers and listed
companies than in the United States.
Investments in companies domiciled in developing countries
may be subject to potentially higher risks than investments in
developed countries. These risks include (i) less social,
political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of
liquidity and in greater price volatility; (iii) certain national
policies which may restrict a Fund's investment opportunities,
including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation;
(v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to
private property; (vi) the absence, until recently in certain
Eastern European countries, of a capital market structure or
market-oriented economy; and (vii) the possibility that recent
favorable economic developments in Eastern Europe may be slowed
or reversed by unanticipated political or social events in such
countries.
In addition, many countries in which a Fund may invest have
experienced substantial, and in some periods extremely high,
rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have
negative effects on the economies and securities markets of
certain countries. Moreover, the economies of some developing
countries may differ favorably or unfavorably from the United
States economy in such respects as growth of gross domestic
product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments
position.
Despite the recent dissolution of the Soviet Union, the
Communist Party may continue to exercise a significant role in
certain Eastern European countries. To the extent of the
Communist Party's influence, investments in such countries will
involve risks of nationalization, expropriation and confiscatory
taxation. The communist governments of a number of Eastern
European countries expropriated large amounts of private property
in the past, in many cases without adequate compensation, and
there can be no assurance that such expropriation will not occur
in the future. In the event of such expropriation, a Fund could
lose a substantial portion of any investments it has made in the
affected countries. Further, no accounting standards exist in
Eastern European countries. Finally, even though certain Eastern
European currencies may be convertible into U.S. dollars, the
conversion rates may be artificial to the actual market values
and may be adverse to Fund Shareholders.
Certain Eastern European countries, which do not have market
economies, are characterized by an absence of developed legal
structures governing private and foreign investments and private
property. Certain countries require governmental approval prior
to investments by foreign persons, or limit the amount of
investment by foreign persons in a particular company, or limit
the investment of foreign persons to only a specific class of
securities of a company that may have less advantageous terms
than securities of the company available for purchase by
nationals.
Authoritarian governments in certain Eastern European
countries may require that a governmental or quasi-governmental
authority act as custodian of a Fund's assets invested in such
country. To the extent such governmental or quasi-governmental
authorities do not satisfy the requirements of the 1940 Act to
act as foreign custodians of a Fund's cash and securities, the
Fund's investment in such countries may be limited or may be
required to be effected through intermediaries. The risk of loss
through governmental confiscation may be increased in such
countries.
Each Fund endeavors to buy and sell foreign currencies on as
favorable a basis as practicable. Some price spread on currency
exchange (to cover service charges) may be incurred, particularly
when a Fund changes investments from one country to another or
when proceeds of the sale of Shares in U.S. dollars are used for
the purchase of securities in foreign countries. Also, some
countries may adopt policies which would prevent a Fund from
transferring cash out of the country or withhold portions of
interest and dividends at the source. There is the possibility
of cessation of trading on national exchanges, expropriation,
nationalization or confiscatory taxation, withholding and other
foreign taxes on income or other amounts, foreign exchange
controls (which may include suspension of the ability to transfer
currency from a given country), default in foreign government
securities, political or social instability or diplomatic
developments which could affect investments in securities of
issuers in foreign nations.
The Funds may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations
and by indigenous economic and political developments. Some
countries in which a Fund may invest may also have fixed or
managed currencies that are not free-floating against the U.S.
dollar. Further, certain currencies may not be internationally
traded. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the
currencies in which a Fund's portfolio securities are denominated
may have a detrimental impact on that Fund. Through the flexible
policy of the Funds, the Investment Managers endeavor to avoid
unfavorable consequences and to take advantage of favorable
developments in particular nations where from time to time they
place the Funds' investments.
The exercise of this flexible policy may include decisions
to purchase securities with substantial risk characteristics and
other decisions such as changing the emphasis on investments from
one nation to another and from one type of security to another.
Some of these decisions may later prove profitable and others may
not. No assurance can be given that profits, if any, will exceed
losses.
The Trustees consider at least annually the likelihood of
the imposition by any foreign government of exchange control
restrictions which would affect the liquidity of the Funds'
assets maintained with custodians in foreign countries, as well
as the degree of risk from political acts of foreign governments
to which such assets may be exposed. They also consider the
degree of risk involved through the holding of portfolio
securities in domestic and foreign securities depositories (see
"Investment Management and other Services -- Custodian and
"Transfer Agent"). However, in the absence of willful
misfeasance, bad faith or gross negligence on the part of a
Fund's Investment Manager, any losses resulting from the holding
of portfolio securities in foreign countries and/or with
securities depositories will be at the risk of the Shareholders.
No assurance can be given that the Trustees' appraisal of the
risks will always be correct or that such exchange control
restrictions or political acts of foreign governments will not
occur.
A Fund's ability to reduce or eliminate its futures and
related options positions will depend upon the liquidity of the
secondary markets for such futures and options. The Funds intend
to purchase or sell futures and related options only on exchanges
or boards of trade where there appears to be an active secondary
market, but there is no assurance that a liquid secondary market
will exist for any particular contract or at any particular time.
Use of futures and options for hedging may involve risks because
of imperfect correlations between movements in the prices of the
futures or options and movements in the prices of the securities
being hedged. Successful use of futures and related options by a
Fund for hedging purposes also depends upon that Fund's
Investment Manager's ability to predict correctly movements in
the direction of the market, as to which no assurance can be
given.
Additional risks may be involved with the Funds' special
investment techniques, including loans of portfolio securities
and borrowing for investment purposes. These risks are described
under the heading "Investment Techniques" in the Prospectus.
Trading Policies. The Investment Managers and their
affiliated companies serve as investment advisers to other
investment companies and private clients. Accordingly, the
respective portfolios of these funds and clients may contain many
or some of the same securities. When any two or more of these
funds or clients are engaged simultaneously in the purchase or
sale of the same security, the transactions are placed for
execution in a manner designed to be equitable to each party.
The larger size of the transaction may affect the price of the
security and/or the quantity which may be bought or sold for each
party. If the transaction is large enough, brokerage commissions
in certain countries may be negotiated below those otherwise
chargeable.
Sale or purchase of securities, without payment of brokerage
commissions, fees (except customary transfer fees) or other
remuneration in connection therewith, may be effected between any
of these funds, or between funds and private clients, under
procedures adopted pursuant to Rule 17a-7 under the 1940 Act.
Personal Securities Transactions. Access persons of the
Franklin Templeton Group, as defined in SEC Rule 17(j) under the
1940 Act, who are employees of Franklin Resources, Inc. or their
subsidiaries, are permitted to engage in personal securities
transactions subject to the following general restrictions and
procedures: (1) The trade must receive advance clearance from a
compliance officer and must be completed within 24 hours after
this clearance; (2) Copies of all brokerage confirmations must be
sent to the compliance officer and within 10 days after the end
of each calendar quarter, a report of all securities transactions
must be provided to the compliance officer; (3) In addition to
items (1) and (2), access persons involved in preparing and
making investment decisions must file annual reports of their
securities holdings each January and also inform the compliance
officer (or other designated personnel) if they own a security
that is being considered for a fund or other client transaction
or if they are recommending a security in which they have an
ownership interest for purchase or sale by a fund or other
client.
MANAGEMENT OF THE TRUST
The name, address, principal occupation during the past five
years and other information with respect to each of the Trustees
and Principal Executive Officers of the Trust are as follows:
Name, Address and Principal Occupation
Offices with Trust During Past Five Years
CHARLES B. JOHNSON* President, chief executive
777 Mariners Island Blvd. officer, and director, Franklin
San Mateo, California Resources, Inc.; chairman of
Trustee and Vice President the board, Franklin Templeton
Distributors, Inc.; chairman of
the board and director,
Franklin Advisers, Inc.;
director, Franklin
Administrative Services, Inc.
and General Host Corporation;
director of Templeton Global
Investors, Inc.; director or
trustee of other Templeton
Funds; and officer and
director, trustee or managing
general partner, as the case
may be, of most other
subsidiaries of Franklin and of
most of the investment
companies in the Franklin Group
of Funds.
MARTIN L. FLANAGAN* Senior vice president,
777 Mariners Island Blvd. treasurer, and chief financial
San Mateo, California officer of Franklin Resources,
Trustee and Vice President Inc.; director and executive
vice president of Templeton
Investment Counsel, Inc. and
Templeton Global Investors,
Inc.; president or vice
president of the Templeton
Funds; accountant, Arthur
Andersen & Company (1982-1983);
member of the International
Society of Financial Analysts
and the American Institute of
Certified Public Accountants.
HASSO-G VON DIERGARDT-NAGLO Farmer; president of Clairhaven
R.R. 3 Investments, Ltd. and other
Stouffville, Ontario private investment companies; a
Trustee director or trustee of other
Templeton Funds.
F. BRUCE CLARKE Retired; former credit advisor,
19 Vista View Blvd. National Bank of Canada,
Thornhill, Ontario Toronto; a director or trustee
Trustee of other Templeton Funds.
BETTY P. KRAHMER A director or trustee of other
2201 Kentmere Parkway Templeton Funds; director or
Wilmington, Delaware trustee of various civic
Trustee associations; former economic
analyst, U.S. Government.
FRED R. MILLSAPS A director or trustee of other
2665 N.E. 37th Drive Templeton Funds; manager of
Fort Lauderdale, Florida personal investments (1978-
Trustee present); chairman and chief
executive officer of Landmark
Banking Corporation (1969-
1978); financial vice president
of Florida Power and Light
(1965-1969); vice president of
Federal Reserve Bank of Atlanta
(1958-1965); director of
various business and nonprofit
organizations.
JOHN G. BENNETT, JR. A director or trustee of other
3 Radnor Corporate Center Templeton Funds; founder,
Suite 150 chairman of the board, and
100 Matsonford Road president of the Foundation for
Radnor, Pennsylvania New Era Philanthropy; president
Trustee and chairman of the boards of
the Evelyn M. Bennett Memorial
Foundation and NEP
International Trust; chairman
of the board and chief
executive officer of The
Bennett Group International,
LTD; chairman of the boards of
Human Service Systems, Inc. and
Multi-Media Communicators,
Inc.; a director or trustee of
many national and international
organizations, universities,
and grant-making foundations
serving in various executive
board capacities; member of the
Public Policy Committee of the
Advertising Council.
ANDREW H. HINES, JR. Consultant, Triangle Consulting
150 2nd Avenue N. Group; chairman of the board
St. Petersburg, Florida and chief executive officer of
Trustee Florida Progress Corporation
(1982-February 1990) and
director of various of its
subsidiaries; chairman and
director of Precise Power
Corporation; Executive-in-
Residence of Eckerd College
(1991-present); director of
Checkers Drive-In Restaurants,
Inc.; a director or trustee of
other Templeton Funds.
HARRIS J. ASHTON Chairman of the board,
Metro Center president, and chief executive
1 Station Place officer of General Host
Stamford, Connecticut Corporation (nursery and craft
Trustee centers); director of RBC
Holdings Inc. (a bank holding
company) and Bar-S Foods;
director or trustee of other
Templeton Funds; and director,
trustee or managing general
partner, as the case may be,
for most of the investment
companies in the Franklin Group
of Funds.
S. JOSEPH FORTUNATO Member of the law firm of
200 Campus Drive Pitney, Hardin, Kipp & Szuch;
Florham Park, New Jersey director of General Host
Trustee Corporation; director or
trustee of other Templeton
Funds; and director, trustee or
managing general partner, as
the case may be, for most of
the investment companies in the
Franklin Group of Funds.
GORDON S. MACKLIN Chairman of White River
8212 Burning Tree Road Corporation (information
Bethesda, Maryland services); director of Infovest
Trustee Corporation, Fund America
Enterprise Holdings, Inc.,
Martin Marietta Corporation,
MCI Communications Corporation
and Medimmune, Inc.; director
or trustee of other Templeton
Funds; director, trustee, or
managing general partner, as
the case may be, of most of the
investment companies in the
Franklin Group of Funds;
formerly: chairman, Hambrecht
and Quist Group; director, H&Q
Healthcare Investors; and
president, National Association
of Securities Dealers, Inc.
NICHOLAS F. BRADY* A director or trustee of other
The Bullitt House Templeton Funds; chairman of
102 East Dover Street Templeton Emerging Markets
Easton, Maryland Investment Trust PLC; chairman
Trustee and president of Darby
Advisors, Inc. (an investment
firm) since January, 1993;
director of the H. J. Heinz
Company, Capital Cities/ABC,
Inc. and the Christiana
Companies; Secretary of the
United States Department of the
Treasury from 1988 to January,
1993; chairman of the board of
Dillon, Read & Co. Inc.
(investment banking) prior
thereto.
MARK G. HOLOWESKO President and director of
Lyford Cay Templeton, Galbraith &
Nassau, Bahamas Hansberger Ltd.; director of
President global equity research for
Templeton Worldwide, Inc.;
president or vice president of
the Templeton Funds; investment
administrator with Roy West
Trust Corporation (Bahamas)
Limited (1984-1985).
SAMUEL J. FORESTER, JR. President of the Templeton
500 East Broward Blvd. Global Bond Managers Division
Fort Lauderdale, Florida of Templeton Investment
Vice President Counsel, Inc.; president or
vice president of other
Templeton Funds; founder and
partner of Forester, Hairston
Investment Management (1989-
1990); managing director (Mid-
East Region) of Merrill Lynch,
Pierce, Fenner & Smith Inc.
(1987-1988); advisor for Saudi
Arabian Monetary Agency (1982-
1987).
DORIAN FOYIL Vice president, Portfolio
Lyford Cay Management/Research, of
Nassau, Bahamas Templeton, Galbraith &
Vice President Hansberger Ltd.; formerly,
research analyst, UBS Phillips
& Drew (London).
HAROLD W. EHRLICH Vice president, Portfolio
500 East Broward Blvd. Management/Research, of
Fort Lauderdale, Florida Templeton Investment Counsel,
Vice President Inc.; vice president of certain
of the Templeton Funds;
formerly, analyst and assistant
portfolio manager, Fundamental
Management Corporation (1985-
1987); vice president of First
Equity Corporation of Florida
(1983-1985).
DOUGLAS R. LEMPEREUR Senior vice president of the
500 East Broward Blvd. Templeton Global Bond Managers
Fort Lauderdale, Florida Division of Templeton
Vice President Investment Counsel, Inc.;
formerly, securities analyst
for Colonial Management
Associates (1985-1988),
Standish, Ayer & Wood (1977-
1985), and The First National
Bank of Chicago (1974-1977).
JOHN R. KAY Vice president of the Templeton
500 East Broward Blvd. Funds; vice president and
Fort Lauderdale, Florida treasurer of Templeton Global
Vice President Investors, Inc. and Templeton
Worldwide, Inc.; assistant vice
president of Franklin Templeton
Distributors, Inc.; formerly,
vice president and controller
of the Keystone Group, Inc.
NEIL S. DEVLIN Senior vice president,
500 East Broward Blvd. Portfolio Management/Research,
Fort Lauderdale, Florida of the Templeton Global Bond
Vice President Managers division of Templeton
Investment Counsel, Inc.;
formerly, portfolio manager and
bond analyst, Constitutional
Capital Management (1985-1987);
bond trader and research
analyst, Bank of New England
(1982-1985).
JAMES R. BAIO Certified public accountant;
500 East Broward Blvd. treasurer of the Templeton
Fort Lauderdale, Florida Funds; senior vice president,
Treasurer Templeton Worldwide, Inc.,
Templeton Global Investors,
Inc., and Templeton Funds Trust
Company; formerly, senior tax
manager of Ernst & Young
(certified public accountants)
(1977-1989).
THOMAS M. MISTELE Senior vice president of
700 Central Avenue Templeton Global Investors,
St. Petersburg, Florida Inc.; vice president of
Secretary Franklin Templeton
Distributors, Inc.; secretary
of the Templeton Funds;
attorney, Dechert Price &
Rhoads (1985-1988) and
Freehill, Hollingdale & Page
(1988); judicial clerk, U.S.
District Court (Eastern
District of Virginia) (1984-
1985).
JACK L. COLLINS Assistant treasurer of the
700 Central Avenue Templeton Funds; assistant vice
St. Petersburg, Florida president of Franklin Templeton
Assistant Treasurer Investor Services, Inc.; former
partner of Grant Thornton,
independent public accountants.
JEFFREY L. STEELE Partner, Dechert Price &
1500 K Street, N.W. Rhoads.
Washington, D.C.
Assistant Secretary
__________________________
* Messrs. Templeton, Johnson, Flanagan and Brady are Trustees
who are "interested persons" of the Trust as that term is
defined in the 1940 Act. Mr. Brady and Franklin Resources,
Inc. are limited partners of Darby Overseas Partners, L.P.
("Darby Overseas"). Mr. Brady established Darby Overseas in
February, 1994, and is Chairman and a shareholder of the
corporate general partner of Darby Overseas. In addition,
Darby Overseas and Templeton, Galbraith & Hansberger Ltd.
are limited partners of Darby Emerging Markets Fund, L.P.
TRUSTEE COMPENSATION
All of the Trust's officers and Trustees also hold positions
with other investment companies in the Franklin Templeton Group.
No compensation is paid by the Trust to any officer or Trustee
who is an officer, trustee or employee of the Investment Manager
or its affiliates. Each Templeton Fund pays its independent
directors and trustees and Mr. Brady an annual retainer and/or
fees for attendance at Board and Committee meetings, the amount
of which is based on the level of assets in each fund.
Accordingly, based upon the assets of the Trust as of December
31, 1994, the Trust will pay the independent Trustees and Mr.
Brady an annual retainer of $________ and a fee of $________ per
meeting attended of the Board and its Committees. The
independent Trustees and Mr. Brady are reimbursed for any
expenses incurred in attending meetings, paid pro rata by each
Franklin Templeton fund in which they serve. No pension or
retirement benefits are accrued as part of Trust expenses.
The following table shows the total compensation paid to the
Trustees by the Trust and by all investment,companies in the
Franklin Templeton Group for the fiscal year ended December 31,
1994:
Number of
Franklin Total
Aggregate Templeton Fund Compensation
Compensation Boards on from All Funds
from the Which Director in Franklin
Name of Director Fund Serves Templeton Group
Harris J. Ashton $ 54 $319,925
John G. Bennett, Jr. 23 105,625
Nicholas F. Brady 23 86,125
F. Bruce Clarke
Frank J. Crothers 4 12,850
Hasso-G von
Diergardt-Naglo
S. Joseph Fortunato 56 336,065
Andrew H. Hines, Jr. 23 106,125
Betty P. Krahmer 19 75,275
Gordon S. Macklin 51 303,685
Fred R. Millsaps 23 106,125
PRINCIPAL SHAREHOLDERS
As of February 10, 1995, there were 576,959 Shares of Rising
Dividends Fund outstanding, of which _____ Shares (____%) were
owned beneficially, directly or indirectly, by all the Trustees
and Officers of the Trust as a group. As of February 10, 1995,
there were 1,872,441 Shares of Infrastructure Fund outstanding,
of which ____ Shares (____%) were owned beneficially, directly or
indirectly, by all the Trustees and Officers of the Trust as a
group. As of February 10, 1995, there were 286,495 Shares of
Americas Government Securities Fund outstanding, of which ___
Shares (____%) were owned beneficially, directly or indirectly,
by all the Trustees and Officers of the Trust as a group. As of
February 10, 1995, to the knowledge of management, no person
owned beneficially 5% or more of the outstanding Shares of Rising
Dividends Fund, except Templeton Global Investors, Inc., 500 E.
Broward Blvd., Suite 2100, Fort Lauderdale, Florida 33394 owned
100,939 Shares (17.5% of the outstanding Shares). As of
February 10, 1995, to the knowledge of management, no person
owned beneficially 5% or more of the outstanding Shares of
Infrastructure Fund, except Templeton Global Investors, Inc., 500
E. Broward Blvd., Suite 2100, Fort Lauderdale, Florida 33394
owned 100,321 Shares (5.36% of the outstanding Shares). As of
February 10, 1995, to the knowledge of management, no person
owned beneficially 5% or more of the outstanding Shares of
Americas Government Securities Fund, except Templeton Global
Investors, Inc., 500 E. Broward Blvd., Suite 2100, Fort
Lauderdale, Florida 33394 owned 253,296 Shares (88.4% of the
outstanding Shares).
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Management Agreements. The Investment Manager of
Rising Dividends Fund is Templeton, Galbraith & Hansberger Ltd.,
a Bahamian corporation with offices in Nassau, Bahamas. The
Investment Manager of Infrastructure Fund is Templeton Investment
Counsel, Inc., a Florida corporation with offices located at
Broward Financial Centre, Fort Lauderdale, Florida 33394-3091.
The Investment Manager of Americas Government Securities Fund is
TICI, through the Templeton Global Bond Managers division. The
Investment Management Agreements, dated March 14, 1994, relating
to Rising Dividends Fund and Infrastructure Fund were approved by
the Board of Trustees, including a majority of the Trustees who
were not parties to the Agreements or interested persons of any
such party, at a meeting on February 25, 1994, and by Templeton
Global Investors, Inc., as sole Shareholder of Rising Dividends
Fund and Infrastructure Fund, on March 11, 1994 and will run
through July 31, 1995. The Investment Management Agreement,
dated June 27, 1994, relating to Americas Government Securities
Fund was approved by the Board of Trustees, including a majority
of the Trustees who were not interested parties to the Agreement
or interested persons of any such party, at a meeting held on
March 18, 1994, and by Templeton Global Investors, Inc., as sole
Shareholder of Americas Government Securities Fund, on June 27,
1994, and will run through July 31, 1995. The Investment
Management Agreements will continue from year to year thereafter,
subject to approval annually by the Board of Trustees or by vote
of a majority of the outstanding Shares of each Fund (as defined
in the 1940 Act) and also, in either event, with the approval of
a majority of those Trustees who are not parties to the
Agreements or interested persons of any such party in person at a
meeting called for the purpose of voting on such approval.
Each Investment Management Agreement requires a Fund's
Investment Manager to manage the investment and reinvestment of
the Fund's assets. The Investment Managers are not required to
furnish any personnel, overhead items or facilities for the
Funds, including daily pricing or trading desk facilities,
although such expenses are paid by investment advisers of some
other investment companies.
Each Investment Management Agreement provides that a Fund's
Investment Manager will select brokers and dealers for execution
of a Fund's portfolio transactions consistent with the Trust's
brokerage policies (see "Brokerage Allocation"). Although the
services provided by broker-dealers in accordance with the
brokerage policies incidentally may help reduce the expenses of
or otherwise benefit the Investment Managers and other investment
advisory clients of the Investment Managers and of their
affiliates, as well as the Funds, the value of such services is
indeterminable and the Investment Managers' fees are not reduced
by any offset arrangement by reason thereof.
When the Investment Manager of a Fund determines to buy or
sell the same security for a Fund that the Investment Manager or
one or more of its affiliates has selected for one or more of its
other clients or for clients of its affiliates, the orders for
all such securities transactions are placed for execution by
methods determined by the Investment Manager, with approval by
the Board of Trustees, to be impartial and fair, in order to seek
good results for all parties. See "Investment Objectives and
Policies -- Trading Policies." Records of securities
transactions of persons who know when orders are placed by a Fund
are available for inspection at least four times annually by the
Compliance Officer of the Trust so that the non-interested
Trustees (as defined in the 1940 Act) can be satisfied that the
procedures are generally fair and equitable to all parties.
Each Investment Management Agreement provides that a Fund's
Investment Manager shall have no liability to the Trust, a Fund
or any Shareholder of a Fund for any error of judgment, mistake
of law, or any loss arising out of any investment or other act or
omission in the performance by the Investment Manager of its
duties under the Agreement, except liability resulting from
willful misfeasance, bad faith or gross negligence on the
Investment Manager's part or reckless disregard of its duties
under the Agreement. Each Investment Management Agreement will
terminate automatically in the event of its assignment, and may
be terminated by the Trust on behalf of a Fund at any time
without payment of any penalty on 60 days' written notice, with
the approval of a majority of the Trustees in office at the time
or by vote of a majority of the outstanding voting securities of
that Fund (as defined in the 1940 Act).
Management Fees. For its services, Rising Dividends Fund
pays TGH a monthly fee equal on an annual basis to 0.75% of its
average daily net assets. Infrastructure Fund pays TICI a
monthly fee equal on an annual basis to 0.75% of its average
daily net assets. Americas Government Securities Fund pays TICI
a monthly fee equal on an annual basis to 0.60% of its average
daily net assets. Each class of Shares pays a portion of the
fee, determined by the proportion of the Fund that it represents.
Each Fund's Investment Manager will comply with any
applicable state regulations which may require it to make
reimbursements to a Fund in the event that the Fund's aggregate
operating expenses, including the advisory fee, but generally
excluding interest, taxes, brokerage commissions and
extraordinary expenses, are in excess of specific applicable
limitations. The strictest rule currently applicable to a Fund
is 2.5% of the first $30,000,000 of net assets, 2% of the next
$70,000,000 of net assets and 1.5% of the remainder.
The Investment Managers. The Investment Managers are
indirect wholly owned subsidiaries of Franklin Resources, Inc.
("Franklin"), a publicly traded company whose shares are listed
on the New York Stock Exchange. Charles B. Johnson and Rupert H.
Johnson, Jr. are principal shareholders of Franklin and own,
respectively, approximately 20% and 16% of its outstanding
shares. Messrs. Charles B. Johnson and Rupert H. Johnson, Jr.
are brothers.
Sub-Advisory Agreement. Under a Sub-Advisory Agreement
between TICI and Franklin Advisers, Inc. ("Franklin Advisers"),
Franklin Advisers provides TICI with investment advisory
assistance and portfolio management advice with respect to
Americas Government Securities Fund's portfolio. Franklin
Advisers provides TICI on an ongoing basis with research
services, including information, analytical reports, computer
screening studies, statistical data and factual resumes
pertaining to securities. For its services, TICI pays to
Franklin Advisers a fee in U.S. dollars at an annual rate of
0.25% of Americas Government Securities Fund's average daily net
assets.
The Sub-Advisory Agreement provides that it will terminate
automatically in the event of its assignment and that it may be
terminated by the Trust on 60 days' written notice to TICI and to
Franklin Advisers, without penalty, provided that such
termination by the Trust is approved by the vote of a majority of
the Trust's Board of Trustees or by vote of a majority of
Americas Government Securities Fund's outstanding Shares. The
Agreement also provides that it may be terminated by either TICI
or Franklin Advisers upon not less than 60 days' written notice
to the other party. The Sub-Advisory Agreement dated June 27,
1994 was approved by the Board of Trustees at a meeting held on
March 18, 1994, was approved by Templeton Global Investors, Inc.
as sole Shareholder of Americas Government Securities Fund on
June 27, 1994, and will run through July 31, 1995. The Agreement
will continue from year to year thereafter, subject to approval
annually by the Board of Trustees or by vote of a majority of the
outstanding Shares of Americas Government Securities Fund (as
defined in the 1940 Act) and also, in either event, with the
approval of a majority of those Trustees who are not parties to
the Agreement or interested persons of any such party in person
at a meeting called for the purpose of voting on such approval.
Franklin Advisers is relieved of liability to the Trust for any
act or omission in the course of its performance under the Sub-
Advisory Agreement, in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations
under the Agreement.
Business Manager. Templeton Global Investors, Inc. performs
certain administrative functions as Business Manager for the
Funds, including:
- providing office space, telephone, office equipment and
supplies for the Trust;
- paying compensation of the Trust's officers for
services rendered as such;
- authorizing expenditures and approving bills for
payment on behalf of the Funds;
- supervising preparation of annual and semiannual
reports to Shareholders, notices of dividends, capital
gain distributions and tax credits, and attending to
correspondence and other special communications with
individual Shareholders;
- daily pricing of each Fund's investment portfolio and
preparing and supervising publication of daily
quotations of the bid and asked prices of each Fund's
Shares, earnings reports and other financial data;
- monitoring relationships with organizations serving the
Funds, including the custodian and printers;
- providing trading desk facilities for the Funds;
- supervising compliance by the Funds with recordkeeping
requirements under the 1940 Act and regulations
thereunder, with state regulatory requirements,
maintaining books and records for the Funds (other than
those maintained by the custodian and transfer agent),
and preparing and filing tax reports other than the
Funds' income tax returns;
- monitoring the qualifications of tax deferred
retirement plans providing for investment in Shares of
the Funds; and
- providing executive, clerical and secretarial help
needed to carry out these responsibilities.
For its services, the Business Manager receives a monthly
fee equal on an annual basis to 0.15% of the first $200,000,000
of the Trust's aggregate average daily net assets (i.e., total of
both Funds), reduced to 0.135% annually of the Trust's aggregate
net assets in excess of $200,000,000, further reduced to 0.1%
annually of such net assets in excess of $700,000,000, and
further reduced to 0.075% annually of such net assets in excess
of $1,200,000,000. The fee is allocated between the Funds
according to their respective average daily net assets. Each
class of Shares pays a portion of the fee, determined by the
proportion of the Fund that it represents. Since the Business
Manager's fee covers services often provided by investment
advisers to other funds, each Fund's combined expenses for
advisory and administrative services together may be higher than
those of some other investment companies.
The Business Manager is relieved of liability to the Trust
for any act or omission in the course of its performance under
the Business Management Agreement, in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties and obligations under the Agreement. The Business
Management Agreement may be terminated by the Trust on behalf of
a Fund at any time on 60 days' written notice without payment of
penalty, provided that such termination by the Trust shall be
directed or approved by vote of a majority of the Trustees of the
Trust in office at the time or by vote of a majority of the
outstanding voting securities of that Fund, and shall terminate
automatically and immediately in the event of its assignment.
Templeton Global Investors, Inc. is a wholly owned
subsidiary of Franklin.
Custodian and Transfer Agent. The Chase Manhattan Bank,
N.A. serves as Custodian of the Trust's assets, which are
maintained at the Custodian's principal office, MetroTech
Center, Brooklyn, New York 11245, and at the offices of its
branches and agencies throughout the world. The Custodian has
entered into agreements with foreign sub-custodians approved by
the Trustees pursuant to Rule 17f-5 under the 1940 Act. The
Custodian, its branches and sub-custodians generally
domestically, and frequently abroad, do not actually hold
certificates for the securities in their custody, but instead
have book records with domestic and foreign securities
depositories, which in turn have book records with the transfer
agents of the issuers of the securities. Compensation for the
services of the Custodian is based on a schedule of charges
agreed on from time to time.
Franklin Templeton Investor Services, Inc. serves as the
Funds' Transfer Agent. Services performed by the Transfer Agent
include processing purchase, transfer and redemption orders,
making dividend payments, capital gain distributions and
reinvestments, and handling routine communications with
Shareholders. The Transfer Agent receives an annual fee of
$13.74 per Shareholder account plus out-of-pocket expenses from
Rising Dividends Fund and Infrastructure Fund and an annual fee
of $14.77 per Shareholder account plus out-of-pocket expenses
from Americas Government Securities Fund. These fees are
adjusted each year to reflect changes in the Department of Labor
Consumer Price Index.
Legal Counsel. Dechert Price & Rhoads, 1500 K Street, N.W.,
Washington, D.C. 20005, is legal counsel for the Trust.
Independent Accountants. The firm of McGladrey & Pullen,
LLP, 555 Fifth Avenue, New York, New York 10017, serves as
independent accountants for the Trust. Its audit services
comprise examination of the Funds' financial statements and
review of the Funds' filings with the Securities and Exchange
Commission and the Internal Revenue Service.
Reports to Shareholders. The Funds' fiscal years end on
March 31. Shareholders are provided at least semiannually with
reports showing the Funds' portfolios and other information,
including an annual report with financial statements audited by
the independent accountants.
BROKERAGE ALLOCATION
The Investment Management Agreements provide that each
Fund's Investment Manager is responsible for selecting members of
securities exchanges, brokers and dealers (such members, brokers
and dealers being hereinafter referred to as "brokers") for the
execution of the Fund's portfolio transactions and, when
applicable, the negotiation of commissions in connection
therewith. All decisions and placements are made in accordance
with the following principles:
1. Purchase and sale orders are usually placed with
brokers who are selected by a Fund's Investment Manager
as able to achieve "best execution" of such orders.
"Best execution" means prompt and reliable execution at
the most favorable securities price, taking into
account the other provisions hereinafter set forth.
The determination of what may constitute best execution
and price in the execution of a securities transaction
by a broker involves a number of considerations,
including, without limitation, the overall direct net
economic result to a Fund (involving both price paid or
received and any commissions and other costs paid), the
efficiency with which the transaction is effected, the
ability to effect the transaction at all where a large
block is involved, availability of the broker to stand
ready to execute possibly difficult transactions in the
future, and the financial strength and stability of the
broker. Such considerations are judgmental and are
weighed by the Investment Managers in determining the
overall reasonableness of brokerage commissions.
2. In selecting brokers for portfolio transactions, each
Fund's Investment Manager takes into account its past
experience as to brokers qualified to achieve "best
execution," including brokers who specialize in any
foreign securities held by the Fund.
3. The Investment Managers are authorized to allocate
brokerage business to brokers who have provided
brokerage and research services, as such services are
defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "1934 Act"), for a Fund and/or other
accounts, if any, for which the Investment Managers
exercise investment discretion (as defined in Section
3(a)(35) of the 1934 Act) and, as to transactions to
which fixed minimum commission rates are not
applicable, to cause a Fund to pay a commission for
effecting a securities transaction in excess of the
amount another broker would have charged for effecting
that transaction, if the Investment Manager for that
Fund in making the selection in question determines in
good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research
services provided by such broker, viewed in terms of
either that particular transaction or the Investment
Manager's overall responsibilities with respect to that
Fund and the other accounts, if any, as to which it
exercises investment discretion. In reaching such
determination, the Investment Managers are not required
to place or attempt to place a specific dollar value on
the research or execution services of a broker or on
the portion of any commission reflecting either of said
services. In demonstrating that such determinations
were made in good faith, the Investment Managers shall
be prepared to show that all commissions were allocated
and paid for purposes contemplated by the Trust's
brokerage policy; that the research services provide
lawful and appropriate assistance to the Investment
Managers in the performance of their investment
decision-making responsibilities; and that the
commissions paid were within a reasonable range. The
determination that commissions were within a reasonable
range shall be based on any available information as to
the level of commissions known to be charged by other
brokers on comparable transactions, but there shall be
taken into account the Trust's policies that (i)
obtaining a low commission is deemed secondary to
obtaining a favorable securities price, since it is
recognized that usually it is more beneficial to a Fund
to obtain a favorable price than to pay the lowest
commission; and (ii) the quality, comprehensiveness and
frequency of research studies which are provided for
the Investment Managers are useful to the Investment
Managers in performing their advisory services under
their Investment Management Agreements with the Trust.
Research services provided by brokers to the Investment
Managers are considered to be in addition to, and not
in lieu of, services required to be performed by the
Investment Managers under its Investment Management
Agreements with the Trust. Research furnished by
brokers through whom a Fund effects securities
transactions may be used by the Investment Managers for
any of their accounts, and not all such research may be
used by the Investment Managers for the Funds. When
execution of portfolio transactions is allocated to
brokers trading on exchanges with fixed brokerage
commission rates, account may be taken of various
services provided by the broker, including quotations
outside the United States for daily pricing of foreign
securities held in a Fund's portfolio.
4. Purchases and sales of portfolio securities within the
United States other than on a securities exchange are
executed with primary market makers acting as
principal, except where, in the judgment of a Fund's
Investment Manager, better prices and execution may be
obtained on a commission basis or from other sources.
5. Sales of the Funds' Shares (which shall be deemed to
include also shares of other companies registered under
the 1940 Act which have either the same investment
adviser or an investment adviser affiliated with either
Fund's Investment Manager) made by a broker are one
factor among others to be taken into account in
deciding to allocate portfolio transactions (including
agency transactions, principal transactions, purchases
in underwritings or tenders in response to tender
offers) for the account of a Fund to that broker;
provided that the broker shall furnish "best
execution," as defined in paragraph 1 above, and that
such allocation shall be within the scope of that
Fund's other policies as stated above; and provided
further, that in every allocation made to a broker in
which the sale of Shares is taken into account there
shall be no increase in the amount of the commissions
or other compensation paid to such broker beyond a
reasonable commission or other compensation determined,
as set forth in paragraph 3 above, on the basis of best
execution alone or best execution plus research
services, without taking account of or placing any
value upon such sale of Shares.
Insofar as known to management, no Trustee or officer of the
Trust, nor the Investment Managers or Principal Underwriter or
any person affiliated with either of them, has any material
direct or indirect interest in any broker employed by or on
behalf of the Trust. Franklin Templeton Distributors, Inc., the
Trust's Principal Underwriter, is a registered broker-dealer, but
it does not intend to execute any purchase or sale transactions
for the Funds' portfolios or to participate in any commissions on
any such transactions. All portfolio transactions are allocated
to broker-dealers only when their prices and execution, in the
judgment of the Investment Managers, are equal to the best
available within the scope of the Trust's policies. There is no
fixed method used in determining which broker-dealers receive
which order or how many orders.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Each Fund's Prospectus describes the manner in which a
Fund's Shares may be purchased and redeemed. See "How to Buy
Shares of the Fund" and "How to Sell Shares of the Fund."
Net asset value per Share is calculated separately for each
Fund. Net asset value per Share is determined as of the
scheduled closing of the New York Stock Exchange (generally
4:00 p.m., New York time) every Monday through Friday (exclusive
of national business holidays). The Trust's offices will be
closed, and net asset value will not be calculated, on those days
on which the New York Stock Exchange is closed, which currently
are: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business in New York on each day on which the
New York Stock Exchange is open. Trading of European or Far
Eastern securities generally, or in a particular country or
countries, may not take place on every New York business day.
Furthermore, trading takes place in various foreign markets on
days which are not business days in New York and on which each
Fund's net asset value is not calculated. Each Fund calculates
net asset value per Share, and therefore effects sales,
redemptions and repurchases of its Shares, as of the close of the
New York Stock Exchange once on each day on which that Exchange
is open. Such calculation does not take place contemporaneously
with the determination of the prices of many of the portfolio
securities used in such calculation and if events occur which
materially affect the value of those foreign securities, they
will be valued at fair market value as determined by the
management and approved in good faith by the Board of Trustees.
The Board of Trustees may establish procedures under which a
Fund may suspend the determination of net asset value for the
whole or any part of any period during which (1) the New York
Stock Exchange is closed other than for customary weekend and
holiday closings, (2) trading on the New York Stock Exchange is
restricted, (3) an emergency exists as a result of which disposal
of securities owned by a Fund is not reasonably practicable or it
is not reasonably practicable for a Fund fairly to determine the
value of its net assets, or (4) for such other period as the
Securities and Exchange Commission may by order permit for the
protection of the holders of a Fund's Shares.
Ownership and Authority Disputes. In the event of disputes
involving multiple claims of ownership or authority to control a
shareholder's account, each Fund has the right (but has no
obligation) to: (a) freeze the account and require the written
agreement of all persons deemed by the Fund to have a potential
property interest in the account, prior to executing instructions
regarding the account; or (b) interplead disputed funds or
accounts with a court of competent jurisdiction. Moreover, the
Fund may surrender ownership of all or a portion of the account
to the Internal Revenue Service in response to a Notice of Levy.
In addition to the special purchase plans described in the
Prospectus, the following special purchase plans also are
available:
Tax Deferred Retirement Plans. The Trust offers its
Shareholders the opportunity to participate in the following
types of retirement plans:
- For individuals whether or not covered by other
qualified plans;
- For simplified employee pensions;
- For employees of tax-exempt organizations; and
- For corporations, self-employed individuals and
partnerships.
Capital gains and income received by the foregoing plans
generally are exempt from taxation until distribution from the
plans. Investors considering participation in any such plan
should review specific tax laws relating thereto and should
consult their attorneys or tax advisers with respect to the
establishment and maintenance of any such plan. Additional
information, including the fees and charges with respect to all
of these plans, is available upon request to the Principal
Underwriter. No distribution under a retirement plan will be
made until Franklin Templeton Trust Company receives the
participant's election on Internal Revenue Service Form W-4P
(available on request from Franklin Templeton Trust Company, and
such other documentation as it deems necessary, as to whether or
not U.S. income tax is to be withheld from such distribution.
Individual Retirement Account (IRA). All individuals
(whether or not covered by qualified private or governmental
retirement plans) may purchase Shares of a Fund pursuant to an
Individual Retirement Account. However, contributions to an IRA
by an individual who is covered by a qualified private or
governmental plan may not be tax-deductible depending on the
individual's income. Custodial services for Individual
Retirement Accounts are available through Franklin Templeton
Trust Company. Disclosure statements summarizing certain aspects
of Individual Retirement Accounts are furnished to all persons
investing in such accounts, in accordance with Internal Revenue
Service regulations.
Simplified Employee Pensions (SEP-IRA). For employers who
wish to establish a simplified form of employee retirement
program investing in Shares of a Fund, there are available
Simplified Employee Pensions invested in IRA Plans. Details and
materials relating to these plans will be furnished upon request
to the Principal Underwriter.
Retirement Plan for Employees of Tax-Exempt Organizations
(403(b)). Employees of public school systems and certain types
of charitable organizations may enter into a deferred
compensation arrangement for the purchase of Shares of a Fund
without being taxed currently on the investment. Contributions
which are made by the employer through salary reduction are
excludable from the gross income of the employee. Such deferred
compensation plans, which are intended to qualify under Section
403(b) of the Internal Revenue Code, are available through the
Principal Underwriter. Custodial services are provided by
Franklin Templeton Trust Company.
Qualified Plan for Corporations, Self-Employed Individuals
and Partnerships. For employers who wish to purchase Shares of a
Fund in conjunction with employee retirement plans, there is a
prototype master plan which has been approved by the Internal
Revenue Service. A "Section 401(k) plan" is also available.
Franklin Templeton Trust Company furnishes custodial services for
these plans. For further details, including custodian fees and
plan administration services, see the master plan and related
material which is available from the Principal Underwriter.
Letter of Intent. Purchasers who intend to invest $100,000
or more in Class I Shares of Templeton Americas Government
Securities Fund, or $50,000 or more in Shares of Rising Dividends
Fund, Infrastructure Fund or any other fund 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) within 13 months (whether in one lump sum or in
installments, the first of which may not be less than 5% of the
total intended amount and each subsequent installment not less
than $25 unless the investor is a qualifying employee benefit
plan (the "Benefit Plan"), including automatic investment and
payroll deduction plans), and to beneficially hold the total
amount of such Class I Shares fully paid for and outstanding
simultaneously for at least one full business day before the
expiration of that period, should execute a Letter of Intent
("LOI") on the form provided in the Shareholder Application in
the Prospectus. Payment for not less than 5% of the total
intended amount must accompany the executed LOI unless the
investor is a Benefit Plan. Except for purchases of Shares by a
Benefit Plan, those Class I Shares purchased with the first 5% of
the intended amount stated in the LOI will be held as "Escrowed
Shares" for as long as the LOI remains unfulfilled. Although the
Escrowed Shares are registered in the investor's name, his full
ownership of them is conditional upon fulfillment of the LOI. No
Escrowed Shares can be redeemed by the investor for any purpose
until the LOI is fulfilled or terminated. If the LOI is
terminated for any reason other than fulfillment, the Transfer
Agent will redeem that portion of the Escrowed Shares required
and apply the proceeds to pay any adjustment that may be
appropriate to the sales commission on all Class I Shares
(including the Escrowed Shares) already purchased under the LOI
and apply any unused balance to the investor's account. The LOI
is not a binding obligation to purchase any amount of Shares, but
its execution will result in the purchaser paying a lower sales
charge at the appropriate quantity purchase level. A purchase
not originally made pursuant to an LOI may be included under a
subsequent LOI executed within 90 days of such purchase. In this
case, an adjustment will be made at the end of 13 months from the
effective date of the LOI at the net asset value per Share then
in effect, unless the investor makes an earlier written request
to the Principal Underwriter upon fulfilling the purchase of
Shares under the LOI. In addition, the aggregate value of any
Shares, including Class II Shares, purchased prior to the 90-day
period referred to above may be applied to purchases under a
current LOI in fulfilling the total intended purchases under the
LOI. However, no adjustment of sales charges previously paid on
purchases prior to the 90-day period will be made.
If an LOI is executed on behalf of a benefit plan (such
plans are described under "How to Buy Shares of the Fund--Net
Asset Value Purchases" in the Prospectus), the level and any
reduction in sales charge for these employee benefit plans will
be based on actual plan participation and the projected
investments 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) under the LOI. Benefit
Plans are not subject to the requirement to reserve 5% of the
total intended purchase, or to any penalty as a result of the
early termination of a plan, nor are Benefit Plans entitled to
receive retroactive adjustments in price for investments made
before executing LOIs.
Special Net Asset Value Purchases. As discussed in the
prospectus under "How to Buy Shares of the Fund - Description of
Special Net Asset Value Purchases," certain categories of
investors may purchase Class I Shares of a Fund net asset value
(without a front-end or contingent deferred sales charge). FTD
or one of its affiliates may make payments, out of its own
resources, to securities dealers who initiate and are responsible
for such purchases, as indicated below. FTD may make these
payments in the form of contingent advance payments, which may
require reimbursement from the securities dealers with respect to
certain redemptions made within 12 months of the calendar month
following purchase, as well as other conditions, all of which may
be imposed by an agreement between FTD, or its affiliates, and
the securities dealer.
The following amounts will be paid by FTD or one of its
affiliates, out of its own resources, to securities dealers who
initiate and are responsible for (i) purchases of most equity and
fixed-income Franklin Templeton Funds made at net asset value by
certain designated retirement plans (excluding IRA and IRA
rollovers): 1.00% on sales of $1 million but less than $2 millon,
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; and (ii) purchases of
most fixed-income Franklin Templeton Funds made at net asset
value by non-designated retirement plans: 0.75% on sales of $1
million but less than $2 million, plus 0.60% 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. These payment breakpoints are reset every 12
months for purposes of additional purchases. With respect to
purchases made at net asset value by certain trust companies and
trust departments of banks and certain retirement plans of
organizations with collective retirement plan assets of $10
million or more, FTD, or one of its affiliates, out of its own
resources, may pay up to 1% of the amount invested.
TAX STATUS
The following discussion summarizes certain U.S. Federal tax
considerations incident to an investment in a Fund.
Each Fund intends to quality as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the
"Code"). To so qualify, each Fund must, among other things: (a)
derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or
other disposition of stock or securities and gains from the sale
or other disposition of foreign currencies, or other income
(including gains from options, futures contracts and forward
contracts) derived with respect to the Fund's business of
investing in stocks, securities or currencies; (b) derive less
than 30% of its gross income from the sale or other disposition
of the following assets held for less than three months: (i)
stock and securities, (ii) options, futures and forward contracts
(other than options, futures and forward contracts on foreign
currencies), and (iii) foreign currencies (and options, futures
and forward contracts on foreign currencies) which are not
directly related to the Fund's principal business of investing in
stocks and securities (or options and futures with respect to
stock or securities); (c) diversify its holdings so that, at the
end of each quarter, (i) at least 50% of the value of the Fund's
total assets is represented by cash and cash items, U.S.
Government securities, securities of other regulated investment
companies, and other securities, with such other securities
limited in respect of any one issuer to an amount not greater in
value than 5% of the Fund's total assets and to not more than 10%
of the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of the Fund's total assets is invested
in the securities (other than U.S. Government securities or
securities of other regulated investment companies) of any one
issuer or of any two or more issuers that the Fund controls and
that are determined to be engaged in the same business or similar
or related businesses; and (d) distribute at least 90% of its
investment company taxable income (which includes, among other
items, dividends, interest and net short-term capital gains in
excess of net long-term capital losses) each taxable year.
The Treasury Department is authorized to issue regulations
providing that foreign currency gains that are not directly
related to a Fund's principal business of investing in stock or
securities (or options and futures with respect to stock or
securities) will be excluded from the income which qualifies for
purposes of the 90% gross income requirement described above. To
date, however, no regulations have been issued.
The status of the Funds as regulated investment companies
does not involve government supervision of management or of their
investment practices or policies. As a regulated investment
company, a Fund generally will be relieved of liability for U.S.
Federal income tax on that portion of its net investment income
and net realized capital gains which it distributes to its
Shareholders. Amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement also are
subject to a nondeductible 4% excise tax. To prevent application
of the excise tax, each Fund intends to make distributions in
accordance with the calendar year distribution requirement.
Dividends of net investment income and net short-term
capital gains are taxable to Shareholders as ordinary income.
Distributions of net investment income may be eligible for the
corporate dividends-received deduction to the extent attributable
to a Fund's qualifying dividend income. However, the alternative
minimum tax applicable to corporations may reduce the benefit of
the dividends-received deduction. Distributions of net capital
gains (the excess of net long-term capital gains over net short-
term capital losses) designated by a Fund as capital gain
dividends are taxable to Shareholders as long-term capital gains,
regardless of the length of time the Fund's Shares have been held
by a Shareholder, and are not eligible for the dividends-received
deduction. All dividends and distributions are taxable to
Shareholders, whether or not reinvested in Shares of a Fund.
Shareholders will be notified annually as to the Federal tax
status of dividends and distributions they receive and any tax
withheld thereon.
Distributions by a Fund reduce the net asset value of the
Fund Shares. Should a distribution reduce the net asset value
below a Shareholder's cost basis, the distribution nevertheless
would be taxable to the Shareholder as ordinary income or capital
gain as described above, even though, from an investment
standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax
implication of buying Shares just prior to a distribution by a
Fund. The price of Shares purchased at that time includes the
amount of the forthcoming distribution, but the distribution will
generally be taxable to them.
Certain of the debt securities acquired by the Funds may be
treated as debt securities that were originally issued at a
discount. Original issue discount can generally be defined as
the difference between the price at which a security was issued
and its stated redemption price at maturity. Although no cash
income is actually received by the Funds, original issue discount
that accrues on a debt security in a given year generally is
treated for Federal income tax purposes as interest and,
therefore, such income would be subject to the distribution
requirements of the Code.
Some of the debt securities may be purchased by the Funds at
a discount which exceeds the original issue discount on such debt
securities, if any. This additional discount represents market
discount for Federal income tax purposes. The gain realized on
the disposition of any taxable debt security having market
discount generally will be treated as ordinary income to the
extent it does not exceed the accrued market discount on such
debt security. Generally, market discount accrues on a daily
basis for each day the debt security is held by a Fund at a
constant rate over the time remaining to the debt security's
maturity or, at the election of a Fund, at a constant yield to
maturity which takes into account the semi-annual compounding of
interest.
A Fund may invest in debt securities issued in bearer form.
Special rules applicable to bearer debt may in some cases result
in (i) treatment of gain realized with respect to such a debt
security as ordinary income and (ii) disallowance of deductions
for losses realized on dispositions of such debt securities. If
these special rules apply, the amount that must be distributed to
Fund shareholders may be increased as compared to a fund that did
not invest in debt securities issued in bearer form.
A Fund may invest in stocks of foreign companies that are
classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign company is classified as a PFIC
if at least one-half of its assets constitute investment-type
assets or 75% or more of its gross income is investment-type
income. Under the PFIC rules, an "excess distribution" received
with respect to PFIC stock is treated as having been realized
ratably over the period during which a Fund held the PFIC stock.
A Fund itself will be subject to tax on the portion, if any, of
the excess distribution that is allocated to that Fund's holding
period in prior taxable years (and an interest factor will be
added to the tax, as if the tax had actually been payable in such
prior taxable years) even though the Fund distributes the
corresponding income to Shareholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain
distributions from a PFIC. All excess distributions are taxable
as ordinary income.
A Fund may be able to elect alternative tax treatment with
respect to PFIC stock. Under an election that currently may be
available, a Fund generally would be required to include in its
gross income its share of the earnings of a PFIC on a current
basis, regardless of whether any distributions are received from
the PFIC. If this election is made, the special rules, discussed
above, relating to the taxation of excess distributions, would
not apply. In addition, another election may be available that
would involve marking to market the Funds' PFIC shares at the end
of each taxable year (and on certain other dates prescribed in
the Code), with the result that unrealized gains are treated as
though they were realized. If this election were made, tax at
the Fund level under the PFIC rules would generally be
eliminated, but the Funds could, in limited circumstances, incur
nondeductible interest charges. Each Fund's intention to qualify
annually as a regulated investment company may limit its
elections with respect to PFIC shares.
Because the application of the PFIC rules may affect, among
other things, the character of gains, the amount of gain or loss
and the timing of the recognition of income with respect to PFIC
stock, as well as subject a Fund itself to tax on certain income
from PFIC stock, the amount that must be distributed to Share-
holders, and which will be taxed to Shareholders as ordinary
income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC
stock.
Income received by a Fund from sources within foreign
countries may be subject to withholding and other income or
similar taxes imposed by such countries. If more than 50% of the
value of a Fund's total assets at the close of its taxable year
consists of securities of foreign corporations, that Fund will be
eligible and intends to elect to "pass through" to the Fund's
Shareholders the amount of foreign taxes paid by that Fund.
Pursuant to this election, a Shareholder will be required to
include in gross income (in addition to taxable dividends
actually received) his pro rata share of the foreign taxes paid
by a Fund, and will be entitled either to deduct (as an itemized
deduction) his pro rata share of foreign income and similar taxes
in computing his taxable income or to use it as a foreign tax
credit against his U.S. Federal income tax liability, subject to
limitations. No deduction for foreign taxes may be claimed by a
Shareholder who does not itemize deductions, but such a
Shareholder may be eligible to claim the foreign tax credit (see
below). Each Shareholder will be notified within 60 days after
the close of the relevant Fund's taxable year whether the foreign
taxes paid by the Fund will "pass through" for that year.
Generally, a credit for foreign taxes is subject to the
limitation that it may not exceed the Shareholder's U.S. tax
attributable to his foreign source taxable income. For this
purpose, if the pass-through election is made, the source of a
Fund's income flows through to its Shareholders. With respect to
a Fund, gains from the sale of securities will be treated as
derived from U.S. sources and certain currency fluctuation gains,
including fluctuation gains from foreign currency denominated
debt securities, receivables and payables, will be treated as
ordinary income derived from U.S. sources. The limitation on the
foreign tax credit is applied separately to foreign source
passive income (as defined for purposes of the foreign tax
credit), including the foreign source passive income passed
through by a Fund. Shareholders may be unable to claim a credit
for the full amount of their proportionate share of the foreign
taxes paid by a Fund. Foreign taxes may not be deducted in
computing alternative minimum taxable income and the foreign tax
credit can be used to offset only 90% of the alternative minimum
tax (as computed under the Code for purposes of this limitation)
imposed on corporations and individuals. If a Fund is not
eligible to make the election to "pass through" to its
Shareholders its foreign taxes, the foreign income taxes it pays
generally will reduce investment company taxable income and the
distributions by a Fund will be treated as United States source
income.
Certain options, futures, and foreign currency forward
contracts in which the Funds may invest are "section 1256
contracts." Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or
losses ("60/40"); however, foreign currency gains or losses (as
discussed below) arising from certain section 1256 contracts may
be treated as ordinary income or loss. Also, section 1256
contracts held by a Fund at the end of each taxable year (and on
certain other dates as prescribed under the Code) are "marked-to-
market" with the result that unrealized gains or losses are
treated as though they were realized.
Generally, the hedging transactions undertaken by a Fund may
result in "straddles" for U.S. Federal income tax purposes. The
straddle rules may affect the character of gains (or losses)
realized by a Fund. In addition, losses realized by a Fund on
positions that are part of the straddle may be deferred under the
straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the
losses are realized. Because only a few regulations implementing
the straddle rules have been promulgated, the tax consequences to
a Fund of hedging transactions are not entirely clear. The
hedging transactions may increase the amount of short-term
capital gain realized by a Fund which is taxed as ordinary income
when distributed to Shareholders.
A Fund may make one or more of the elections available under
the Code which are applicable to straddles. If a Fund makes any
of the elections, the amount, character, and timing of the
recognition of gains or losses from the affected straddle
positions will be determined under rules that vary according to
the election(s) made. The rules applicable under certain of the
elections may operate to accelerate the recognition of gains or
losses from the affected straddle positions.
Because application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle
positions, the amount which must be distributed to Shareholders
and which will be taxed to Shareholders as ordinary income or
long-term capital gain may be increased or decreased as compared
to a fund that did not engage in such hedging transactions.
Requirements relating to each Fund's tax status as a
regulated investment company may limit the extent to which a Fund
will be able to engage in transactions in options, futures, and
foreign currency forward contracts.
Under the Code, gains or losses attributable to fluctuations
in foreign currency exchange rates which occur between the time a
Fund accrues income or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
a Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated
in a foreign currency and on disposition of certain futures
contracts and options, gains or losses attributable to
fluctuations in the value of foreign currency between the date of
acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. These
gains and losses, referred to under the Code as "section 988"
gains and losses, may increase or decrease the amount of a Fund's
net investment income to be distributed to its Shareholders as
ordinary income. For example, fluctuations in exchange rates may
increase the amount of income that a Fund must distribute in
order to qualify for treatment as a regulated investment company
and to prevent application of an excise tax on undistributed
income. Alternatively, fluctuations in exchange rates may
decrease or eliminate income available for distribution. If
section 988 losses exceed other net investment income during a
taxable year, a Fund would not be able to make ordinary dividend
distributions, or distributions made before the losses were
realized would be recharacterized as return of capital to
Shareholders for Federal income tax purposes, rather than as an
ordinary dividend, reducing each Shareholder's basis in his Fund
Shares.
Upon the sale or exchange of his Shares, a Shareholder will
realize a taxable gain or loss depending upon his basis in the
Shares. Such gain or loss will be treated as capital gain or
loss if the Shares are capital assets in the Shareholder's hands,
and generally will be long-term if the Shareholder's holding
period for the Shares is more than one year and generally
otherwise will be short-term. Any loss realized on a sale or
exchange will be disallowed to the extent that the Shares
disposed of are replaced (including replacement through the
reinvesting of dividends and capital gain distributions in a
Fund) within a period of 61 days beginning 30 days before and
ending 30 days after the disposition of the Shares. In such a
case, the basis of the Shares acquired will be adjusted to
reflect the disallowed loss. Any loss realized by a Shareholder
on the sale of a Fund's Shares held by the Shareholder for six
months or less will be treated for Federal income tax purposes as
a long-term capital loss to the extent of any distributions of
long-term capital gains received by the Shareholder with respect
to such Shares.
In some cases, Shareholders will not be permitted to take
sales charges into account for purposes of determining the amount
of gain or loss realized on the disposition of their Shares.
This prohibition generally applies where (1) the Shareholder
incurs a sales charge in acquiring the stock of a regulated
investment company, (2) the stock is disposed of before the 91st
day after the date on which it was acquired, and (3) the
Shareholder subsequently acquires shares of the same or another
regulated investment company and the otherwise applicable sales
charge is reduced or eliminated under a "reinvestment right"
received upon the initial purchase of shares of stock. In that
case, the gain or loss recognized will be determined by excluding
from the tax basis of the Shares exchanged all or a portion of
the sales charge incurred in acquiring those Shares. This
exclusion applies to the extent that the otherwise applicable
sales charge with respect to the newly acquired Shares is reduced
as a result of having incurred a sales charge initially. Sales
charges affected by this rule are treated as if they were
incurred with respect to the stock acquired under the
reinvestment right. This provision may be applied to successive
acquisitions of stock.
Each Fund generally will be required to withhold Federal
income tax at a rate of 31% ("backup withholding") from dividends
paid, capital gain distributions, and redemption proceeds to
Shareholders if (1) the Shareholder fails to furnish a Fund with
the Shareholder's correct taxpayer identification number or
social security number and to make such certifications as a Fund
may require, (2) the Internal Revenue Service notifies the
Shareholder or a Fund that the Shareholder has failed to report
properly certain interest and dividend income to the Internal
Revenue Service and to respond to notices to that effect, or (3)
when required to do so, the Shareholder fails to certify that he
is not subject to backup withholding. Any amounts withheld may
be credited against the Shareholder's Federal income tax
liability.
Ordinary dividends and taxable capital gain distributions
declared in October, November, or December with a record date in
such month and paid during the following January will be treated
as having been paid by a Fund and received by Shareholders on
December 31 of the calendar year in which declared, rather than
the calendar year in which the dividends are actually received.
Distributions also may be subject to state, local and
foreign taxes. U.S. tax rules applicable to foreign investors
may differ significantly from those outlined above. This
discussion does not purport to deal with all of the tax
consequences applicable to Shareholders. Shareholders are
advised to consult their own tax advisers for details with
respect to the particular tax consequences to them of an
investment in a Fund.
PRINCIPAL UNDERWRITER
Franklin Templeton Distributors, Inc. ("FTD" or the
"Principal Underwriter"), P.O. Box 33030, St. Petersburg, Florida
33733-8030, toll free telephone (800) 237-0738, is the Principal
Underwriter of each Fund's Shares. FTD is a wholly owned
subsidiary of Franklin.
Each Fund, pursuant to Rule 12b-1 under the 1940 Act, has
adopted a Distribution Plan with respect to each class of shares
(the "Plans"). Under the Plans adopted with respect to Class I
Shares (including all Shares issued by Americas Government
Securities Fund), each Fund may reimburse FTD or others quarterly
(subject to a limit of 0.35% per annum of each Fund's average
daily net assets attributable to Class I Shares) for costs and
expenses incurred by FTD or others in connection with any
activity which is primarily intended to result in the sale of the
Funds' Shares. Rising Dividends Fund and Infrastructure Fund
also have a second class of Shares, designated Class II Shares.
Under the Plans adopted with respect to Class II Shares, each
Fund may reimburse FTD or others quarterly (subject to a limit of
1.00% per annum of each Fund's average daily assets attributable
to Class II Shares of which up to 0.25% of such net assets may be
paid to dealers for personal service and/or maintenance of
Shareholder accounts) for costs and expenses incurred by FTD or
others in connection with any activity which is primarily
intended to result in the sale of the Funds' Shares. Payments to
FTD or others could be for various types of activities, including
(1) payments to broker-dealers who provide certain services of
value to each Fund's Shareholders (sometimes referred to as a
"trail fee"); (2) reimbursement of expenses relating to selling
and servicing efforts or of organizing and conducting sales
seminars; (3) payments to employees or agents of the Principal
Underwriter who engage in or support distribution of Shares; (4)
payments of the costs of preparing, printing and distributing
Prospectuses and reports to prospective investors and of printing
and advertising expenses; (5) payment of dealer commissions and
wholesaler compensation in connection with sales of the Funds'
Shares exceeding $1 million (on which the Funds impose no initial
sales charge) and interest or carrying charges in connection
therewith; and (6) such other similar services as the Trust's
Board of Trustees determines to be reasonably calculated to
result in the sale of Shares. Under the Plans, the costs and
expenses not reimbursed in any one given quarter (including costs
and expenses not reimbursed because they exceed the percentage
limit applicable to either class of Shares) may be reimbursed in
subsequent quarters or years.
During the fiscal year ended March 31, 1995, FTD incurred
costs and expenses (including advanced commissions) of $________
in connection with distribution of Class I Shares (Class II
Shares were not offered during this period). During the same
period, the Fund made payments of $________ under the Plans
applicable to Class I Shares. As indicated above, unreimbursed
expenses, which amounted to $________ as of March 31, 1995, may
be reimbursed by the Funds during the fiscal year ending March
31, 1995 or in subsequent years. During the fiscal year ended
March 31, 1995, FTD spent, pursuant to the Plans, the following
amounts on: compensation to dealers, $______; costs and
expenses, $______; and printing, $______.
The Underwriting Agreement provides that the Principal
Underwriter will use its best efforts to maintain a broad and
continuous distribution of each Fund's Shares among bona fide
investors and may sign selling agreements with responsible
dealers, as well as sell to individual investors. The Shares are
sold only at the Offering Price in effect at the time of sale,
and each Fund receives not less than the full net asset value of
the Shares sold. The discount between the Offering Price and the
net asset value of a Fund's Shares may be retained by the
Principal Underwriter or it may reallow all or any part of such
discount to dealers. The Principal Underwriter in all cases buys
Shares from a Fund acting as principal for its own account.
Dealers generally act as principal for their own account in
buying Shares from the Principal Underwriter. No agency
relationship exists between any dealer and a Fund or the
Principal Underwriter.
The Underwriting Agreement provides that each Fund shall pay
the costs and expenses incident to registering and qualifying its
Shares for sale under the Securities Act of 1933 and under the
applicable blue sky laws of the jurisdictions in which the
Principal Underwriter desires to distribute such Shares, and for
preparing, printing and distributing Prospectuses and reports to
Shareholders. The Principal Underwriter pays the cost of
printing additional copies of Prospectuses and reports to
Shareholders used for selling purposes. (The Funds pay costs of
preparation, set-up and initial supply of their Prospectuses for
existing Shareholders.)
The Underwriting Agreement is subject to renewal from year
to year in accordance with the provisions of the 1940 Act and
terminates automatically in the event of its assignment. The
Underwriting Agreement may be terminated without penalty by
either party upon 60 days' written notice to the other, provided
termination by the Trust shall be approved by the Board of
Trustees or a majority (as defined in the 1940 Act) of the
Shareholders. The Principal Underwriter is relieved of liability
for any act or omission in the course of its performance of the
Underwriting Agreement, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations.
FTD is the principal underwriter for the other Templeton
Funds.
DESCRIPTION OF SHARES
The Shares of each Fund have the same preferences,
conversion and other rights, voting powers, restrictions and
limitations as to dividends, qualifications and terms and
conditions of redemption, except as follows: all consideration
received from the sale of Shares of a Fund, together with all
income, earnings, profits and proceeds thereof, belongs to that
Fund and is charged with liabilities in respect to that Fund and
of that Fund's part of general liabilities of the Trust in the
proportion that the total net assets of the Fund bear to the
total net assets of both Funds. The net asset value of a Share
of a Fund is based on the assets belonging to that Fund less the
liabilities charged to that Fund, and dividends are paid on
Shares of a Fund only out of lawfully available assets belonging
to that Fund. In the event of liquidation or dissolution of the
Trust, the Shareholders of each Fund will be entitled, out of
assets of the Trust available for distribution, to the assets
belonging to that particular Fund.
The Trust Instrument provides that the holders of not less
than two-thirds of the outstanding Shares of the Funds may remove
a person serving as Trustee either by declaration in writing or
at a meeting called for such purpose. The Trustees are required
to call a meeting for the purpose of considering the removal of a
person serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding Shares of the
Trust.
The Shares have non-cumulative voting rights so that the
holders of a plurality of the Shares voting for the election of
Trustees at a meeting at which 50% of the outstanding Shares are
present can elect all the Trustees and in such event, the holders
of the remaining Shares voting for the election of Trustees will
not be able to elect any person or persons to the Board of
Trustees.
PERFORMANCE INFORMATION
The Funds may, from time to time, include their total return
in advertisements or reports to Shareholders or prospective
investors. Quotations of average annual total return for the
Funds will be expressed in terms of the average annual compounded
rate of return for periods in excess of one year or the total
return for periods less than one year of a hypothetical
investment in the Funds over periods of one, five, or ten years
(up to the life of a Fund) calculated pursuant to the following
formula: P(1 + T)n = ERV (where P = a hypothetical initial
payment of $1,000, T = the average annual total return for
periods of one year or more or the total return for periods of
less than one year, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures reflect the
deduction of the maximum initial sales charge and deduction of a
proportional share of Fund expenses on an annual basis, and
assume that all dividends and distributions are reinvested when
paid. The total return for the period from March 14, 1994
(commencement of operations) through September 30, 1994, on an
annualized basis, was 2.74% for Rising Dividends Fund and 6.26%
for Infrastructure Fund. The total return for the period from
June 27, 1994 (commencement of operations) through September 30,
1994, on an annualized basis, was 0.00% for Americas Government
Securities Fund.
Performance information for either Fund may be compared, in
reports and promotional literature, to: (i) unmanaged indices so
that investors may compare the Fund's results with those of a
group of unmanaged securities widely regarded by investors as
representative of the securities market in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services,
Inc., a widely used independent research firm which ranks mutual
funds by overall performance, investment objectives and assets,
or tracked by other services, companies, publications, or persons
who rank mutual funds on overall performance or other criteria;
and (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in a Fund.
Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and
management costs and expenses.
Performance information for a Fund reflects only the
performance of a hypothetical investment in a Fund during the
particular time period on which the calculations are based.
Performance information should be considered in light of a Fund's
investment objective and policies, characteristics and quality of
the portfolio and the market conditions during the given time
period, and should not be considered as a representation of what
may be achieved in the future.
From time to time, each Fund and its Investment Manager may
also refer to the following information:
(1) The Investment Manager's and its affiliates' market share of
international equities managed in mutual funds prepared or
published by Strategic Insight or a similar statistical
organization.
(2) The performance of U.S. equity and debt markets relative to
foreign markets prepared or published by Morgan Stanley
Capital International or a similar financial organization.
(3) The capitalization of U.S. and foreign stock markets as
prepared or published by the International Finance Corp.,
Morgan Stanley Capital International or a similar financial
organization.
(4) The geographic distribution of the Fund's portfolio.
(5) The gross national product and populations, including age
characteristics, of various countries as published by
various statistical organizations.
(6) To assist investors in understanding the different returns
and risk characteristics of various investments, the Fund
may show historical returns of various investments and
published indices (e.g., Ibbotson Associates, Inc. Charts
and Morgan Stanley EAFE - Index).
(7) The major industries located in various jurisdictions as
published by the Morgan Stanley Index.
(8) Rankings by DALBAR Surveys, Inc. with respect to mutual fund
shareholder services.
(9) Allegorical stories illustrating the importance of
persistent long-term investing.
(10) The Fund's portfolio turnover rate and its ranking relative
to industry standards as published by Lipper Analytical
Services, Inc. or Morningstar, Inc.
(11) A description of the Templeton organization's investment
management philosophy and approach, including its worldwide
search for undervalued or "bargain" securities and its
diversification by industry, nation and type of stocks or
other securities.
(12) Quotations from the Templeton organization's founder, Sir
John Templeton,* advocating the virtues of diversification
and long-term investing, including the following:
_______________
* Sir John Templeton is not involved in investment decisions,
which are made by each Fund's Investment Manager.
- "Never follow the crowd. Superior performance is
possible only if you invest differently from the
crowd."
- "Diversify by company. By industry and by country."
- "Always maintain a long-term perspective."
- "Invest for maximum total real return."
- "Invest - don't trade or speculate."
- "Remain flexible and open-minded about types of
investment."
- "Buy low."
- "When buying stocks, search for bargains among quality
stocks."
- "Buy value, not market trends or the economic outlook."
- "Diversify. In stocks and bonds, as in much else,
there is safety in numbers."
- "Do your homework or hire wise experts to help you."
- "Aggressively monitor your investments."
- "Don't panic."
- "Learn from your mistakes."
- "Outperforming the market is a difficult task."
- "An investor who has all the answers doesn't even
understand all the questions."
- "There's no free lunch."
- "And now the last principle: Do not be fearful or
negative too often."
In addition, each Fund and the Investment Managers may also
refer to the number of shareholders in the Fund or the aggregate
number of shareholders in the Franklin Templeton Group or the
dollar amount of fund and private account assets under management
in advertising materials.
FINANCIAL STATEMENTS
The financial statements contained in the Annual Report to
Shareholders of Global Rising Dividends Fund and Global
Infrastructure Fund, dated March 31, 1994, and in the Semi-Annual
Report to Shareholders of Global Rising Dividends Fund, Global
Infrastructure Fund, and Americas Government Securities Fund,
dated September 30, 1994, are incorporated herein by reference.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Incorporated by Reference from the March 31, 1994
Annual Reports to the Shareholders of Templeton
Global Rising Dividends Fund and Templeton Global
Infrastructure Fund:
Independent Auditor's Reports dated April 22,
1994
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Incorporated by Reference from the September 30,
1994 Semi-Annual Reports to Shareholders of
Templeton Global Rising Dividends Fund, Templeton
Global Infrastructure Fund, and Templeton Americas
Government Securities Fund:
Investment Portfolios
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
(b) Exhibits:
(1) Trust Instrument*
(2) Bylaws**
(3) Not applicable
(4)(A) Specimen security - Templeton Global Rising
Dividends Fund**
(B) Specimen security - Templeton Global
Infrastructure Fund**
(C) Specimen security - Templeton Americas
Government Securities Fund***
(5)(A) Investment Management Agreement - Templeton
Global Rising Dividends Fund**
(B) Investment Management Agreement - Templeton
Global Infrastructure Fund**
(C) Investment Management Agreement - Templeton
Americas Government Securities Fund***
(D) Sub-Advisory Agreement - Templeton Americas
Government Securities Fund***
(E) Investment Management Agreement - Templeton
Greater European Fund****
(F) Investment Management Agreement - Templeton
Latin America Fund****
(6)(A) Amended and Restated Distribution
Agreement****
(B) Dealer Agreement**
(7) Not applicable
(8) Amended and Restated Custody Agreement****
(9)(A) Amended and Restated Business Management
Agreement****
(B) Amended and Restated Transfer Agent
Agreement****
(C) Form of Sub-Transfer Agent Services
Agreement*****
(D) Form of Shareholder Sub-Accounting Services
Agreement*****
(10) Opinion and consent of counsel (filed with
Rule 24f-2 Notice)
(11) Consent of Independent Public Accountants
(12) Not applicable
(13)(A) Form of Initial Capital Agreement*****
(13)(B) Investment Letter
(14) Not applicable
(15)(A)(i) Distribution Plan - Templeton Global
Rising Dividends Fund Class I
(ii) Distribution Plan - Templeton Global
Rising Dividends Fund Class II
(B)(i) Distribution Plan - Templeton Global
Infrastructure Fund Class I
(ii) Distribution Plan - Templeton Global
Infrastructure Fund Class II
(C) Distribution Plan - Templeton Americas
Government Securities Fund***
(D)(i) Distribution Plan - Templeton Greater
European Fund Class I****
(ii) Distribution Plan - Templeton Greater
European Fund Class II****
(E)(i) Distribution Plan - Templeton Latin
America Fund Class I****
(ii) Distribution Plan - Templeton Latin
America Fund Class II****
(16) Not applicable - Schedule showing computation
of performance quotations provided in
response to Item 22 (unaudited)
(17) Assistant Secretary's Certificate pursuant to
Rule 483(b)***
(18) Form of Multiclass Plan
(19)(A) Semi-Annual Report dated September 30, 1994
for Templeton Global Rising Dividends
Fund******
(B) Semi-Annual Report dated September 30, 1994
for Templeton Global Infrastructure
Fund******
(C) Semi-Annual Report dated September 30, 1994
for Templeton Americas Government Securities
Fund******
(27) Financial Data Schedule
____________________
* Filed with the initial Registration Statement on
December 21, 1993.
** Filed with Pre-Effective Amendment No. 1 to the Registration
Statement on March 1, 1994.
*** Filed with Post-Effective Amendment No. 1 to the
Registration Statement on April 28, 1994.
**** Filed with Post-Effective Amendment No. 4 to the
Registration Statement on February 21, 1995.
***** Filed with Pre-Effective Amendment No. 2 to the
Registration Statement on March 14, 1994.
****** Filed with Post-Effective Amendment No. 3 to the
Registration Statement on December 2, 1994.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Record Holders
Templeton Global Rising Dividends Fund
Shares of Beneficial Interest, par value $0.01 per
share: 660 shareholders as of January 31, 1995.
Templeton Global Infrastructure Fund
Shares of Beneficial Interest, par value $0.01 per
share: 2,844 shareholders as of January 31, 1995.
Templeton Americas Government Securities Fund
Shares of Beneficial Interest, par value $0.01 per
share: 35 shareholders as of January 31, 1995.
Item 27. Indemnification
Reference is made to Article X, Section 10.02 of the
Registrant's Trust Instrument, which is filed herewith.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant by the Registrant pursuant to the Trust
Instrument or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange
Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by trustees, officers or controlling persons of
the Registrant in connection with the successful
defense of any act, suit or proceeding) is asserted by
such trustees, officers or controlling persons in
connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Advisers
and their Officers and Directors
The business and other connections of Templeton,
Galbraith & Hansberger Ltd. (the investment adviser of
Templeton Global Rising Dividends Fund, Templeton
Greater European Fund, and Templeton Latin America
Fund) and Templeton Investment Counsel, Inc. (the
investment adviser of Templeton Global Infrastructure
Fund and Templeton Americas Government Securities Fund)
are described in Parts A and B.
For information relating to the investment advisers'
officers and directors, reference is made to Forms ADV
filed under the Investment Advisers Act of 1940 by
Templeton, Galbraith & Hansberger Ltd. and Templeton
Investment Counsel, Inc.
Item 29. Principal Underwriters
(a) Franklin Templeton Distributors, Inc. also acts as
principal underwriter of shares of Templeton
Growth Fund, Inc., Templeton Funds, Inc.,
Templeton Smaller Companies Growth Fund, Inc.,
Templeton Income Trust, Templeton Real Estate
Securities Fund, Templeton Capital Accumulator
Fund, Inc., Templeton Developing Markets Trust,
Templeton American Trust, Inc., Templeton
Institutional Funds, Inc., Templeton Global
Opportunities Trust, Templeton Variable Products
Series Fund, AGE High Income Fund, Inc., Franklin
Balance Sheet Investment Fund, Franklin California
Tax Free Income Fund, Inc., Franklin California
Tax Free Trust, Franklin Custodian Funds, Inc.,
Franklin Equity Fund, Franklin Federal Tax-Free
Income Fund, Franklin Gold Fund, Franklin
Investors Securities Trust, Franklin Managed
Trust, Franklin Municipal Securities Trust,
Franklin New York Tax-Free Income Fund, Franklin
New York Tax-Free Trust, Franklin Pennsylvania
Investors Fund, Franklin Premier Return Fund,
Franklin Strategic Series, Franklin Tax-Advantaged
High Yield Securities Fund, Franklin Tax-
Advantaged International Bond Fund, Franklin Tax-
Advantaged U.S. Government Securities Fund,
Franklin Tax-Free Trust, and Franklin Strategic
Mortgage Portfolio.
(b) The directors and officers of FTD are identified
below. Except as otherwise indicated, the address
of each director and officer is 777 Mariners
Island Blvd., San Mateo, CA 94404.
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
Gregory E. Johnson President None
Charles B. Johnson Director Trustee and
Vice President
Rupert H. Johnson, Jr. Executive Vice President None
and Director
Harmon E. Burns Executive Vice President None
and Director
Edward V. McVey Senior Vice President None
Kenneth V. Domingues Senior Vice President None
Martin L. Flanagan Senior Vice President Vice President
and Treasurer
William J. Lippman Senior Vice President None
Loretta Fry Vice President None
Deborah R. Gatzek Senior Vice President None
and Assistant Secretary
Richard C. Stoker Senior Vice President None
Charles E. Johnson Senior Vice President None
500 East Broward Blvd.
Ft. Lauderdale, FL 33394
James K. Blinn Vice President None
Richard O. Conboy Vice President None
James A. Escobedo Vice President None
Sheppard G. Griswold Vice President None
Carolyn L. Hennion Vice President None
Peter Jones Vice President None
700 Central Avenue
St. Petersburg, FL 33701
Philip J. Kearns Vice President None
Jack Lemein Vice President None
John R. McGee Vice President None
Thomas M. Mistele Vice President Secretary
700 Central Avenue
St. Petersburg, FL 33701
Harry G. Mumford Vice President None
Thomas H. O'Connor Vice President None
Vivian J. Palmieri Vice President None
Kent P. Strazza Vice President None
John R. Trayser Vice President None
Leslie M. Kratter Secretary None
Philip Bensen Assistant Vice President None
700 Central Avenue
St. Petersburg, FL 33701
James F. Duryea Assistant Vice President None
Robert N. Geppner Assistant Vice President None
Rich Handrich Assistant Vice President None
700 Central Avenue
St. Petersburg, FL 33701
Brad N. Hanson Assistant Vice President None
John R. Kay Assistant Vice President Vice President
500 East Broward Blvd.
Ft. Lauderdale, FL 33394
Richard S. Petrell Assistant Vice President None
Janice Salvato Assistant Vice President None
Clement Sanfilippo Assistant Vice President None
700 Central Avenue
St. Petersburg, FL 33701
Susan K. Tallarico Assistant Vice President None
Karen DeBellis Assistant Treasurer None
700 Central Avenue
St. Petersburg, FL 33701
Philip A. Scatena Assistant Treasurer None
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of
the Investment Company Act of 1940 and rules promul-
gated thereunder are in the possession of Templeton
Global Investors, Inc., 500 East Broward Blvd., Fort
Lauderdale, Florida 33394.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant undertakes to call a meeting of
Shareholders for the purpose of voting upon the
question of removal of a Trustee or Trustees when
requested to do so by the holders of at least 10%
of the Registrant's outstanding shares of
beneficial interest and in connection with such
meeting to comply with the shareholder
communications provisions of Section 16(c) of the
Investment Company Act of 1940.
(d) Registrant undertakes to furnish to each person to
whom a Prospectus for a series of the Registrant
is provided a copy of the series' latest annual
report, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Washington, D.C. on the 26th day of April, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
By: _____________________________
Mark G. Holowesko*
President
*By: /s/ Jeffrey L. Steele
Jeffrey L. Steele
attorney-in-fact**
Pursuant to the requirements of the Securities Act of 1933,
as amended, this amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the date indicated.
Signature Title Date
__________________ President April 26, 1995
Mark G. Holowesko* (Principal Executive
Officer)
__________________ Treasurer April 26, 1995
James R. Baio* (Principal Financial
and Accounting Officer)
__________________ Trustee April 26, 1995
Charles B. Johnson*
__________________ Trustee April 26, 1995
Martin L. Flanagan*
__________________ Trustee April 26, 1995
Hasso-G von Diergardt-Naglo*
__________________ Trustee April 26, 1995
F. Bruce Clarke*
__________________ Trustee April 26, 1995
Betty P. Krahmer*
__________________ Trustee April 26, 1995
Fred R. Millsaps*
__________________ Trustee April 26, 1995
John G. Bennett, Jr.*
__________________ Trustee April 26, 1995
Andrew H. Hines, Jr.*
__________________ Trustee April 26, 1995
Harris J. Ashton*
__________________ Trustee April 26, 1995
S. Joseph Fortunato*
__________________ Trustee April 26, 1995
Gordon S. Macklin*
__________________ Trustee April 26, 1995
Nicholas F. Brady*
*By: /s/ Jeffrey L. Steele
Jeffrey L. Steele
attorney-in-fact**
______________________
** Powers of attorney were filed in Pre-Effective Amendment No.
1 to the Registration Statement on Form N-1A of Templeton
Global Investment Trust (File No. 33-73244), filed on
March 1, 1994.
EXHIBIT INDEX
Number Name of Exhibits
(11) Consent of Independent Public
Accountants
(13)(B) Investment Letter
(15)(A)(i) Distribution Plan - Templeton Global
Rising Dividends Fund Class I
(15)(A)(ii) Distribution Plan - Templeton Global
Rising Dividends Fund Class II
(15)(B)(i) Distribution Plan - Templeton Global
Infrastructure Fund Class I
(15)(B)(ii) Distribution Plan - Templeton Global
Infrastructure Fund Class II
(18) Form of Multiclass Plan
(27) Financial Data Schedule
McGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our reports dated April 22,
1994 on the financial statements of Templeton Global Rising
Dividends Fund and Templeton Global Infrastructure Fund, series
of Templeton Global Investment Trust referred to therein, which
appear in the 1994 Annual Reports to Shareholders and which are
incorporated herein by reference, in Post-Effective Amendment No.
5 to the Registration Statement on Form N-1A, File No. 33-73244,
as filed with the Securities and Exchange Commission.
We also consent to the reference to our firm in the
Statement of Additional Information under the caption
"Independent Accountants" and in the Prospectus under the caption
"Financial Highlights."
McGLADREY & PULLEN, LLP
New York, New York
April 26, 1995
DISTRIBUTION PLAN
WHEREAS, Templeton Global Investment Trust (the
"Trust") is registered as an open-end diversified management
investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Trust on behalf of Templeton Global Rising
Dividends Fund (the "Fund") and Franklin Templeton Distributors,
Inc. (the "Selling Company"), a wholly owned subsidiary of
Franklin Resources, Inc. and a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into a Distribution
Agreement pursuant to which the Selling Company will act as
principal underwriter of the Class I Shares of the Fund for sale
to the public; and
WHEREAS, shares of beneficial interest of the Fund are
divided into classes of shares, one of which is designated Class
I; and
WHEREAS, the Board of Trustees of the Trust has
determined to adopt this Distribution Plan (the "Plan"), in
accordance with the requirements of the 1940 Act and has
determined that there is a reasonable likelihood that the Plan
will benefit the Fund and the holders of Class I Shares.
NOW THEREFORE, the Trust on behalf of the Fund hereby
adopts, with respect to its Class I Shares, the Plan on the
following terms and conditions:
1. The Fund will reimburse the Selling Company for
costs and expenses incurred in connection with the distribution
and marketing of the Class I Shares of the Fund. Such
distribution costs and expenses may include: (a) payments to
broker-dealers who provide certain services of value to the
Fund's Class I Shareholders (sometimes referred to as a "trail
fee"); (b) reimbursement of expenses relating to selling and
servicing efforts or of organizing and conducting sales seminars;
(c) payments to employees or agents of the Selling Company who
engage in or support distribution of the Class I Shares; (d)
payment of the costs of preparing, printing and distributing
prospectuses and reports to prospective investors and of printing
and advertising expenses; (e) payment of dealer commissions and
wholesaler compensation in connection with sales of the Fund's
Class I Shares exceeding $1 million (for which the Trust imposes
no sales charge) and interest or carrying charges in connection
therewith; and (f) such other similar services as the Trust's
Board of Trustees determines to be reasonably calculated to
result in the sale of Class I Shares.
The Selling Company will be reimbursed for such costs,
expenses or payments on a quarterly basis, subject to a limit of
0.35% per annum of the average daily net assets of the Fund's
Class I Shares. Payments made out of or charged against the
assets of the Class I Shares of the Fund must be in reimbursement
for costs and expenses in connection with any activity which is
primarily intended to result in the sale of the Fund's Class I
Shares. The costs and expenses not reimbursed in any one given
quarter (including costs and expenses not reimbursed because they
exceeded the limit of 0.35% per annum of the average daily net
assets of the Fund's Class I Shares) may be reimbursed in
subsequent quarters or years.
2. The Plan shall not take effect with respect to the
Fund's Class I Shares until it has been approved by a vote of at
least a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Class I Shares of the Fund. With
respect to the submission of the Plan for such a vote, it shall
have been effectively approved with respect to the Fund's Class I
Shares if a majority of the outstanding voting securities of the
Class I Shares of the Fund votes for approval of the Plan.
3. The Plan shall not take effect until it has been
approved, together with any related agreements and supplements,
by votes of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Plan Trustees"), cast
in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
4. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the
manner provided for approval of the Plan in paragraph 3.
5. Any person authorized to direct the disposition of
monies paid or payable by the Class I Shares of the Fund pursuant
to the Plan or any related agreement shall provide to the Trust's
Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
6. Any agreement related to the Plan shall be in
writing and shall provide: (a) that such agreement may be
terminated at any time as to the Fund's Class I Shares, without
payment of any penalty, by vote of a majority of the Plan
Trustees or by vote of a majority of the outstanding voting
securities of the Class I Shares of the Fund, on not more than
sixty days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the
event of its assignment.
7. The Plan may be terminated at any time, without
payment of any penalty, by vote of a majority of the Plan
Trustees, or by vote of a majority of the outstanding Class I
Shares of the Fund.
8. The Plan may be amended at any time by the Trust's
Board of Trustees, provided that (a) any amendment to increase
materially the costs which the Class I Shares of the Fund may
bear for distribution pursuant to the Plan shall be effective
only upon approval by a vote of a majority of the Class I Shares
of the Fund, and (b) any material amendments of the terms of the
Plan shall become effective only upon approval as provided in
paragraph 3 hereof.
9. While the Plan is in effect, the selection and
nomination of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund shall be committed to the
discretion of the Trustees who are not interested persons.
10. The Trust shall preserve copies of the Plan, any
related agreement and any report made pursuant to paragraph 5
hereof, for a period of not less than six years from the date of
the Plan, such agreement or report, as the case may be, the first
two years of which shall be in an easily accessible place.
11. It is understood and expressly stipulated that
neither the holders of Class I Shares of the Fund nor any
Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has executed this
Distribution Plan on this 1st day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
on behalf of
TEMPLETON GLOBAL RISING DIVIDENDS FUND
By: _______________________________
John R. Kay
Vice President
DISTRIBUTION PLAN
WHEREAS, Templeton Global Investment Trust (the
"Trust") is registered as an open-end diversified management
investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Trust on behalf of Templeton Global Rising
Dividends Fund (the "Fund") and Franklin Templeton Distributors,
Inc. (the "Selling Company"), a wholly owned subsidiary of
Franklin Resources, Inc. and a broker-dealer registered under the
Securities Exchange Act of 1934, have entered into a Distribution
Agreement pursuant to which the Selling Company will act as
principal underwriter of the Class II Shares of the Fund for sale
to the public; and
WHEREAS, shares of beneficial interest of the Fund are
divided into classes of shares, one of which is designated Class
II; and
WHEREAS, the Board of Trustees of the Trust has
determined to adopt this Distribution Plan (the "Plan"), in
accordance with the requirements of the 1940 Act and has
determined that there is a reasonable likelihood that the Plan
will benefit the Fund and the holders of Class II Shares.
NOW THEREFORE, the Trust on behalf of the Fund hereby
adopts, with respect to its Class II Shares, the Plan on the
following terms and conditions:
1. The Fund will reimburse the Selling Company for
costs and expenses incurred in connection with the distribution
and marketing of the Class II Shares of the Fund. Such
distribution costs and expenses may include: (a) payments to
broker-dealers who provide certain services of value to the
Fund's Class II Shareholders (sometimes referred to as a "trail
fee"); (b) reimbursement of expenses relating to selling and
servicing efforts or of organizing and conducting sales seminars;
(c) payments to employees or agents of the Selling Company who
engage in or support distribution of the Class II Shares; (d)
payment of the costs of preparing, printing and distributing
prospectuses and reports to prospective investors and of printing
and advertising expenses; (e) payment of dealer commissions and
wholesaler compensation in connection with sales of the Fund's
Class II Shares and interest or carrying charges in connection
therewith; and (f) such other similar services as the Trust's
Board of Trustees determines to be reasonably calculated to
result in the sale of Class II Shares.
The Selling Company will be reimbursed for such costs,
expenses or payments on a quarterly basis, subject to a limit of
1.00% per annum of the average daily net assets of the Fund's
Class II Shares (of which up to 0.25% of such net assets may be
paid to dealers for personal service and/or the maintenance of
Class II Shareholder accounts (the "Service Fee")) and subject to
any applicable restriction imposed by rules of the National
Association of Securities Dealers, Inc. Payments made out of or
charged against the assets of the Class II Shares of the Fund
must be in reimbursement for costs and expenses in connection
with any activity which is primarily intended to result in the
sale of the Fund's Class II Shares or account maintenance and
personal service to Shareholders.
2. The Plan shall not take effect with respect to the
Fund's Class II Shares until it has been approved by a vote of at
least a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Class II Shares of the Fund. With
respect to the submission of the Plan for such a vote, it shall
have been effectively approved with respect to the Fund's Class
II Shares if a majority of the outstanding voting securities of
the Class II Shares of the Fund votes for approval of the Plan.
3. The Plan shall not take effect until it has been
approved, together with any related agreements and supplements,
by votes of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Plan Trustees"), cast
in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
4. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the
manner provided for approval of the Plan in paragraph 3.
5. Any person authorized to direct the disposition of
monies paid or payable by the Class II Shares of the Fund
pursuant to the Plan or any related agreement shall provide to
the Trust's Board of Trustees, and the Board shall review, at
least quarterly, a written report of the amounts so expended and
the purposes for which such expenditures were made.
6. Any agreement related to the Plan shall be in
writing and shall provide: (a) that such agreement may be
terminated at any time as to the Fund's Class II Shares, without
payment of any penalty, by vote of a majority of the Plan
Directors or by vote of a majority of the outstanding voting
securities of the Class II Shares of the Fund, on not more than
sixty days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the
event of its assignment.
7. The Plan may be terminated at any time, without
payment of any penalty, by vote of a majority of the Plan
Trustees, or by vote of a majority of the outstanding Class II
Shares of the Fund.
8. The Plan may be amended at any time by the Trust's
Board of Trustees, provided that (a) any amendment to increase
materially the costs which the Class II Shares of the Fund may
bear for distribution pursuant to the Plan shall be effective
only upon approval by a vote of a majority of the Class II Shares
of the Fund, and (b) any material amendments of the terms of the
Plan shall become effective only upon approval as provided in
paragraph 3 hereof.
9. While the Plan is in effect, the selection and
nomination of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust shall be committed to the
discretion of the Trustees who are not interested persons.
10. The Fund shall preserve copies of the Plan, any
related agreement and any report made pursuant to paragraph 5
hereof, for a period of not less than six years from the date of
the Plan, such agreement or report, as the case may be, the first
two years of which shall be in an easily accessible place.
11. It is understood and expressly stipulated that
neither the holders of Class II Shares of the Fund nor any
Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has executed this
Distribution Plan on this 1st day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
on behalf of Templeton Global Rising Dividends Fund
By: _______________________________
John R. Kay
Vice President
DISTRIBUTION PLAN
WHEREAS, Templeton Global Investment Trust (the
"Trust") is registered as an open-end diversified management
investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Trust on behalf of Templeton Global
Infrastructure Fund (the "Fund") and Franklin Templeton
Distributors, Inc. (the "Selling Company"), a wholly owned
subsidiary of Franklin Resources, Inc. and a broker-dealer
registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the
Selling Company will act as principal underwriter of the Class II
Shares of the Fund for sale to the public; and
WHEREAS, shares of beneficial interest of the Fund are
divided into classes of shares, one of which is designated Class
II; and
WHEREAS, the Board of Trustees of the Trust has
determined to adopt this Distribution Plan (the "Plan"), in
accordance with the requirements of the 1940 Act and has
determined that there is a reasonable likelihood that the Plan
will benefit the Fund and the holders of Class II Shares.
NOW THEREFORE, the Trust on behalf of the Fund hereby
adopts, with respect to its Class II Shares, the Plan on the
following terms and conditions:
1. The Fund will reimburse the Selling Company for
costs and expenses incurred in connection with the distribution
and marketing of the Class II Shares of the Fund. Such
distribution costs and expenses may include: (a) payments to
broker-dealers who provide certain services of value to the
Fund's Class II Shareholders (sometimes referred to as a "trail
fee"); (b) reimbursement of expenses relating to selling and
servicing efforts or of organizing and conducting sales seminars;
(c) payments to employees or agents of the Selling Company who
engage in or support distribution of the Class II Shares; (d)
payment of the costs of preparing, printing and distributing
prospectuses and reports to prospective investors and of printing
and advertising expenses; (e) payment of dealer commissions and
wholesaler compensation in connection with sales of the Fund's
Class II Shares and interest or carrying charges in connection
therewith; and (f) such other similar services as the Trust's
Board of Trustees determines to be reasonably calculated to
result in the sale of Class II Shares.
The Selling Company will be reimbursed for such costs,
expenses or payments on a quarterly basis, subject to a limit of
1.00% per annum of the average daily net assets of the Fund's
Class II Shares (of which up to 0.25% of such net assets may be
paid to dealers for personal service and/or the maintenance of
Class II Shareholder accounts (the "Service Fee")) and subject to
any applicable restriction imposed by rules of the National
Association of Securities Dealers, Inc. Payments made out of or
charged against the assets of the Class II Shares of the Fund
must be in reimbursement for costs and expenses in connection
with any activity which is primarily intended to result in the
sale of the Fund's Class II Shares or account maintenance and
personal service to Shareholders.
2. The Plan shall not take effect with respect to the
Fund's Class II Shares until it has been approved by a vote of at
least a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Class II Shares of the Fund. With
respect to the submission of the Plan for such a vote, it shall
have been effectively approved with respect to the Fund's Class
II Shares if a majority of the outstanding voting securities of
the Class II Shares of the Fund votes for approval of the Plan.
3. The Plan shall not take effect until it has been
approved, together with any related agreements and supplements,
by votes of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Plan Trustees"), cast
in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
4. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the
manner provided for approval of the Plan in paragraph 3.
5. Any person authorized to direct the disposition of
monies paid or payable by the Class II Shares of the Fund
pursuant to the Plan or any related agreement shall provide to
the Trust's Board of Trustees, and the Board shall review, at
least quarterly, a written report of the amounts so expended and
the purposes for which such expenditures were made.
6. Any agreement related to the Plan shall be in
writing and shall provide: (a) that such agreement may be
terminated at any time as to the Fund's Class II Shares, without
payment of any penalty, by vote of a majority of the Plan
Directors or by vote of a majority of the outstanding voting
securities of the Class II Shares of the Fund, on not more than
sixty days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the
event of its assignment.
7. The Plan may be terminated at any time, without
payment of any penalty, by vote of a majority of the Plan
Trustees, or by vote of a majority of the outstanding Class II
Shares of the Fund.
8. The Plan may be amended at any time by the Trust's
Board of Trustees, provided that (a) any amendment to increase
materially the costs which the Class II Shares of the Fund may
bear for distribution pursuant to the Plan shall be effective
only upon approval by a vote of a majority of the Class II Shares
of the Fund, and (b) any material amendments of the terms of the
Plan shall become effective only upon approval as provided in
paragraph 3 hereof.
9. While the Plan is in effect, the selection and
nomination of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust shall be committed to the
discretion of the Trustees who are not interested persons.
10. The Fund shall preserve copies of the Plan, any
related agreement and any report made pursuant to paragraph 5
hereof, for a period of not less than six years from the date of
the Plan, such agreement or report, as the case may be, the first
two years of which shall be in an easily accessible place.
11. It is understood and expressly stipulated that
neither the holders of Class II Shares of the Fund nor any
Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has executed this
Distribution Plan on this 1st day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
on behalf of Templeton Global Infrastructure Fund
By: _______________________________
John R. Kay
Vice President
DISTRIBUTION PLAN
WHEREAS, Templeton Global Investment Trust (the
"Trust") is registered as an open-end diversified management
investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Trust on behalf of Templeton Global
Infrastructure Fund (the "Fund") and Franklin Templeton
Distributors, Inc. (the "Selling Company"), a wholly owned
subsidiary of Franklin Resources, Inc. and a broker-dealer
registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the
Selling Company will act as principal underwriter of the Class I
Shares of the Fund for sale to the public; and
WHEREAS, shares of beneficial interest of the Fund are
divided into classes of shares, one of which is designated Class
I; and
WHEREAS, the Board of Trustees of the Trust has
determined to adopt this Distribution Plan (the "Plan"), in
accordance with the requirements of the 1940 Act and has
determined that there is a reasonable likelihood that the Plan
will benefit the Fund and the holders of Class I Shares.
NOW THEREFORE, the Trust on behalf of the Fund hereby
adopts, with respect to its Class I Shares, the Plan on the
following terms and conditions:
1. The Fund will reimburse the Selling Company for
costs and expenses incurred in connection with the distribution
and marketing of the Class I Shares of the Fund. Such
distribution costs and expenses may include: (a) payments to
broker-dealers who provide certain services of value to the
Fund's Class I Shareholders (sometimes referred to as a "trail
fee"); (b) reimbursement of expenses relating to selling and
servicing efforts or of organizing and conducting sales seminars;
(c) payments to employees or agents of the Selling Company who
engage in or support distribution of the Class I Shares; (d)
payment of the costs of preparing, printing and distributing
prospectuses and reports to prospective investors and of printing
and advertising expenses; (e) payment of dealer commissions and
wholesaler compensation in connection with sales of the Fund's
Class I Shares exceeding $1 million (for which the Trust imposes
no sales charge) and interest or carrying charges in connection
therewith; and (f) such other similar services as the Trust's
Board of Trustees determines to be reasonably calculated to
result in the sale of Class I Shares.
The Selling Company will be reimbursed for such costs,
expenses or payments on a quarterly basis, subject to a limit of
0.35% per annum of the average daily net assets of the Fund's
Class I Shares. Payments made out of or charged against the
assets of the Class I Shares of the Fund must be in reimbursement
for costs and expenses in connection with any activity which is
primarily intended to result in the sale of the Fund's Class I
Shares. The costs and expenses not reimbursed in any one given
quarter (including costs and expenses not reimbursed because they
exceeded the limit of 0.35% per annum of the average daily net
assets of the Fund's Class I Shares) may be reimbursed in
subsequent quarters or years.
2. The Plan shall not take effect with respect to the
Fund's Class I Shares until it has been approved by a vote of at
least a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Class I Shares of the Fund. With
respect to the submission of the Plan for such a vote, it shall
have been effectively approved with respect to the Fund's Class I
Shares if a majority of the outstanding voting securities of the
Class I Shares of the Fund votes for approval of the Plan.
3. The Plan shall not take effect until it has been
approved, together with any related agreements and supplements,
by votes of a majority of both (a) the Board of Trustees of the
Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Plan Trustees"), cast
in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
4. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the
manner provided for approval of the Plan in paragraph 3.
5. Any person authorized to direct the disposition of
monies paid or payable by the Class I Shares of the Fund pursuant
to the Plan or any related agreement shall provide to the Trust's
Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
6. Any agreement related to the Plan shall be in
writing and shall provide: (a) that such agreement may be
terminated at any time as to the Fund's Class I Shares, without
payment of any penalty, by vote of a majority of the Plan
Trustees or by vote of a majority of the outstanding voting
securities of the Class I Shares of the Fund, on not more than
sixty days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the
event of its assignment.
7. The Plan may be terminated at any time, without
payment of any penalty, by vote of a majority of the Plan
Trustees, or by vote of a majority of the outstanding Class I
Shares of the Fund.
8. The Plan may be amended at any time by the Trust's
Board of Trustees, provided that (a) any amendment to increase
materially the costs which the Class I Shares of the Fund may
bear for distribution pursuant to the Plan shall be effective
only upon approval by a vote of a majority of the Class I Shares
of the Fund, and (b) any material amendments of the terms of the
Plan shall become effective only upon approval as provided in
paragraph 3 hereof.
9. While the Plan is in effect, the selection and
nomination of Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Fund shall be committed to the
discretion of the Trustees who are not interested persons.
10. The Trust shall preserve copies of the Plan, any
related agreement and any report made pursuant to paragraph 5
hereof, for a period of not less than six years from the date of
the Plan, such agreement or report, as the case may be, the first
two years of which shall be in an easily accessible place.
11. It is understood and expressly stipulated that
neither the holders of Class I Shares of the Fund nor any
Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has executed this
Distribution Plan on this 1st day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
on behalf of TEMPLETON GLOBAL INFRASTRUCTURE FUND
By: _______________________________
John R. Kay
Vice President
Templeton Greater European Fund
Multiple Class Plan
This Multiple Class Plan (the "Plan") has been adopted
by a majority of the Board of Trustees of Templeton Global
Investment Trust - Templeton Greater European Fund (the "Fund").
The Board has determined that the Plan is in the best interests
of each class and the Fund as a whole. The Plan sets forth the
provisions relating to the establishment of multiple classes of
shares for the Fund.
1. The Fund shall offer two classes of shares, to be known
as Templeton Greater European Fund - Class I and Templeton
Greater European Fund - Class II.
2. Class I shares shall carry a front-end sales charge
ranging from 0% - 5.75%, and Class II shares shall carry a front-
end sales charge of 1.00%.
3. Class I shares shall not be subject to a contingent
deferred sales charge ("CDSC") except in the following limited
circumstances. On investments of $1 million or more, a
contingent deferred sales charge of 1.00% of the lesser of the
then-current net asset value or the original net asset value at
the time of purchase applies to redemptions of those investments
within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain
circumstances, as described in the Fund's prospectus.
4. Class II shares redeemed within 18 months of their
purchase shall be assessed a CDSC of 1.00% on the lesser of the
then-current net asset value or the original net asset value at
the time of purchase. The CDSC is waived in certain
circumstances as described in the Fund's prospectus.
5. The Rule 12b-1 Plan associated with Class I shares may
be used to reimburse Franklin Templeton Distributors, Inc. (the
"Distributor") or others for expenses incurred in the promotion
and distribution of the shares of Class I. Such expenses
include, but are not limited to, the printing of the prospectuses
and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses,
advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead
expenses attributable to the distribution of Class I shares, as
well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing
agreement with the Fund for the Class, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with Class II shares has
two components. The first component is a shareholder servicing
fee, to be paid to broker-dealers, banks, trust companies and
others who will provide personal assistance to shareholders in
servicing their accounts. The second component is an asset-based
sales charge to be retained by the Distributor during the first
year after sale of shares, and, in subsequent years, to be paid
to dealers or retained by the Distributor to be used in the
promotion and distribution of Class II shares, in a manner
similar to that described above for Class I shares.
The Plans shall operate in accordance with the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., Article III, section 26(d).
6. The only difference in expenses as between Class I and
Class II shares shall relate to differences in the Rule 12b-1
plan expenses of each class, as described in each class' Rule
12b-1 Plan.
7. There shall be no conversion features associated with
the Class I and Class II shares.
8. Shares of Class I of the Fund may only be exchanged for
shares of Class I of any other fund in the Franklin Templeton
Group and may not be exchanged into the Franklin Templeton Money
Fund II of the Franklin Templeton Money Fund Trust. Shares of
- 2 -
Class II of the Fund may only be exchanged for shares of Class II
of any other fund in the Franklin Templeton Group and may also be
exchanged into the Franklin Templeton Money Fund II of the
Franklin Templeton Money Fund Trust.
9. Each Class will vote separately with respect to the
Rule 12b-1 Plan related to that Class.
10. On an ongoing basis, the trustees, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will
monitor the Fund for the existence of any material conflicts
between the interests of the two classes of shares. The
trustees, including a majority of the independent trustees, shall
take such action as is reasonably necessary to eliminate any such
conflict that may develop. Templeton Galbraith & Hansberger Ltd.
and Franklin Templeton Distributors, Inc. shall be responsible
for alerting the Board of any material conflicts that arise.
11. All material amendments to this Plan must be approved
by a majority of the trustees of the Fund, including a majority
of the trustees who are not interested persons of the Fund.
- 3 -
Templeton Global Infrastructure Fund
Multiple Class Plan
This Multiple Class Plan (the "Plan") has been adopted
by a majority of the Board of Trustees of Templeton Global
Investment Trust - Templeton Global Infrastructure Fund (the
"Fund"). The Board has determined that the Plan is in the best
interests of each class and the Fund as a whole. The Plan sets
forth the provisions relating to the establishment of multiple
classes of shares for the Fund.
1. The Fund shall offer two classes of shares, to be known
as Templeton Global Infrastructure Fund - Class I and Templeton
Global Infrastructure Fund - Class II.
2. Class I shares shall carry a front-end sales charge
ranging from 0% - 5.75%, and Class II shares shall carry a front-
end sales charge of 1.00%.
3. Class I shares shall not be subject to a contingent
deferred sales charge ("CDSC") except in the following limited
circumstances. On investments of $1 million or more, a
contingent deferred sales charge of 1.00% of the lesser of the
then-current net asset value or the original net asset value at
the time of purchase applies to redemptions of those investments
within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain
circumstances, as described in the Fund's prospectus.
4. Class II shares redeemed within 18 months of their
purchase shall be assessed a CDSC of 1.00% on the lesser of the
then-current net asset value or the original net asset value at
the time of purchase. The CDSC is waived in certain
circumstances as described in the Fund's prospectus.
- 1 -
5. The Rule 12b-1 Plan associated with Class I shares may
be used to reimburse Franklin Templeton Distributors, Inc. (the
"Distributor") or others for expenses incurred in the promotion
and distribution of the shares of Class I. Such expenses
include, but are not limited to, the printing of the prospectuses
and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses,
advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead
expenses attributable to the distribution of Class I shares, as
well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing
agreement with the Fund for the Class, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with Class II shares has
two components. The first component is a shareholder servicing
fee, to be paid to broker-dealers, banks, trust companies and
others who will provide personal assistance to shareholders in
servicing their accounts. The second component is an asset-based
sales charge to be retained by the Distributor during the first
year after sale of shares, and, in subsequent years, to be paid
to dealers or retained by the Distributor to be used in the
promotion and distribution of Class II shares, in a manner
similar to that described above for Class I shares.
The Plans shall operate in accordance with the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., Article III, section 26(d).
6. The only difference in expenses as between Class I and
Class II shares shall relate to differences in the Rule 12b-1
plan expenses of each class, as described in each class' Rule
12b-1 Plan.
7. There shall be no conversion features associated with
the Class I and Class II shares.
8. Shares of Class I of the Fund may only be exchanged for
shares of Class I of any other fund in the Franklin Templeton
Group and may not be exchanged into the Franklin Templeton Money
Fund II of the Franklin Templeton Money Fund Trust. Shares of
Class II of the Fund may only be exchanged for shares of Class II
of any other fund in the Franklin Templeton Group and may also be
exchanged into the Franklin Templeton Money Fund II of the
Franklin Templeton Money Fund Trust.
9. Each Class will vote separately with respect to the
Rule 12b-1 Plan related to that Class.
10. On an ongoing basis, the trustees, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will
monitor the Fund for the existence of any material conflicts
between the interests of the two classes of shares. The
trustees, including a majority of the independent trustees, shall
take such action as is reasonably necessary to eliminate any such
conflict that may develop. Templeton Investment Counsel, Inc.
and Franklin Templeton Distributors, Inc. shall be responsible
for alerting the Board of any material conflicts that arise.
11. All material amendments to this Plan must be approved
by a majority of the trustees, including a majority of the
trustees who are not interested persons of the Fund.
- 3 -
Templeton Global Rising Dividends Fund
Multiple Class Plan
This Multiple Class Plan (the "Plan") has been adopted
by a majority of the Board of Trustees of Templeton Global
Investment Trust - Templeton Global Rising Dividends Fund (the
"Fund"). The Board has determined that the Plan is in the best
interests of each class and the Fund as a whole. The Plan sets
forth the provisions relating to the establishment of multiple
classes of shares for the Fund.
1. The Fund shall offer two classes of shares, to be known
as Templeton Global Rising Dividends Fund - Class I and Templeton
Global Rising Dividends Fund - Class II.
2. Class I shares shall carry a front-end sales charge
ranging from 0% - 5.75%, and Class II shares shall carry a front-
end sales charge of 1.00%.
3. Class I shares shall not be subject to a contingent
deferred sales charge ("CDSC") except in the following limited
circumstances. On investments of $1 million or more, a
contingent deferred sales charge of 1.00% of the lesser of the
then-current net asset value or the original net asset value at
the time of purchase applies to redemptions of those investments
within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain
circumstances, as described in the Fund's prospectus.
4. Class II shares redeemed within 18 months of their
purchase shall be assessed a CDSC of 1.00% on the lesser of the
then-current net asset value or the original net asset value at
the time of purchase. The CDSC is waived in certain
circumstances as described in the Fund's prospectus.
- 1 -
5. The Rule 12b-1 Plan associated with Class I shares may
be used to reimburse Franklin Templeton Distributors, Inc. (the
"Distributor") or others for expenses incurred in the promotion
and distribution of the shares of Class I. Such expenses
include, but are not limited to, the printing of the prospectuses
and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses,
advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead
expenses attributable to the distribution of Class I shares, as
well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing
agreement with the Fund for the Class, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with Class II shares has
two components. The first component is a shareholder servicing
fee, to be paid to broker-dealers, banks, trust companies and
others who will provide personal assistance to shareholders in
servicing their accounts. The second component is an asset-based
sales charge to be retained by the Distributor during the first
year after sale of shares, and, in subsequent years, to be paid
to dealers or retained by the Distributor to be used in the
promotion and distribution of Class II shares, in a manner
similar to that described above for Class I shares.
The Plans shall operate in accordance with the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., Article III, section 26(d).
6. The only difference in expenses as between Class I and
Class II shares shall relate to differences in the Rule 12b-1
plan expenses of each class, as described in each class' Rule
12b-1 Plan.
7. There shall be no conversion features associated with
the Class I and Class II shares.
8. Shares of Class I of the Fund may only be exchanged for
shares of Class I of any other fund in the Franklin Templeton
Group and may not be exchanged into the Franklin Templeton Money
Fund II of the Franklin Templeton Money Fund Trust. Shares of
Class II of the Fund may only be exchanged for shares of Class II
of any other fund in the Franklin Templeton Group and may also be
exchanged into the Franklin Templeton Money Fund II of the
Franklin Templeton Money Fund Trust.
9. Each Class will vote separately with respect to the
Rule 12b-1 Plan related to that Class.
10. On an ongoing basis, the trustees, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will
monitor the Fund for the existence of any material conflicts
between the interests of the two classes of shares. The
trustees, including a majority of the independent trustees, shall
take such action as is reasonably necessary to eliminate any such
conflict that may develop. Templeton Galbraith & Hansberger Ltd.
and Franklin Templeton Distributors, Inc. shall be responsible
for alerting the Board of any material conflicts that arise.
11. All material amendments to this Plan must be approved
by a majority of the trustees, including a majority of the
trustees who are not interested persons of the Fund.
- 3 -
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL INFRASTRUCTURE FUND SEPTEMBER 30, 1994 SEMI-ANNUAL
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> TEMPLETON GLOBAL INFRASTRUCTURE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 11947185
<INVESTMENTS-AT-VALUE> 12053767
<RECEIVABLES> 862092
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 73521
<TOTAL-ASSETS> 12989380
<PAYABLE-FOR-SECURITIES> 980373
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39324
<TOTAL-LIABILITIES> 1019697
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11845773
<SHARES-COMMON-STOCK> 1158113
<SHARES-COMMON-PRIOR> 10072
<ACCUMULATED-NII-CURRENT> 29985
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12657)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 106582
<NET-ASSETS> 11969683
<DIVIDEND-INCOME> 7638
<INTEREST-INCOME> 46292
<OTHER-INCOME> 0
<EXPENSES-NET> 24033
<NET-INVESTMENT-INCOME> 29897
<REALIZED-GAINS-CURRENT> (12657)
<APPREC-INCREASE-CURRENT> 106554
<NET-CHANGE-FROM-OPS> 123794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1165991
<NUMBER-OF-SHARES-REDEEMED> 17950
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11868843
<ACCUMULATED-NII-PRIOR> 88
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14416
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 72031
<AVERAGE-NET-ASSETS> 3833846
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.34
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALED 3.75%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL RISING DIVIDENDS FUND SEPTEMBER 30, 1994 SEMI-ANNUAL
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> TEMPLETON GLOBAL RISING DIVIDENDS FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 3962605
<INVESTMENTS-AT-VALUE> 3957304
<RECEIVABLES> 295037
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 62830
<TOTAL-ASSETS> 4315171
<PAYABLE-FOR-SECURITIES> 270518
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25867
<TOTAL-LIABILITIES> 296385
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4006368
<SHARES-COMMON-STOCK> 395912
<SHARES-COMMON-PRIOR> 10022
<ACCUMULATED-NII-CURRENT> 21794
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4075)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5301)
<NET-ASSETS> 4018786
<DIVIDEND-INCOME> 9280
<INTEREST-INCOME> 24597
<OTHER-INCOME> 0
<EXPENSES-NET> 12171
<NET-INVESTMENT-INCOME> 21706
<REALIZED-GAINS-CURRENT> (4075)
<APPREC-INCREASE-CURRENT> (5329)
<NET-CHANGE-FROM-OPS> 12302
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 395877
<NUMBER-OF-SHARES-REDEEMED> 9987
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3918450
<ACCUMULATED-NII-PRIOR> 88
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7302
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 54468
<AVERAGE-NET-ASSETS> 1942103
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> .02
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALS 5.60%.
</FN>
</TABLE>
April 28, 1995
To: All Templeton Funds Listed on Schedule A
700 Central Avenue
St. Petersburg, FL 33701
Gentlemen:
We propose to invest $100.00 in the Class II shares (the "Shares") of each of
the Funds listed on the attached Schedule A (the "Funds"), on the business
day immediately preceding the effective date for each Fund's Class II shares,
at a purchase price per share equivalent to the net asset value per share of
each Fund's Class I shares on the date of purchase. We will purchase the
Shares in a private offering prior to the effectiveness of the post-effective
amendment to the Form N-1A registration statement under which each Fund's Class
II share are initially offered, as filed by the Fund under the Securities Act
of 1933. The Shares are being purchased to serve as the seed money for each
Fund's Class II shares prior to the commencement of the public offering of
Class II shares.
In connection with such purchase, we understand that we, the purchaser,
intend to acquire the Shares for our own account as the sole beneficial owner
thereof and have no present intention of redeeming or reselling the Shares so
acquired.
We consent to the filing of this Investment Letter as an exhibit to the Form
N-1A registration statement of each Fund.
Sincerely,
TEMPLETON GLOBAL INVESTORS, INC.
By: /s/ Thomas M. Mistele
------------------------------------
Thomas M. Mistele
Senior Vice Presidemt
Date: April 28, 1995
<PAGE>
ACTION OF SOLE SHAREHOLDER BY WRITTEN CONSENT
The undersigned, being the sole shareholder of the Class II shares of each of
the Templeton Funds listed on the attached Schedule A (the "Funds"), each of
which is a series of the Investment Companies as indicated on Schedule A (the
"Companies"), does hereby take the following actions and does hereby consent
to the following resolution:
RESOLVED: That the Distribution Plans pursuant to Rule 12b-1 (under
the Investment Company Act of 1940), as agreed to and
accepted by Franklin Templeton Distributors, Inc. and each
of the Companies prior to the date below, be and it
hereby is, approved for each Fund.
By execution hereof, the undersigned shareholder waives prior notice of the
foregoing action by written consent.
TEMPLETON GLOBAL INVESTORS, INC.
Dated: April 28, 1995 By: /s/ Thomas M. Mistele
Title: Senior Vice President
<PAGE>
SCHEDULE A
INVESTMENT COMPANY FUND
Templeton Funds, Inc . Templeton World Fund - Class II
Templeton Foreign Fund - Class II
Templeton Smaller Companies Growth Templeton Smaller Companies
Fund, Inc. Growth Fund, Inc. - Class II
Templeton Growth Fund, Inc. Templeton Growth Fund, Inc. - Class II
Templeton Real Estate Securities Templeton Real Estate Securities Fund -
Fund Class II
Templeton Global Opportunities Trust Templeton Global Opportunities Trust -
Class II
Templeton Developing Markets Trust Templeton Developing Markets Trust -
Class II
Templeton Income Trust Templeton Income Fund - Class II
Templeton American Trust, Inc. Templeton American Trust, Inc. - Class I
Templeton Global Investment Trust Templeton Global Rising Dividends Fund -
Class II
Templeton Global Infrastructure Fund -
Class II
Templeton Latin America Fund - Class II
Templeton Greater European Fund -
Class II
