File No. 33-73244
As filed with the Securities and Exchange Commission on November 8, 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. 8 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 10 X
TEMPLETON GLOBAL INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
700 Central Avenue, P.O. Box 33030, St. Petersburg, Florida 33733-8030
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (813) 823-8712
Thomas M. Mistele, Esq.
Templeton Global Investors, Inc.
500 East Broward Blvd.
Fort Lauderdale, FL 33394
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b) on 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, 1995 on May 26, 1995.
<PAGE>
TEMPLETON GLOBAL INVESTMENT TRUST
CROSS-REFERENCE SHEET
This Post-Effective Amendment No. 8 to the Registration Statement
(File No. 33-73244) on Form N-1A for Templeton Global Investment
Trust incorporates by reference the prospectus for Templeton Growth
and Income Fund, Templeton Global Infrastructure Fund and Templeton
Americas Government Securities Fund which was contained in
Templeton Global Investment Trust's Post-Effective Amendment No. 7,
which was filed on July 7, 1995.
Part A - Templeton Region Funds
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 B
10 Cover Page
11 Table of Contents
12 General Information and
History
13 Investment Objectives and
Policies
14 Management of the Trust
<PAGE>
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>
SUPPLEMENT TO THE PROSPECTUS
Prospectus Dated May 8, 1995
(as previously amended August 31, 1995 and
supplemented October 2, 1995 and
November 1, 1995)
Templeton Region Funds
The prospectus is hereby supplemented by adding the following section after the
section entitled "EXPENSE TABLE":
FINANCIAL HIGHLIGHTS
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
<TABLE>
<CAPTION>
TEMPLETON GREATER EUROPEAN FUND TEMPLETON LATIN AMERICA FUND
Class I Class II Class I Class II
May 8, 1995 May 8, 1995 May 8, 1995 May 8, 1995
(commencement of (commencement of (commencement of (commencement of
operations) to operations) to operations) to operations) to
September 30, 1995 September 30, 1995 September 30, 1995 September 30, 1995
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
Income from investment operations:
Net investment income .06 .08 .06 .05
Net realized and unrealized loss (.18) (.22) .16 .14
Total from investment operations (.12) (.14) .22 .19
Change in net asset value (.12) (.14) .22 .19
Net asset value, end of period $9.88 $9.86 $10.22 $10.19
TOTAL RETURN* (1.20)% (1.40)% 2.20% 1.90%
RATIO/SUPPLEMENTAL DATA
Net assets, end of period (000) $2,946 $1,136 $3,308 $871
Ratio of expenses to average net assets 4.58% ** 5.23% ** 4.98% ** 5.63% **
Ratio of expenses, net of reimbursement,
to average net assets 1.85% ** 2.50% ** 2.35% ** 3.00% **
Ratio of net investment income to average
net assets 3.22% ** 2.77% ** 2.63% ** 1.99% **
</TABLE>
*Total Return does not reflect sales commissions. Not annualized.
**Annualized.
NOVEMBER 8, 1995 TLGIT STKR 11/95
<PAGE>
TEMPLETON PROSPECTUS -- MAY 8, 1995
REGION FUNDS
AS AMENDED AUGUST 31, 1995
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INVESTMENT The Templeton Region Funds are the Templeton Greater European
OBJECTIVES Fund ("Greater European Fund") and the Templeton Latin America
AND POLICIES Fund ("Latin America Fund") (each a "Fund" and collectively
the "Funds"), which are separate series of Templeton Global
Investment Trust (the "Trust"), an open-end management
investment company.
GREATER EUROPEAN FUND seeks to achieve long-term capital
appreciation by investing primarily in equity securities of
companies in Greater Europe (Western, Central and Eastern
Europe and Russia).
LATIN AMERICA FUND seeks to achieve long-term capital
appreciation by investing primarily in equity securities and
debt obligations of issuers in Latin American countries.
INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN
CONSIDERATIONS WHICH ARE NOT NORMALLY INVOLVED IN INVESTMENT
IN SECURITIES OF U.S. COMPANIES, AND AN INVESTMENT IN THE
FUNDS MAY BE CONSIDERED SPECULATIVE. EACH FUND MAY INVEST
WITHOUT LIMIT IN EMERGING MARKET COUNTRIES, BORROW MONEY FOR
INVESTMENT PURPOSES, AND 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." INVESTORS SHOULD
CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING.
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PURCHASE OF Please complete and return the Shareholder Application. If you
SHARES need assistance in completing this form, please call our
Shareholder Services Department. Each Fund offers two classes
to its investors: Greater European Fund--Class I ("Class I"),
Greater European Fund--Class II ("Class II"), Latin America
Fund--Class I ("Class I") and Latin America 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 Funds--
Differences Between Class I and Class II." The minimum initial
investment is $100 ($25 minimum for subsequent investments).
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PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Funds 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 July 10, 1995, has been filed with
the Securities and Exchange Commission (the "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.
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FUND INFORMATION DEPARTMENT -- 1-800/DIAL BEN
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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
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SHARES OF THE FUNDS 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>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
EXPENSE TABLE............................. 3
GENERAL DESCRIPTION....................... 4
INVESTMENT OBJECTIVES AND
POLICIES................................. 5
Greater European Fund..................... 5
Latin America Fund........................ 5
Information Regarding Both Funds.......... 5
Brady Bonds............................... 6
INVESTMENT TECHNIQUES..................... 7
Temporary Investments..................... 7
Borrowing................................. 8
Loans of Portfolio Securities............. 8
Options on Securities or Indices.......... 8
Forward Foreign Currency Contracts and
Options on Foreign Currencies............ 8
Futures Contracts......................... 9
Repurchase Agreements..................... 9
Depositary Receipts....................... 9
Illiquid and Restricted Securities........ 10
Structured Investments.................... 10
Investment Companies...................... 11
RISK FACTORS.............................. 11
Foreign Currency Exchange................. 11
Foreign Investments....................... 11
High-Risk Debt Securities................. 12
Leverage.................................. 13
Futures Contracts and Related Options..... 13
HOW TO BUY SHARES OF THE
FUNDS.................................... 13
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<S> <C>
Differences Between Class I and
Class II................................. 13
Deciding Which Class to Purchase.......... 14
Offering Price--Class I................... 14
Offering Price--Class II.................. 16
Net Asset Value Purchases (Both
Classes)................................. 17
Description of Special Net Asset Value
Purchases................................ 18
Additional Dealer Compensation (Both
Classes)................................. 18
Purchasing Class I and Class II Shares.... 19
Automatic Investment Plan................. 19
Institutional Accounts.................... 20
Account Statements........................ 20
Templeton STAR Service.................... 20
Retirement Plans.......................... 20
Net Asset Value........................... 20
EXCHANGE PRIVILEGE........................ 21
Exchanges of Class I Shares............... 22
Exchanges of Class II Shares.............. 22
Transfers................................. 23
Conversion Rights......................... 23
Exchanges by Timing Accounts.............. 23
HOW TO SELL SHARES OF THE
FUNDS.................................... 23
Reinstatement Privilege................... 25
Systematic Withdrawal Plan................ 26
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Page
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<S> <C>
Redemptions by Telephone.................. 26
Contingent Deferred Sales Charge.......... 27
TELEPHONE TRANSACTIONS.................... 27
Verification Procedures................... 28
Restricted Accounts....................... 28
General................................... 28
MANAGEMENT OF THE FUNDS................... 28
Investment Manager........................ 28
Business Manager.......................... 30
Transfer Agent............................ 30
Custodian................................. 30
Plans of Distribution..................... 30
Brokerage Commissions..................... 31
GENERAL INFORMATION....................... 31
Description of Shares/Share Certificates.. 31
Voting Rights............................. 31
Meetings of Shareholders.................. 31
Dividends and Distributions............... 32
Federal Tax Information................... 32
Inquiries................................. 32
Performance Information................... 33
Statements and Reports.................... 33
WITHHOLDING INFORMATION................... 34
CORPORATE RESOLUTION...................... 35
AUTHORIZATION AGREEMENT................... 36
THE FRANKLIN TEMPLETON GROUP.............. 37
</TABLE>
2
<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 Funds. The figures are estimates of
the Funds' expenses for the current fiscal year, restated to reflect current
sales charges and Rule 12b-1 fees for each class.
<TABLE>
<CAPTION>
GREATER EUROPEAN FUND LATIN AMERICA FUND
-------------------------- -----------------------
CLASS I CLASS II CLASS I CLASS II
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
Offering Price)................ 5.75% 1.00%/1/ 5.75% 1.00%/1/
Deferred Sales Charge........... None/2/ 1.00%/3/ None/2/ 1.00%/3/
Exchange Fee (per transaction).. $ 5.00/4/ $ 5.00/4/ $ 5.00/4/ $ 5.00/4/
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees (after expense
reimbursement)................. 0.00% 0.00% 0.00% 0.00%
Rule 12b-1 Fees/5/.............. .35% 1.00%/4/ .35% 1.00%
Other Expenses (audit, legal,
business management, transfer
agent and custodian) (after
expense reimbursement)......... 1.50% 1.50% 2.00% 2.00%
Total Fund Operating Expenses
(after expense reimbursement).. 1.85% 2.50% 2.35% 3.00%
</TABLE>
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/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. (See "How to Buy Shares of the
Funds.")
/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% 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 Funds--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 Funds--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 each Fund's average net
assets attributable to Class I Shares and 1% of each 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 Funds. Rather, the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and
expenses. The information in this 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. For a more detailed
discussion of these matters, investors should refer to the appropriate
sections of this Prospectus.
The Funds' investment manager, Templeton Galbraith & Hansberger Ltd. (the
"Investment Manager"), has voluntarily agreed to reduce its investment
management fee to the extent necessary to limit total expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses) to the
following percentages of each Fund's average daily net assets: 1.85% for Class
I and 2.50% for Class II of Greater European Fund; and 2.35% for Class I and
3.00% for Class II of Latin America Fund, in each case until December 31,
1995. If such fee reduction is insufficient to so limit each Fund's total
expenses, the Funds' Business Manager, Templeton Global Investors, Inc., has
voluntarily agreed to reduce its fee and, to the extent necessary, assume
other Fund expenses,
3
<PAGE>
so as to so limit each Fund's total expenses. If this policy were not in
effect, the Funds' "Other Expenses" would be 1.90% for both classes of Greater
European Fund and 2.10% for both classes of Latin America Fund and the "Total
Fund Operating Expenses" would be 3.00% for Class I and 3.65% for Class II of
Greater European Fund, and 3.70% for Class I and 4.35% for Class II of Latin
America Fund. 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: Greater European Fund--$86 for one year and $145 for three years for
Class I; $56 for one year and $121 for three years for Class II; and Latin
America Fund--$93 for one year and $164 for three years for Class I; $63 for
one year and $140 for three years for Class II. As long as this temporary
expense limitation continues, it may lower each Fund's expenses and increase
its total return. After December 31, 1995, the expense limitation may be
terminated or revised at any time, at which time each Fund's expenses may
increase and its total return may be reduced, depending on the total assets of
the Fund.
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
Funds 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>
Greater European Fund
Class I................................................ $68 $105
Class II............................................... $45 $ 87
Latin America Fund
Class I................................................ $73 $120
Class II............................................... $50 $102
You would pay the following expenses on the same invest-
ment in Class II Shares,
assuming no redemption.
Greater European Fund, Class II........................ $35 $ 87
Latin America Fund, Class II........................... $40 $102
</TABLE>
For the purpose of this example, it is assumed that a contingent deferred
sales charge will not apply to Class I Shares.
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 Funds and only indirectly
by Shareholders as a result of their investment in the Funds. In addition,
federal securities regulations require the example to assume an annual return
of 5%, but each Fund's actual return may be more or less than 5%.
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, as amended (the "1940 Act") as an open-end
management investment company. In addition to the Funds, both of which are
diversified funds, the Trust has three series of shares: Templeton Americas
Government Securities Fund, a non-diversified fund, and Templeton Growth and
Income Fund and Templeton Global
4
<PAGE>
Infrastructure Fund, both diversified funds. Prospectuses for Templeton
Americas Government Securities Fund, Templeton Growth and Income Fund and
Templeton Global Infrastructure Fund are available upon request and without
charge from the Principal Underwriter. Each Fund has two classes of shares of
beneficial interest with a par value of $.01: Greater European Fund--Class I,
Greater European Fund--Class II, Latin America Fund--Class I and Latin America
Fund--Class II.
Shares of the Funds 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 Funds--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% of the amount invested. (See "How to
Buy Shares of the Funds.")
INVESTMENT OBJECTIVES AND POLICIES
GREATER EUROPEAN FUND has as its investment objective long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily
in equity securities (as defined below) of Greater European Companies. As used
in this Prospectus, the term "Greater European Company" means a company (i)
that is organized under the laws of, or with a principal office and domicile
in, a country in Greater Europe, (ii) for which the principal equity
securities trading market is in Greater Europe, or (iii) that derives at least
50% of its revenues or profits from goods produced or sold, investments made,
or services performed in Greater Europe or that has at least 50% of its assets
situated in Greater Europe. As used in this Prospectus, the term "Greater
Europe" means Western, Central and Eastern Europe (including Ukraine, Belarus,
Latvia, Lithuania and Estonia) and Russia. Under normal market conditions, the
Fund will invest at least 75% of its total assets in the equity securities of
Greater European Companies. The balance of the Fund's assets will be invested
in (i) debt securities (as defined below) issued by Greater European Companies
or issued or guaranteed by Greater European government entities, (ii) equity
securities and debt obligations of issuers outside Greater Europe, and (iii)
short-term and medium-term debt securities of the type described below under
"Investment Techniques--Temporary Investments."
LATIN AMERICA FUND has as its investment objective long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily
in equity and debt securities of issuers in the following Latin American
countries: Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Cuba, Ecuador, El Salvador, French Guyana, Guatemala, Guyana, Honduras,
Mexico, Nicaragua, Panama, Paraguay, Peru, Surinam, Trinidad/Tobago, Uruguay,
and Venezuela. Under normal market conditions, the Fund will invest at least
65% of its total assets in equity and debt securities of issuers in the
countries named above. The balance of the Fund's assets will be invested in
(i) equity securities and debt obligations of companies and government
entities of countries other than those named above, and (ii) short-term and
medium-term debt securities of the type described below under "Investment
Techniques--Temporary Investments."
INFORMATION REGARDING BOTH FUNDS. Each 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. There can be no assurance that
either Fund's investment objective will be achieved.
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, Greater
European Fund may invest up to 25% of its total assets, and Latin America Fund
may invest without limit, 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
5
<PAGE>
("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, neither Fund will invest more than 5% of its total
assets in debt securities rated lower than Baa by Moody's or BBB 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.
The Funds' Investment Manager will select equity investments for the Funds
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 will be the company's current
price relative to its long-term earnings potential, or real book value, as
determined by the Investment Manager. Securities considered for purchase by a
Fund may be listed or unlisted, and may be issued by companies in various
industries, with various levels of market capitalization. The Investment
Manager will actively manage the Funds' assets in response to market,
political and general economic conditions, and will seek to adjust each Fund's
investments based on its perception of which investments would best enable the
Fund to achieve its investment objective.
As a diversified investment company, each Fund, with respect to 75% of its
total assets, may invest no more than 5% of its total assets in securities
issued by any one company or government, exclusive of U.S. Government
securities. Although a Fund may invest up to 25% of its assets in a single
industry, the Funds have no present intention of doing so. A Fund may not
invest more than 5% of its assets in warrants (exclusive of warrants acquired
in units or attached to securities) or more than 15% of its assets in
securities with a limited trading market.
Each Fund may lend its portfolio securities and borrow money for investment
purposes (i.e., "leverage" its portfolio). In addition, each Fund may enter
into transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, structured investments, 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 Investment Manager, the Funds 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, either
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 Funds do not emphasize short-term trading profits and usually expect to
have an annual portfolio turnover rate not exceeding 50%.
BRADY BONDS. Latin America Fund may invest without limit in certain debt
obligations customarily referred to as "Brady Bonds," which are created
through the exchange of existing commercial bank loans to sovereign entities
for new obligations in connection with debt restructuring under a plan
introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the
"Brady Plan"). Brady Bonds are not considered U.S. Government securities and
are considered speculative. Brady Plan debt restructurings have been
implemented to date in several countries, including Argentina, Brazil,
Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico,
Nigeria, the Philippines, Uruguay, and Venezuela (collectively, the "Brady
Countries"). It is expected that other countries will undertake a Brady Plan
debt restructuring in the future, including Panama, Peru, and Poland.
6
<PAGE>
Brady Bonds have been issued only recently and, accordingly, do not have a
long payment history. They may be collateralized or uncollateralized and
issued in various currencies (although most are U.S. dollar-denominated) and
they are actively traded in the over-the-counter secondary market.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed par
bonds or floating rate discount bonds, are generally collateralized in full as
to principal by U.S. Treasury zero coupon bonds which have the same maturity
as the Brady Bonds. Interest payments on these Brady Bonds generally are
collateralized on a one-year or longer rolling-forward basis by cash or
securities in an amount that, in the case of fixed-rate bonds, is equal to at
least one year of interest payments or, in the case of floating rate bonds,
initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest
payments, but generally are not collateralized. Brady Bonds are often viewed
as having three or four valuation components: (i) the collateralized repayment
of principal at final maturity; (ii) the collateralized interest payments;
(iii) the uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts constitute
the "residual risk").
Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or
comparable collateral denominated in other currencies) and interest coupon
payments collateralized on an 18-month rolling-forward basis by funds held in
escrow by an agent for the bondholders. A significant portion of the
Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date have
principal repayments at final maturity collateralized by U.S. Treasury zero
coupon bonds (or comparable collateral denominated in other currencies) and/or
interest coupon payments collateralized on a 14-month (for Venezuela) or 12-
month (for Argentina) rolling-forward basis by securities held by the Federal
Reserve Bank of New York as collateral agent.
Brady Bonds involve various risk factors including residual risk and the
history of defaults with respect to commercial bank loans by public and
private entities of Brady Countries. There can be no assurance that Brady
Bonds in which Latin America Fund may invest will not be subject to
restructuring arrangements or to requests for new credit, which may cause the
Fund to suffer a loss of interest or principal on any of its holdings.
INVESTMENT TECHNIQUES
The Funds are 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
Funds in some of the markets in which the Funds will invest and may not be
available for extensive use in the future.
TEMPORARY INVESTMENTS. For temporary defensive purposes, each 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.
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BORROWING. Each 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, a 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 a
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 a 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. Each 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. A Fund may terminate the loans
at any time and obtain the return of the securities loaned within five
business days. A 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,
a 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. Each 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. A Fund may write a call or put option only if the option is
"covered." This means that so long as a 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 a 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 a Fund. A 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
Funds will normally conduct 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 Funds 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 Funds will generally enter into forward contracts only under two
circumstances. First, when a 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
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foreign currency. This second investment practice is generally referred to as
"cross-hedging." The Funds have no specific limitation on the percentage of
assets they may commit to forward contracts, subject to their stated
investment objective and policies, except that a 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
Funds from adverse currency movements, they also involve the risk that
anticipated currency movements will not be accurately predicted.
The Funds 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 a 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 a 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 Funds are traded on U.S. and
foreign exchanges or over-the-counter.
FUTURES CONTRACTS. For hedging purposes only, the Funds 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 a 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 a 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.
REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, the Funds may enter into repurchase agreements with U.S.
banks and broker-dealers. Under a repurchase agreement, a 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 a 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, a 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 incur 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. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made
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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 a 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. Each 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. A 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. A 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 a 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 a Fund are required to be registered under the securities
laws of one or more jurisdictions before being resold, a Fund may be required
to bear the expenses of registration. Each Fund will limit its investment in
restricted securities other than Rule 144A securities to 10% of its total
assets, and will limit its investment in all restricted securities, including
Rule 144A securities, to 15% of its total assets. Restricted securities, other
than Rule 144A securities determined by the Board of Trustees to be liquid,
are considered to be illiquid and are subject to a Fund's limitation on
investment in illiquid securities.
STRUCTURED INVESTMENTS. Included among the issuers of debt securities in
which the Funds may invest are entities organized and operated solely for the
purpose of restructuring the investment characteristics of various securities.
These entities are typically organized by investment banking firms which
receive fees in connection with establishing each entity and arranging for the
placement of its securities. This type of restructuring involves the deposit
with or purchase by an entity, such as a corporation or trust, of specified
instruments and the issuance by that entity of one or more classes of
securities ("Structured Investments") backed by, or representing interests in,
the underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued Structured Investments to create securities
with different investment characteristics such as varying maturities, payment
priorities or interest rate provisions; the extent of the payments made with
respect to Structured Investments is dependent on the extent of the cash flow
on the underlying instruments. Because Structured Investments of the type in
which the Funds anticipate investing typically involve no credit enhancement,
their credit risk will generally be equivalent to that of the underlying
instruments.
The Funds are permitted to invest in a class of Structured Investments that
is either subordinated or unsubordinated to the right of payment of another
class. Subordinated Structured Investments typically have higher yields and
present greater risks than unsubordinated Structured Investments. Although a
Fund's purchase of subordinated Structured Investments would have a similar
economic effect to that of borrowing against the underlying securities, the
purchase will not be deemed to be leverage for purposes of the limitations
placed on the extent of a Fund's assets that may be used for borrowing
activities.
Certain issuers of Structured Investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investment in
these Structured Investments may be limited by the restrictions contained in
the 1940 Act described below under "Investment Companies." Structured
Investments are typically sold in private placement transactions, and there
currently is no
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active trading market for Structured Investments. To the extent such
investments are illiquid, they will be subject to the restrictions set forth
in "Investment Techniques--Illiquid and Restricted Securities" above and in
the SAI under "Investment Objectives and Policies--Investment Restrictions."
INVESTMENT COMPANIES. Each Fund may invest in other investment companies,
except those for which the Investment Manager serves as investment adviser or
sponsor, which invest principally in securities in which the Fund is
authorized to invest. Under the 1940 Act, each Fund may invest a maximum of
10% of its total assets in the securities of other investment companies and
not more than 5% of each Fund's total assets in the securities of any one
investment company, provided the investment does not represent more than 3% of
the voting stock of the acquired investment company at the time such shares
are purchased. To the extent a Fund invests in other investment companies, a
Fund's Shareholders will incur certain duplicative fees and expenses,
including investment advisory fees. A Fund's investment in certain investment
companies will result in special U.S. federal income tax consequences
described under "Tax Status" in the SAI.
RISK FACTORS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Funds,
nor can there be any assurance that a Fund's investment objective will be
attained. As with any investment in securities, the value of, and income from,
an investment in a Fund can decrease as well as increase, depending on a
variety of factors which may affect the values and income generated by a
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 a
Fund will fluctuate with movements in the broader equity and bond markets. A
decline in the stock market of any country in which a Fund is invested in
equity securities may also be reflected in declines in the price of Shares of
a Fund. Changes in the prevailing rates of interest in any of the countries in
which a Fund is invested in fixed income securities will likely affect the
value of such holdings and thus the value of Fund Shares. Increased rates of
interest, which frequently accompany inflation and/or a growing economy, are
likely to have a negative effect on the value of Fund Shares. In addition,
changes in currency valuations will also affect the price of Shares of the
Funds. History reflects both decreases and increases in stock markets and
interest rates in individual countries and throughout the world, and in
currency valuations, and these may reoccur unpredictably in the future. The
value of debt securities held by the Funds generally will vary inversely with
changes in prevailing interest rates. Additionally, investment decisions made
by the Investment Manager will not always be profitable or prove to have been
correct. Neither Fund is intended as a complete investment program.
FOREIGN CURRENCY EXCHANGE. Since the Funds are authorized to invest in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates relative to the U.S. dollar will
affect the value of securities in the respective portfolios and the unrealized
appreciation or depreciation of investments insofar as U.S. investors are
concerned. Changes in foreign currency exchange rates relative to the U.S.
dollar will also affect a Fund's yield on assets denominated in currencies
other than the U.S. dollar. The Funds usually effect currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market or through entering into forward contracts. However,
some price spread on currency exchange transactions (to cover service charges)
will be incurred when a Fund converts assets from one currency to another.
Many of the currencies of the countries in which the Funds may invest have
experienced devaluations relative to the U.S. dollar, and may be more highly
volatile than currencies of other more established markets.
FOREIGN INVESTMENTS. The Funds have 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. Each Fund's performance is closely tied to
economic and political conditions within the geographic area of its respective
investments. Some of the countries in which the Funds may invest are
considered emerging markets, in which the risks generally associated with
foreign investments are heightened. 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
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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. Further, the Funds may encounter
difficulties or be unable to vote proxies, exercise shareholder rights, pursue
legal remedies, and obtain judgments in foreign courts.
Brokerage commissions, custodial services, and other costs relating to
investments in foreign countries are generally more expensive than in the
United States. 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 a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause a Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to a Fund
due to subsequent declines in value of the portfolio security or, if a Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Greater European Fund's proposed investments in
Russia are subject to the risk of total loss due to Russia's unusual system of
share registration and settlement, which is discussed in the SAI under the
caption "Investment Objectives and Policies--Risk Factors." As a non-
fundamental policy, Greater European Fund will limit investments in Russian
companies to 5% of its total assets.
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 a 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, each Fund is limited in the extent to which it
may invest in illiquid securities. The foregoing risks may be heightened for
investments in Eastern Europe and/or Latin America, and there are further
risks specific to investments in those regions. 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.
HIGH-RISK DEBT SECURITIES. The Funds are 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, a 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 a Fund and its Shareholders. See "Investment
Objectives and Policies--Debt
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Securities" in the SAI for descriptions of debt securities rated BBB by S&P
and Baa by Moody's. 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. Each 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.
LEVERAGE. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on a 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. The use of leverage may
significantly increase a Fund's investment risk.
FUTURES CONTRACTS AND RELATED OPTIONS. 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 a 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 indices is subject to similar risk considerations. In
addition, by writing covered call options, a 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 FUNDS
Shares of the Funds 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 Funds, or directly from
FTD upon receipt by FTD of a completed Shareholder Application and check.
Shares of both classes of the Funds 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
Funds 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). 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."
DIFFERENCES BETWEEN CLASS I AND CLASS II. The differences between Class I
and Class II Shares lie primarily in their front-end and contingent deferred
sales charges and Rule 12b-1 fees as described below.
Class I. Voting rights of each class will be the same on matters affecting a
Fund as a whole, but each will vote separately on matters affecting its class.
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
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comparatively lower Rule 12b-1 fees. Class I Shares may be purchased at
reduced front-end sales charges, or 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 Funds"
and "How to Sell Shares of the Funds" 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% of the amount
invested. Class II Shares are also subject to a contingent deferred sales
charge of 1% 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% per annum of average daily net assets of such
Shares, 0.75% of which will be retained by FTD during the first year of
investment. 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 Funds--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 the 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 a
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.
Each class also has a separate schedule for compensating securities dealers
for selling Shares of the Funds. Investors should take all of the factors
regarding an investment in each class into account before deciding which class
of Shares to purchase.
OFFERING PRICE--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.
14
<PAGE>
The price to the public on purchases of Class I Shares made by a single
purchaser, by an individual, his or her spouse, their children under age 21,
and grandchildren under age 21, or by a single trust or fiduciary account 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 reallowed, 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 Funds--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 (i) the mutual funds in the Franklin Group
of Funds(R) except Franklin Valuemark Funds and Franklin Government Securities
Trust (the "Franklin Funds"); (ii) 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 (iii)
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
(i), (ii) and (iii) 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.
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
15
<PAGE>
Templeton Investments owned at the time of purchase by the purchaser, his or
her spouse, their children under age 21, and grandchildren 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 a 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 Funds 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 Funds 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 Funds or FTD and the members, must agree to include
sales and other materials related to the Funds 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 Funds.
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, process and forward the payroll deduction
information to a Fund, there may be a delay between the time of the payroll
deduction and the time the money reaches a Fund. The investment in a 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 a Fund.
OFFERING PRICE--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.
16
<PAGE>
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
-----------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE OF NET ASSET VALUE OF OFFERING PRICE
AT OFFERING PRICE THE SHARES PURCHASED THE 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% 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% 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
Funds--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 Funds, any of the Franklin Templeton Funds, or
of Franklin Resources, Inc. and its subsidiaries (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 Funds; (vi) certain unit investment trusts and unit holders of such
trusts reinvesting their distributions from the trusts in the Funds; (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 a Fund may be
purchased at net asset value with the proceeds from (i) a redemption of Shares
of the Fund or shares of any other Franklin Templeton Fund except any of the
Franklin Templeton money market funds (unless the redemption proceeds are from
Class I shares of a fund with a lower initial sales charge than that charged
by the Fund and have been held in that fund for less than six months), or (ii)
a dividend or distribution paid by any of the Franklin Templeton Funds, within
365 days after the date of the redemption or dividend or distribution. See
"How to Sell Shares of the Funds-- Reinstatement Privilege."
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 was subject to a front-end sales charge
or a contingent deferred sales charge and which has investment objectives
similar to those of a 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
Funds must be received by Franklin Templeton Trust Company ("FTTC"), the
Funds, or Franklin Templeton Investor Services, Inc. (the "Transfer Agent")
within 365 days after the plan distribution.
17
<PAGE>
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 Funds are 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 FUNDS CONSTITUTE LEGAL INVESTMENTS FOR THEM.
Municipal investors considering investment of proceeds of bond offerings into
the Funds should consult with expert counsel to determine the effect, if any,
of various payments made by the Funds or their 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 Funds 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.
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 Funds 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
18
<PAGE>
seminars of a business nature. Securities dealers may not use sales of the
Funds' 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 Funds or their 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% 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 Funds. For purchases of Class I Shares for
which FTD advanced a commission to a securities dealer, the dealer will
receive ongoing payments beginning in the thirteenth month after the date of
the purchase. For all purchases of Class II Shares, 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 additional 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, and beginning May 1, 1997 for
exchanges from Templeton American Trust, Inc., if the exchange shares were
purchased prior to May 1, 1995.
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.
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 a
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 U.S. 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 Funds.
The Funds 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 Funds.
Investors should promptly check the confirmation advice that is mailed after
each purchase (or redemption) order to insure that it has been accurately
reflected 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.
19
<PAGE>
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 Funds
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,
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 Class I
Franklin Fund; process an exchange into an identically registered Class I
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 and Templeton 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 Funds, which will be needed to access system
information, are 419 and 519, respectively for Greater European Fund and 418
and 518, respectively for Latin America Fund. 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.
RETIREMENT PLANS. Shares of the Funds 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. A plan document must be adopted in order for a
retirement plan to be in existence. 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 each 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
a 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 a Fund's net asset value. If events materially affecting the value of such
20
<PAGE>
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 Funds' 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
each Fund will be computed on a pro-rata basis for each outstanding Share
based on the proportionate participation in each 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 Funds 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 following 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 Templeton
money market fund. See also "How to Sell Shares of the Funds--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 which no sales
charge was paid was transferred in from a fund on which the investor paid a
sales charge. Exchanges of shares from Franklin Templeton money market funds
are subject to applicable sales charges on the funds being purchased, unless
the Franklin Templeton money market 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 Funds 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 Funds"), by contacting his or her investment dealer or--
if the Shareholder Application indicates that the Shareholder has not declined
the option--by telephoning 1-800-632-2301. 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 Trust 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 Funds--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.
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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 a 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.
If a substantial portion of a Fund's Shareholders should, within a short
period, elect to redeem their Shares of the Fund pursuant to the exchange
privilege, the Fund might have to liquidate portfolio securities it might
otherwise hold and incur the additional costs related to such transactions. On
the other hand, increased use of the exchange privilege may result in periodic
large inflows of money. If this should occur, it is the general policy of the
Funds to initially invest this money in short-term, interest-bearing money
market instruments, unless it is felt that attractive investment opportunities
consistent with a Fund's investment objectives exist immediately.
Subsequently, this money will be withdrawn from such short-term money market
instruments and invested in portfolio securities in as orderly a manner as is
possible when attractive investment opportunities arise.
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 Templeton Class I 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 Funds--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 gain distributions 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 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
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 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.
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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. Shares of each class will
be transferred on the same basis as described above for exchanges.
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 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 Funds reserve 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 a Fund within two weeks of an earlier
exchange request out of a Fund; (ii) makes more than two exchanges out of a
Fund per calendar quarter; or (iii) exchanges Shares equal in value to at
least $5 million, or more than 1% of a 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 Funds reserve the right to refuse the purchase side of
exchange requests by any Timing Account, person, or group if, in the
Investment Manager's judgment, a Fund would be unable to invest effectively in
accordance with its investment objective and policies, or would otherwise
potentially be adversely affected. A Shareholder's exchanges into a Fund may
be restricted or refused if a Fund receives or anticipates simultaneous orders
affecting significant portions of a Fund's assets. In particular, a pattern of
exchanges that coincides with a "market timing" strategy may be disruptive to
a Fund and therefore may be refused.
Finally, as indicated above, the Funds and FTD reserve the right to refuse
any order for the purchase of Shares.
HOW TO SELL SHARES OF THE FUNDS
Shares will be redeemed 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. 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 (a) national or state banks, savings
associations, savings and loan associations, trust companies, savings banks,
industrial loan companies and credit unions; (b) national securities
exchanges, registered securities associations and clearing agencies; (c)
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 (d)
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
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$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 Funds reserve 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 Funds or the Transfer
Agent believes that a signature guarantee would protect against potential
claims based on the transfer instructions, including, for example, when (i)
the current address of one or more joint owners of an account cannot be
confirmed; (ii) multiple owners have a dispute or give inconsistent
instructions to a Fund; (iii) a Fund has been notified of an adverse claim;
(iv) the instructions received by a Fund are given by an agent, not the actual
registered owner; (v) a Fund determines that joint owners who are married to
each other are separated or may be the subject of divorce proceedings; or (vi)
the authority of a representative of a corporation, partnership, association,
or other entity has not been established to the satisfaction of a 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 and, 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 Funds' 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. 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 Shareholder Services Department by
calling 1-800-632-2301 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. A gain or loss for tax purposes generally will be realized upon the
redemption, depending on the tax basis of the Shares redeemed. 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 Trust 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
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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 up to $15, which will be deducted from the
redemption proceeds.
The Funds, through FTD, also repurchase Shares (whether in certificate or
book-entry form) through securities dealers. The Funds 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 Funds; however, securities
dealers may impose a charge on the Shareholder for transmitting the notice of
repurchase to the Funds. Each 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. Each 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 Funds may involuntarily redeem an investor's Shares if the net asset
value of such Shares is less than $100, except that involuntary redemptions
will not result from fluctuations in the value of an investor's Shares. In
addition, the Funds may involuntarily redeem the Shares of any investor who
has failed to provide a Fund with a certified taxpayer identification number
or such other tax-related certifications as a 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 a 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. For either Class I or Class II, the same class of
Shares of the Funds may be purchased at net asset value with the proceeds from
(i) a redemption of Shares of a Fund or Shares of any other Franklin Templeton
Fund, except any of the Franklin Templeton money market funds (unless the
redemption proceeds are from Class I shares of a fund with a lower initial
sales charge than that charged by the Fund and have been held in that fund for
less than six months), or (ii) a dividend or distribution paid by any of the
Franklin Templeton Funds, within 365 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. An investor may reinvest an amount not
exceeding the proceeds of the redemption or the dividend or distribution.
While credit will be given for any contingent deferred sales charge paid on
the shares redeemed, a new contingency period will begin. Matured Shares will
be reinvested at net asset value and will not be subject to a new contingent
deferred sales charge. Shares of the Funds 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 Funds must be received by the Funds or
the Funds' Transfer Agent within 365 days after the redemption or the payment
date of the distribution. The 365 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 tax basis of the Shares reinvested, and 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.
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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. Retirement
plans subject to mandatory distribution requirements are not subject to the
$50 minimum. 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 Funds 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 a
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 Systematic Withdrawal Plans, 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 a Fund, and
it will terminate automatically if all Shares are liquidated or withdrawn from
the account, or upon a 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 Funds by telephone, subject to the
Restricted Account exception noted under "Telephone Transactions--Restricted
Accounts." The Trust 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
Funds 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
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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. In order to recover commissions paid to
securities dealers, Class I investments of $1 million or more, and any Class
II investments, redeemed within the contingency period of 12 months (Class I)
or 18 months (Class II) 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.
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) a calculated number of 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 of up to 1% monthly of an account's net
asst value (3% quarterly, 6% semiannually or 12% annually); redemptions
initiated by the Funds due to a Shareholder's account falling below the
minimum specified account size; and redemptions following the death of the
Shareholder or the beneficial owner.
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.
TELEPHONE TRANSACTIONS
Shareholders of the Funds and their investment representative of record, if
any, may be able to execute various transactions by calling Shareholder
Services at 1-800-632-2301.
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 a
Fund, (iv) request the issuance of certificates (to be sent to the address of
record only) and (v) 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 Funds--Redemptions by Telephone"
will be able to redeem Shares of the Funds.
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VERIFICATION PROCEDURES. The Funds 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 Funds 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 Funds 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 a 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
Funds, 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 retirement accounts. To assure
compliance with all applicable regulations, special forms are required for any
distribution, redemption, or dividend payment. While the telephone exchange
privilege is extended to Franklin Templeton IRA and 403(b) retirement
accounts, certain restrictions may apply to other types of retirement plans.
Changes to dividend options must also be made in writing.
To obtain further information regarding distribution or transfer procedures,
including any required forms, retirement account Shareholders may call to
speak to a Retirement Plan Specialist at 1-800-527-2020.
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 registered dealer for assistance, or to send written
instructions to the Trust as detailed elsewhere in this Prospectus.
Neither the Trust 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 Trust at any time upon 60 days' written notice to
Shareholders.
MANAGEMENT OF THE FUNDS
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 Funds and will take appropriate action to resolve such
conflicts if any should later arise.
In developing the multiclass structure, the Funds have retained the
authority to establish additional classes of Shares. It is each Funds' 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 Funds is Templeton,
Galbraith & Hansberger Ltd., Nassau, Bahamas. The Investment Manager manages
the investment and reinvestment of each 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
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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 each
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 Funds, although such expenses are paid by some investment advisers of
other investment companies. As compensation for its services, Greater European
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. As compensation for its
services, Latin America Fund pays the Investment Manager a monthly fee, equal
on an annual basis to 1.25% of its average daily net assets during the year.
These fees are higher than those paid by most other U.S. investment companies,
primarily because of the additional time and expense required of the
Investment Manager in pursuing the Funds' policies of investing in Greater
European Companies and Latin America issuers. Each Fund also pays its own
operating expenses, including: (1) its pro rata portion of the fees and
expenses of the Trust's 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) 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
"Plans of Distribution" below); and (13) fees and expenses of membership in
industry organizations.
The lead portfolio manager for Greater European Fund is Dorian B. Foyil,
Vice President of the Investment Manager and head of Templeton's Research
Technology Group. Mr. Foyil holds an AA in Business Administration from
Cumberland County College, a BBA in Accounting/Computer Science from Temple
University and an MBA in Finance from the Wharton School of Business of the
University of Pennsylvania. Prior to joining the Templeton organization, Mr.
Foyil was a research analyst for four years with UBS Phillips & Drew in
London, England. Sean Farrington exercises secondary portfolio management
responsibilities with respect to Greater European Fund. Mr. Farrington holds
an AB in Economics from Harvard University. He is a member of the Investment
Manager's research technology group responsible for the maintenance of the
internal research database.
The lead portfolio manager for Latin America Fund is Dr. Jane Siebels-
Kilnes, Senior Vice President of the Investment Manager. Dr. Siebels-Kilnes
holds a BBA in Finance and Marketing from University of Iowa and an MIM in
Finance from American Graduate School of International Management. Prior to
joining the Templeton organization in 1990, Dr. Siebels-Kilnes worked for
Union Bank of Switzerland, Zurich, as the head of equity management for
European institutional accounts. She also worked as an international portfolio
manager for Storebrand International, a Norwegian insurance company, and as
director and portfolio manager of the Storebrand International Unit Trust. She
is also a former director of the Genesis Emerging Markets and the Genesis
Chile Funds. Jeffrey A. Everett exercises secondary portfolio management
responsibilities with respect to Latin America Fund. Mr. Everett joined the
Templeton organization in 1989 and is Vice President, Portfolio
Management/Research, of the Investment Manager. Mr. Everett holds a BS degree
in Finance from Pennsylvania State University. Prior to joining the Templeton
organization, Mr. Everett was an
29
<PAGE>
investment officer at First Pennsylvania Investment Research, a division of
First Pennsylvania Corporation, where he analyzed equity and convertible
securities. Mr. Everett was also responsible for coordinating research for
Centre Square Investment Group, the pension management subsidiary of First
Pennsylvania Corporation.
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 Funds, 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, each Fund pays the Business Manager a fee equivalent on an annual
basis to 0.15% of the combined average daily net assets of the Funds included
in the Trust (the Funds, Templeton Americas Government Securities Fund,
Templeton Growth and Income 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 Funds.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Funds'
assets.
PLANS OF DISTRIBUTION. A separate Plan of Distribution has been approved and
adopted for each class of each Fund ("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 of 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
Funds, FTD or its affiliates.
The maximum amount which a 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 Funds. 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 a 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 expenses over that amount will be borne
by FTD, or others who have incurred them, without reimbursement by the Funds.
In addition, the Class II Plan provides for an additional payment by a 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 Funds on behalf of the customers; or similar activities related to
furnishing personal services and/or maintaining Shareholder accounts.
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<PAGE>
During the first year following the purchase of Class II Shares, FTD will
retain 0.75% per annum of Class II's average daily net assets 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 Funds, the Investment
Manager, FTD, or other parties on behalf of the Funds, 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
Funds 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 Funds. 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.
BROKERAGE COMMISSIONS. The Funds' brokerage policies are described under the
heading "Brokerage Allocation" in the SAI. The Funds' 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 Funds' 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.
Shares for an initial investment, as well as subsequent investments,
including the reinvestment of dividends and capital gain distributions, are
generally credited to an account in the name of an investor on the books of
the Funds, without the issuance of a share certificate. Maintaining Shares in
uncertificated form (also known as "plan balance") minimizes the risk of loss
or theft of a share certificate. No charge is made for the issuance of one
certificate for all or some of the Shares purchased in a single order. A lost,
stolen or destroyed certificate cannot be replaced without obtaining a
sufficient indemnity bond. The cost of such a bond, which is generally borne
by the Shareholder, can be 2% or more of the value of the lost, stolen or
destroyed certificate. A certificate will be issued if requested by the
Shareholder or by the securities dealer.
VOTING RIGHTS. Shares of each class represent proportionate interests in the
assets of each Fund and have the same voting and other rights and preferences
as the other class of each Fund for matters that affect each Fund as a whole.
For matters that only affect a certain class of a Fund's Shares, however, only
Shareholders of that class will be entitled to vote. Therefore, each class of
Shares will vote separately on matters (i) affecting only that class, (ii)
expressly required to be voted on separately by state law, or (iii) 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 a
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 Trust is required to assist
Shareholder communications in connection with the calling of Shareholder
meetings to consider removal of a Trustee or Trustees.
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS. Each Fund intends to pay a dividend at least
annually representing substantially all of its 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 a 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 a Fund or the same class of another of the Franklin
Templeton Funds. Shareholders in Class II funds may direct their dividends and
capital gain distributions for investment in a Class I Franklin Templeton
money market fund. By completing the "Special Payment Instructions for
Distributions" section of the Shareholder Application included with this
Prospectus, a Shareholder may direct the selected distributions to the same
class of another fund in the Franklin Templeton Funds, to a Class I Franklin
Templeton money market fund, or to another person. The processing date for the
reinvestment of dividends may vary from time to time, and does not affect the
amount 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.
Prior to purchasing Shares of a 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 a 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. Each 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. Each 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 Trust will inform Shareholders each year of the amount and
nature of such income or gains. Sales or other dispositions of Fund Shares
generally will give rise to taxable gain or loss. A more detailed description
of tax consequences to Shareholders is contained in the SAI under the heading
"Tax Status."
Each 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 a Fund with their correct taxpayer identification number or to
make required certifications or where a 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 1-800-632-2301 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.
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<PAGE>
PERFORMANCE INFORMATION. Each 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 a 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 a Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Funds, see the SAI.
STATEMENTS AND REPORTS. Each 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. To reduce the volume of mail sent to one household as well as to
reduce Fund expense, the Transfer Agent, when legally permissible, will
attempt to identify related Shareholders within a household, and send only one
copy of the report. Additional copies may be obtained, without charge, upon
request to the Fund Information Department-telephone 1-800/DIAL BEN. 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.
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<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 Pension Trust, Estate, or Pension
Plan Trust Plan Trust
- ------------------------------------------------------------------------------------------------------------------------------
. Joint Individual Actual owner of account, or if . Corporation, Partnership, Corporation, Partnership,
combined funds, the first-named or other organization or other organization
individual
- ------------------------------------------------------------------------------------------------------------------------------
. Unif. Gift/Transfer to Minor Minor . Broker nominee Broker nominee
- ------------------------------------------------------------------------------------------------------------------------------
. 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 entity registered at all times
under section 501(a), or an under the Investment Company
individual retirement plan Act of 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 taxpayer 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
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.
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<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 each 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 a 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
NUMBER
authorized 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)
35
<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.
36
<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.
<TABLE>
<S> <C> <C>
TEMPLETON FUNDS Maryland FRANKLIN FUNDS SEEKING
American Trust Massachusetts*** HIGH CURRENT INCOME
Americas Government Securities Fund Michigan*** AGE High Income Fund
Developing Markets Trust Minnesota*** German Government Bond Fund
Foreign Fund Missouri Global Government Income Fund
Global Infrastructure Fund New Jersey Investment Grade Income Fund
Global Opportunities Trust New York* U.S. Government Securities Fund
Growth and Income Fund North Carolina
Greater European Fund Ohio*** FRANKLIN FUNDS SEEKING HIGH CURRENT
Growth Fund Oregon INCOME AND STABILITY OF PRINCIPAL
Income Fund Pennsylvania Adjustable Rate Securities Fund
Japan Fund Tennessee** Adjustable U.S. Government Securities Fund
Latin America Fund Texas Short-Intermediate U.S. Government Securities Fund
Money Fund Virginia
Real Estate Securities Fund Washington** FRANKLIN FUNDS FOR NON-U.S. INVESTORS
Smaller Companies Growth Fund Tax-Advantaged High Yield Securities Fund
World Fund FRANKLIN FUNDS Tax-Advantaged International Bond Fund
SEEKING CAPITAL GROWTH Tax-Advantaged U.S. Government Securities Fund
FRANKLIN FUNDS California Growth Fund
SEEKING TAX-FREE INCOME DynaTech Fund FRANKLIN TEMPLETON INTERNATIONAL
Federal Intermediate Term Equity Fund CURRENCY FUNDS
Tax-Free Income Fund Global Health Care Fund Global Currency Fund
Federal Tax-Free Income Fund Gold Fund Hard Currency Fund
High Yield Tax-Free Income Fund Growth Fund High Income Currency Fund
Insured Tax-Free Income Fund*** International Equity Fund
Puerto Rico Tax-Free Income Fund Pacific Growth Fund FRANKLIN MONEY MARKET FUNDS
Real Estate Securities Fund California Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC FUNDS Small Cap Growth Fund Federal Money Fund
SEEKING TAX-FREE INCOME IFT U.S. Treasury Money Market Portfolio
Alabama FRANKLIN FUNDS SEEKING Money Fund
Arizona* GROWTH AND INCOME New York Tax-Exempt Money Fund
Arkansas** Balance Sheet Investment Fund Tax-Exempt Money Fund
California* Convertible Securities Fund
Colorado Equity Income Fund FRANKLIN FUND FOR CORPORATIONS
Connecticut Global Utilities Fund Corporate Qualified Dividend Fund
Florida* Income Fund
Georgia Premier Return Fund FRANKLIN TEMPLETON VARIABLE ANNUITIES
Hawaii** Rising Dividends Fund Franklin Valuemark
Indiana Strategic Income Fund Franklin Templeton Valuemark Income
Kentucky Utilities Fund Plus (an immediate annuity)
Louisiana
</TABLE>
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.
37
<PAGE>
NOTES
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38
<PAGE>
NOTES
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39
<PAGE>
- -------------------------------------------------
TEMPLETON REGION FUNDS
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800/DIAL BEN
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.
- -------------------------------------------------
[RECYCLED PAPER LOGO APPEARS HERE] TLGIT P 08/95
TEMPLETON
REGION
FUNDS
Prospectus
May 8, 1995
as amended
August 31, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
<PAGE>
TEMPLETON GLOBAL INVESTMENT TRUST
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED
NOVEMBER 8, 1995, IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES
OF TEMPLETON GROWTH AND INCOME FUND,
TEMPLETON GLOBAL INFRASTRUCTURE FUND, AND TEMPLETON AMERICAS
GOVERNMENT SECURITIES FUND, EACH DATED JULY 10, 1995,
AND TEMPLETON GREATER EUROPEAN FUND AND
TEMPLETON LATIN AMERICA FUND, DATED MAY 8, 1995,
EACH AS AMENDED 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/DIAL BEN
TABLE OF CONTENTS
General Information and History...................... 1
Investment Objectives and Policies................... 2
-Investment Policies............................... 2
-Repurchase Agreements............................. 2
-Debt Securities................................... 2
-Convertible Securities............................ 4
-Futures Contracts................................. 5
-Options on Securities, Indices
and Futures...................................... 5
-Foreign Currency Hedging Transactions............. 8
-Investment Restrictions........................... 9
-Additional Restrictions...........................11
-Risk Factors......................................12
-Trading Policies..................................18
-Personal Securities Transactions..................18
Management of the Trust..............................19
Trustee Compensation.................................25
Principal Shareholders...............................26
Investment Management and Other
Services...........................................27
-Investment Management Agreements..................27
-Management Fees...................................28
-The Investment Managers...........................29
-Sub-Advisory Agreement............................29
-Business Manager..................................30
-Custodian and Transfer Agent......................32
-Legal Counsel.....................................32
-Independent Accountants...........................32
-Reports to Shareholders...........................33
Brokerage Allocation.................................33
Purchase, Redemption and Pricing of
Shares.............................................36
-Ownership and Authority Disputes..................37
-Tax-Deferred Retirement Plans.....................37
-Letter of Intent..................................39
-Special Net Asset Value
Purchases......................................40
Tax Status...........................................41
Principal Underwriter................................48
Description of Shares................................51
Performance Information..............................52
Financial Statements.................................56
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 four diversified series of Shares, Templeton Growth and
Income Fund ("Growth and Income Fund") (formerly Templeton Global Rising
Dividends Fund), Templeton Global Infrastructure Fund ("Infrastructure Fund"),
Templeton Greater European Fund ("Greater European Fund") and Templeton Latin
America Fund ("Latin America Fund"), and one non-diversified series of Shares,
Templeton Americas Government Securities Fund ("Americas Government Securities
Fund") (collectively, the "Funds").
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT POLICIES. The investment objective and policies
of each Fund are described in each Fund's Prospectus under the
heading "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 Growth and Income Fund, Greater European Fund and Latin America 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 Growth and Income Fund, Infrastructure Fund,
Greater European Fund, nor Latin America 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
- 2 -
<PAGE>
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
- 3 -
<PAGE>
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.
- 4 -
<PAGE>
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
- 5 -
<PAGE>
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
- 6 -
<PAGE>
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.
- 7 -
<PAGE>
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.
- 8 -
<PAGE>
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 (i) 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 (ii) 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
- 9 -
<PAGE>
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 the 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 (a)
more than 5% of the Fund's total assets would then be
invested in securities of any single issuer, or (b) 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 (a) purchase a portion of
an issue of publicly distributed bonds, debentures, notes and
other evidences of indebtedness, (b) enter into repurchase
agreements and (c) 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.)
- 10 -
<PAGE>
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.
- 11 -
<PAGE>
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 Rule 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 developing. 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. Foreign markets have substantially less volume than the New York
Stock Exchange ("NYSE") 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,
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<PAGE>
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.
To the extent of the Communist Party's influence, investments in such
countries may 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.
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.
The Infrastructure Fund, Growth and Income Fund, and Greater European
Fund may each invest a portion of its assets in Russian securities, subject to
the availability of an eligible foreign
- 13 -
<PAGE>
subcustodian approved by the Board of Trustees in accordance with Rule 17f-5
under the 1940 Act. There can be no assurance that appropriate sub-custody
arrangements will be available to the Funds if and when one or more of the Funds
seeks to invest a portion of its assets in Russian securities. As a
non-fundamental policy, none of the Funds will invest more than 5% of its total
assets in Russian securities.
Investing in Russian companies involves a high degree of risk and
special considerations not typically associated with investing in the United
States securities markets, and should be considered highly speculative. Such
risks include: (i) delays in settling portfolio transactions and risk of loss
arising out of Russia's system of share registration and custody; (ii) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgment; (iii) pervasiveness of corruption and crime in the
Russian economic system; (iv) currency exchange rate volatility and the lack of
available currency hedging instruments; (v) higher rates of inflation (including
the risk of social unrest associated with periods of hyper-inflation); (vi)
controls on foreign investment and local practices disfavoring foreign investors
and limitations on repatriation of invested capital, profits and dividends, and
on a Fund's ability to exchange local currencies for U.S. dollars; (vii) the
risk that the government of Russia or other executive or legislative bodies may
decide not to continue to support the economic reform programs implemented since
the dissolution of the Soviet Union and could follow radically different
political and/or economic policies to the detriment of investors, including
non-market-oriented policies such as the support of certain industries at the
expense of other sectors or investors, or a return to the centrally planned
economy that existed prior to the dissolution of the Soviet Union; (viii) the
financial condition of Russian companies, including large amounts of
inter-company debt which may create a payments crisis on a national scale; (ix)
dependency on exports and the corresponding importance of international trade;
(x) the risk that the Russian tax system will not be reformed to prevent
inconsistent, retroactive and/or exorbitant taxation; and (xi) possible
difficulty in identifying a purchaser of securities held by a Fund due to the
underdeveloped nature of the securities markets.
There is little historical data on Russian securities markets because
they are relatively new and a substantial proportion of securities transactions
in Russia are privately negotiated outside of stock exchanges. Because of the
recent formation of the securities markets as well as the underdeveloped state
of the banking and telecommunications systems, settlement, clearing and
registration of securities transactions are subject to significant risks.
Ownership of shares (except where shares
- 14 -
<PAGE>
are held through depositories that meet the requirements of the 1940 Act) is
defined according to entries in the company's share register and normally
evidenced by extracts from the register or by formal share certificates.
However, there is no central registration system for shareholders and these
services are carried out by the companies themselves or by registrars located
throughout Russia. These registrars are not necessarily subject to effective
state supervision and it is possible for a Fund to lose its registration through
fraud, negligence or even mere oversight. While each Fund will endeavor to
ensure that its interest continues to be appropriately recorded either itself or
through a custodian or other agent inspecting the share register and by
obtaining extracts of share registers through regular confirmations, these
extracts have no legal enforceability and it is possible that subsequent illegal
amendment or other fraudulent act may deprive a Fund of its ownership rights or
improperly dilute its interests. In addition, while applicable Russian
regulations impose liability on registrars for losses resulting from their
errors, it may be difficult for a Fund to enforce any rights it may have against
the registrar or issuer of the securities in the event of loss of share
registration. Furthermore, although a Russian public enterprise with more than
1,000 shareholders is required by law to contract out the maintenance of its
shareholder register to an independent entity that meets certain criteria, in
practice this regulation has not always been strictly enforced. Because of this
lack of independence, management of a company may be able to exert considerable
influence over who can purchase and sell the company's shares by illegally
instructing the registrar to refuse to record transactions in the share
register. This practice may prevent a Fund from investing in the securities of
certain Russian companies deemed suitable by its Investment Manager. Further,
this also could cause a delay in the sale of Russian company securities by a
Fund if a potential purchaser is deemed unsuitable, which may expose the Fund to
potential loss on the investment.
Investing in Latin American issuers involves a high degree of risk and
special considerations not typically associated with investing in the United
States and other more developed securities markets, and should be considered
highly speculative. Such risks include: (i) restrictions or controls on foreign
investment and limitations on repatriation of invested capital and Latin America
Fund's ability to exchange local currencies for U.S. dollars; (ii) higher and
sometimes volatile rates of inflation (including the risk of social unrest
associated with periods of hyper-inflation); (iii) the risk that certain Latin
American countries, which are among the largest debtors to commercial banks and
foreign governments and which have experienced difficulty in servicing sovereign
debt obligations in
- 15 -
<PAGE>
the past, may negotiate to restructure sovereign debt obligations; (iv) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgment; (v) currency exchange rate fluctuations and the lack
of available currency hedging instruments; (vi) more substantial government
involvement in and control over the local economies; and (vii) dependency on
exports and the corresponding importance of international trade.
Latin American countries may be subject to a greater degree of
economic, political, and social instability than is the case in the United
States, Japan, or Western European countries. Such instability may result from,
among other things, the following: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
governmental control through extra-constitutional means; (ii) popular unrest
associated with demands for improved political, economic, and social conditions;
(iii) internal insurgencies and terrorist activities; (iv) hostile relations
with neighboring countries; (v) ethnic, religious and racial disaffection; and
(vi) drug trafficking.
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 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. 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
- 16 -
<PAGE>
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. The Trustees 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.
The Greater European Fund and Latin America Fund are permitted to
invest in entities organized and operated solely for the purpose of
restructuring the investment characteristics of various securities ("Structured
Investments"). As Structured Investments are backed by, or represent interests
in, underlying instruments, they may be considered derivative instruments and
involve special risks that are discussed in the Funds' Prospectus under the
heading "Investment Techniques -- Structured Investments."
- 17 -
<PAGE>
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 certain of these funds and
clients may contain many or some of the same securities. When certain funds or
clients are engaged simultaneously in the purchase or sale of the same security,
the trades may be aggregated for execution and then allocated 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: (i) The trade must receive advance clearance from a compliance
officer and must be completed within 24 hours after this clearance; (ii) 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; (iii) In addition to
items (i) and (ii), 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.
- 18 -
<PAGE>
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
HARRIS J. ASHTON
Metro Center
1 Station Place
Stamford, Connecticut
Trustee
Chairman of the Board,
president, and chief executive
officer of General Host
Corporation (nursery and craft
centers); and a director of RBC
Holdings (U.S.A.) Inc. (a bank
holding company) and Bar-S
Foods. Age 63.
NICHOLAS F. BRADY*
102 East Dover Street
Easton, Maryland
Trustee
Chairman of Templeton Emerging Markets Investment Trust PLC; chairman of
Templeton Latin America Investment Trust PLC; chairman of Darby Overseas
Investments, Ltd. (an investment firm) (1994-present); director of the Amerada
Hess Corporation, Capital Cities/ABC, Inc., Christiana Companies, and the H.J.
Heinz Company; Secretary of the United States Department of the Treasury
(1988-January 1993); and chairman of the board of Dillon, Read & Co. Inc.
(investment banking) prior thereto. Age 65.
F. BRUCE CLARKE
19 Vista View Blvd.
Thornhill, Ontario
Trustee
Retired; formerly, credit
adviser, National Bank of
Canada, Toronto. Age 85.
- 19 -
<PAGE>
NAME, ADDRESS AND PRINCIPAL OCCUPATION
OFFICES WITH TRUST DURING PAST FIVE YEARS
MARTIN L. FLANAGAN*
777 Mariners Island Blvd.
San Mateo, California
Trustee and Vice President Senior vice president, treasurer, and chief
financial officer of Franklin Resources, Inc.; director, and executive vice
president of Templeton Investment Counsel, Inc.; director, president and chief
executive officer of Templeton Global Investors, Inc.; president or vice
president of various Templeton Funds; director or trustee of six Templeton
Funds; accountant, Arthur Andersen & Company (1982- 1983); and a member of the
International Society of Financial Analysts and the American Institute of
Certified Public Accountants. Age 35.
HASSO-G VON DIERGARDT-NAGLO
R.R. 3
Stouffville, Ontario
Trustee
Farmer; and president of
Clairhaven Investments, Ltd. and
other private investment
companies. Age 79.
S. JOSEPH FORTUNATO
200 Campus Drive
Florham Park, New Jersey
Trustee Member of the law firm of Pitney, Hardin, Kipp & Szuch; and a director
of General Host Corporation. Age 63.
- 20 -
<PAGE>
JOHN Wm. GALBRAITH
360 Central Avenue
Suite 1300
St. Petersburg, Florida
Trustee
President of Galbraith
Properties, Inc. (personal
investment company); director of
Gulfwest Banks, Inc. (bank
holding company) (1995-present)
and Mercantile Bank (1991-
present); vice chairman of
Templeton, Galbraith &
Hansberger Ltd. (1986-1992); and
chairman of Templeton Funds
Management, Inc. (1974-1991).
Age 74.
ANDREW H. HINES, JR.
150 2nd Avenue N.
St. Petersburg, Florida
Trustee Consultant for the Triangle Consulting Group; chairman of the board
and chief executive officer of 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); and
a director of Checkers Drive-In Restaurants, Inc. Age 72.
CHARLES B. JOHNSON*
777 Mariners Island Blvd.
San Mateo, California
Chairman of the Board
and Vice President
President, chief executive officer, and director of Franklin Resources, Inc.;
chairman of the board and director of Franklin Advisers, Inc. and Franklin
Templeton Distributors, Inc.; director of General Host Corporation and Templeton
Global Investors, Inc.; and officer and director, trustee or managing general
partner, as the case may be, of most other subsidiaries of Franklin Resources,
Inc. and of 55 of the investment companies in the Franklin Templeton Group.
Age 62.
BETTY P. KRAHMER
2201 Kentmere Parkway
Wilmington, Delaware
Trustee
Director or trustee of various civic associations; formerly, economic analyst,
U.S.
Government. Age 66.
GORDON S. MACKLIN
8212 Burning Tree Road
Bethesda, Maryland
Trustee
Chairman of White River
Corporation (information
services); director of Fund
America Enterprises Holdings,
Inc., Lockheed Martin
Corporation, MCI Communications
Corporation, Fusion Systems
Corporation, Infovest
Corporation, and Medimmune,
Inc.; formerly, chairman of
Hambrecht and Quist Group;
director of H&Q Healthcare
Investors; and president of the
National Association of
Securities Dealers, Inc. Age
67.
FRED R. MILLSAPS
2665 N.E. 37th Drive
Fort Lauderdale, Florida
Trustee
Manager of personal investments
(1978-present); chairman and
chief executive officer of
NAME, ADDRESS AND PRINCIPAL OCCUPATION
OFFICES WITH TRUST DURING PAST FIVE YEARS
Landmark Banking Corporation (1969-1978); financial vice president of Florida
Power and Light (1965-1969); vice president of The Federal Reserve Bank of
Atlanta (1958-1965); and a director of various other business and nonprofit
organizations. Age 66.
MARK G. HOLOWESKO
Lyford Cay
Nassau, Bahamas
President President and director of Templeton, Galbraith & Hansberger Ltd.;
director of global equity research for Templeton Worldwide, Inc.; president or
vice president of the Templeton Funds; formerly, investment administrator with
Roy West Trust Corporation (Bahamas) Limited (1984-1985).
Age 35.
- 21 -
<PAGE>
NAME, ADDRESS AND PRINCIPAL OCCUPATION
OFFICES WITH TRUST DURING PAST FIVE YEARS
DORIAN FOYIL
Lyford Cay
Nassau, Bahamas
Vice President Vice president, Portfolio Management/Research, of Templeton,
Galbraith & Hansberger Ltd.; formerly, research analyst, UBS Phillips & Drew
(London). Age 37.
SAMUEL J. FORESTER, JR.
500 East Broward Blvd.
Fort Lauderdale, Florida
Vice President President of the Templeton Global Bond Managers Division of
Templeton Investment 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); and an advisor for Saudi Arabian Monetary
Agency (1982-1987).
Age 47.
JOHN R. KAY
500 East Broward Blvd.
Fort Lauderdale, Florida
Vice President Vice president of the Templeton Funds; vice president and
treasurer of Templeton Global Investors, Inc. and Templeton Worldwide, Inc.;
assistant vice president of Franklin Templeton Distributors, Inc.; formerly,
vice president and controller of the Keystone Group, Inc. Age 55.
GARY CLEMONS
500 East Broward Blvd.
Fort Lauderdale, Florida
Vice President
Research analyst for Templeton
Investment Counsel, Inc. (1993-
present); formerly, research
analyst for Templeton
Quantitative Advisors, Inc. Age
38.
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<PAGE>
NAME, ADDRESS AND PRINCIPAL OCCUPATION
OFFICES WITH TRUST DURING PAST FIVE YEARS
DOUGLAS R. LEMPEREUR
500 East Broward Blvd.
Fort Lauderdale, Florida
Vice President Senior vice president of the Templeton Global Bond Managers
Division of Templeton 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). Age 46.
NEIL S. DEVLIN
500 East Broward Blvd.
Fort Lauderdale, Florida
Vice President Senior vice president, Portfolio Management/Research, of the
Templeton Global Bond Managers division of Templeton Investment Counsel, Inc.;
formerly, portfolio manager and bond analyst for Constitutional Capital
Management (1985-1987); and a bond trader and research analyst for Bank of New
England (1982-1985). Age 38.
JAMES R. BAIO
500 East Broward Blvd.
Fort Lauderdale, Florida
Treasurer Certified public accountant; treasurer of the Templeton Funds;
senior vice president of Templeton Worldwide, Inc., Templeton Global Investors,
Inc., and Templeton Funds Trust Company; formerly, senior tax manager for Ernst
& Young (certified public accountants) (1977-1989). Age 41.
THOMAS M. MISTELE
700 Central Avenue
St. Petersburg, Florida
Secretary
Senior vice president of
Templeton Global Investors,
Inc.; vice president of Franklin Templeton Distributors, Inc.; secretary of the
Templeton Funds; formerly, attorney, Dechert Price & Rhoads (1985- 1988) and
Freehill, Hollingdale & Page (1988); and judicial clerk, U.S. District Court
(Eastern District of Virginia) (1984-1985). Age 42.
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<PAGE>
JACK L. COLLINS
700 Central Avenue
St. Petersburg, Florida
Assistant Treasurer Assistant treasurer of the Templeton Funds; assistant vice
president of Franklin Templeton Investor Services, Inc.; formerly, partner with
Grant Thornton, independent public accountants. Age 66.
JEFFREY L. STEELE
1500 K Street, N.W.
Washington, D.C.
Assistant Secretary
Partner, Dechert Price & Rhoads.
Age 50.
- --------------------------
* These 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.
There are no family relationships between any of the Trustees.
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 of 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, the Trust currently pays the
independent Trustees and Mr. Brady an annual retainer of $100. 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.
- 24 -
<PAGE>
The following table shows the total compensation paid to the Trustees
by the Trust and by all investment companies in the Franklin Templeton Group:
<TABLE>
<CAPTION>
Number of Total Compensation
Name of Aggregate Franklin Templeton from all Funds in
TRUSTEE Compensation from Fund Boards on which Franklin Templeton
THE TRUST* TRUSTEE SERVES GROUP**
<S> <C> <C> <C>
Harris J. Ashton $2,050 54 $319,925
Nicholas F. Brady 2,050 23 86,125
F. Bruce Clarke 3,050 19 95,275
Hasso-G von Diergardt-Naglo 2,050 19 75,275
S. Joseph Fortunato 2,050 56 336,065
John Wm. Galbraith 0 22 0
Andrew H. Hines, Jr. 3,050 23 106,125
Betty P. Krahmer 2,050 23 75,275
Gordon S. Macklin 2,050 51 303,685
Fred R. Millsaps 3,050 23 106,125
</TABLE>
* For the fiscal year ended March 31, 1995.
** For the calendar year ended December 31, 1994.
PRINCIPAL SHAREHOLDERS
As of October 20, 1995, there were 760,504 Shares of Growth and Income
Fund outstanding, of which 241 Shares (0. 03%) were owned beneficially, directly
or indirectly, by all the Trustees and Officers of the Trust as a group. As of
October 20, 1995, there were 2,074,445 Shares of Infrastructure Fund
outstanding, of which 214Shares (0. 02%) were owned beneficially, directly or
indirectly, by all the Trustees and Officers of the Trust as a group. As of
October 20, 1995, there were 309,082 Shares of Americas Government Securities
Fund outstanding, of which 70Shares (less than 0.02%) were owned beneficially,
directly or indirectly, by all the Trustees and Officers of the Trust as a
group. As of October 20, 1995, there were 423,264 Shares of
- 25 -
<PAGE>
Greater European Fund outstanding, of which no Shares were owned beneficially,
directly or indirectly, by all the Trustees and Officers of the Trust as a
group. As of October 20, 1995, there were 424,476 Shares of Latin America Fund
outstanding, of which no Shares were owned beneficially, directly or indirectly,
by all the Trustees and Officers of the Trust as a group. As of October 20,
1995, to the knowledge of management, no person owned beneficially 5% or more of
the outstanding Shares of Growth and Income Fund-Class I, except Templeton
Global Investors, Inc., 500 E. Broward Blvd., Suite 2100, Fort Lauderdale,
Florida 33394 owned 103,614 Shares (14% of the outstanding Shares), and no
person owned beneficially 5% or more of the outstanding Shares of Growth and
Income Fund-Class II, except Lewco Securities Corp., 2 Broadway, New York, New
York 10004 owned 7,214 (13% of the outstanding Shares), Prudential Securities,
FBO Christine T. Marks, 4002 Marlane Drive, Pensacola, Florida 32526-2149 owned
9,335 (17% of the outstanding Shares) and Dain Bosworth, Inc., FBO Polytank,
Inc., Attn: Dick Johannek, 62824 250th Street, Litchfield, Minnesota 55355 owned
3,541 (6% of the outstanding Shares). As of October 20, 1995, to the knowledge
of management, no person owned beneficially 5% or more of the outstanding Shares
of Infrastructure Fund-Class I except Templeton Global Investors, Inc., 500 E.
Broward Blvd., Suite 2100, Fort Lauderdale, Florida 33394 owned 100,569 Shares
(5% of the outstanding Shares), and no person owned beneficially 5% or more of
the outstanding Shares of Infrastructure Fund-Class II, except Donna Mickelson
TTEE, Andrew Hopkins Trust, 19480 Ward, Detroit, Michigan 48235-1246 owned 4,651
(6% of the outstanding Shares) and John J. Whitehouse TTEE, John J. Whitehouse
Living Trust, 8037 Pebble Creek Lane W, Ponte Vedra Beach, Florida 32082 owned
9,363 (12% of the outstanding Shares). As of October 20, 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 owned
262,010 Shares (84% of the outstanding Shares). As of October 20, 1995, to the
knowledge of management, no person owned beneficially 5% or more of the
outstanding Shares of Greater European Fund-Class I, except Templeton Global
Investors, Inc., 500 E. Broward Blvd., Suite 2100, Fort Lauderdale, Florida
33394 owned 49,955 Shares (16% of the outstanding Shares) and PaineWebber for
the Benefit of American Guaranty & Trust Co., TTEE Sara Brianne Kiner Trust, PO
Box 15627, Wilmington, Delaware 19850-5627 owned 49,652 Shares (16% of the
outstanding Shares), and no person owned beneficially 5% or more of the
outstanding Shares of Greater European Fund-Class II, except, Templeton Global
Investors, Inc., 500 E. Broward Blvd., Suite 2100, Fort Lauderdale, Florida
33394 owned 49,955 Shares (41% of the outstanding Shares) and Prudential
Securities, FBO J. P. Barger, 600 W Cummings Park, Ste 3500, Woburn, Maryland
01801-6350 owned 49,504 (41% of the outstanding Shares). As of October 20, 1995,
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to the knowledge of management, no person owned beneficially 5% or more of the
outstanding Shares of Latin America Fund-Class I except Templeton Global
Investors, Inc., 500 E. Broward Blvd., Suite 2100, Fort Lauderdale, Florida
33394 owned 49,955 Shares (14% of the outstanding Shares), Robert W. Baird &
Co., Inc., PO Box 672, Milwaukee, Wisconsin 53201 owned 18,843 (5% of the
outstanding Shares) and The Northern Trust Company as Cust FBO Morton/Donnelley
1993 Tr., PO Box 92956, Chicago, Illinois 60675 owned 19,940 Shares (5% of the
outstanding Shares), and no person owned beneficially 5% or more of the
outstanding Shares of Latin America Fund-Class II, except Templeton Global
Investors, Inc., 500 E. Broward Blvd., Suite 2100, Fort Lauderdale, Florida
33394 owned 50,000 Shares (55% of the outstanding Shares) and Geoffrey C. Garth
Commingled Asset Account, 32 57th Place, Long Beach, California 90803 owned
14,711 (16% of the outstanding Shares).
INVESTMENT MANAGEMENT AND OTHER SERVICES
INVESTMENT MANAGEMENT AGREEMENTS. The Investment Manager of Growth and
Income Fund, Greater European Fund, and Latin America Fund is TGH, 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 Growth and Income 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 Growth and Income 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, dated May 8, 1995, relating to Greater
European Fund and Latin America 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 April 25, 1995, and by
Templeton Global Investors, Inc., as sole Shareholder of Greater European Fund
and Latin America Fund, on May 8, 1995, and will run through July 31, 1996. The
Investment Management Agreements will continue from year to year thereafter,
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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 certain of its
affiliates have selected for one or more of the Investment Manager's other
clients or for clients of its affiliates, the orders for all such securities
trades may be 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
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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, Growth and Income 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.
Greater European Fund pays TGH a monthly fee equal on an annual basis to 0.75%
of its average daily net assets. Latin America Fund pays TGH a monthly fee equal
on an annual basis to 1.25% of its average daily net assets. The fees of the
Growth and Income Fund, Infrastructure Fund, Greater European Fund and Latin
America Fund are higher than those paid by most other U.S. investment companies.
Each class of Shares of each Fund pays a portion of the fee, determined by the
proportion of a 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.
During the fiscal year ended March 31, 1995, TGH received from Growth
and Income Fund fees of $25,969, and TICI received from Infrastructure Fund fees
of $75,663. During the period from June 27, 1994 (commencement of operations)
through March 31, 1995, TICI received from Americas Government Securities Fund
fees of $7,036.
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 NYSE. Charles B. Johnson (a Trustee and officer of the
Trust) and Rupert H. Johnson, Jr. are principal shareholders of
Franklin and own, respectively, approximately 24% and 16% of its
outstanding shares. Messrs. Charles B. Johnson and Rupert H.
Johnson, Jr. are brothers.
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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. During the fiscal year ended March
31, 1995, Franklin Advisers received sub-advisory fees of $2,932.
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 Sub-Advisory 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 Sub-Advisory 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 Sub-Advisory
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:
o providing office space, telephone, office equipment and
supplies for the Trust;
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o paying compensation of the Trust's officers for
services rendered as such;
o authorizing expenditures and approving bills for
payment on behalf of the Funds;
o 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;
o 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;
o monitoring relationships with organizations serving the
Funds, including the custodian and printers;
o providing trading desk facilities for the Funds;
o 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;
o monitoring the qualifications of tax-deferred
retirement plans providing for investment in Shares of
the Funds; and
o 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 the 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 of each Fund 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
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expenses for advisory and administrative services together may be higher than
those of some other investment companies. During the Fiscal year ended March 31,
1995, the Business Manager received from Growth and Income Fund and
Infrastructure Fund business management fees of $5,188 and $15,126,
respectively. During the period from June 27, 1994 (commencement of operation)
through March 31, 1995, the Business Manager received from Americas Government
Securities Fund business management fees of $1,752.
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 Growth and Income Fund,
Infrastructure Fund, Greater European Fund and Latin America Fund and an annual
fee of $14.77 per
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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 ("SEC") and the Internal Revenue Service ("IRS").
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. Shareholders who would like
to receive an interim quarterly report may phone the Fund Information Department
at 1-800/DIAL BEN.
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
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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 (a)
obtaining a low commission is deemed secondary to
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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 (b) 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,
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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. The
total brokerage commissions on the portfolio transactions for Growth and Income
Fund and Infrastructure Fund during the year ended March 31, 1995 (not including
any spreads or concessions on principal transactions) were $11,237 and $63,970,
respectively. The total brokerage commissions on the portfolio transactions for
Americas Government Securities Fund during the period from June 27, 1994
(commencement of operations) through March 31, 1995 (not including any spreads
or concessions on principal transactions) were $ -0- . 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 NYSE
(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 NYSE 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 NYSE is open. Trading of European
or Far Eastern securities generally, or in a particular country or countries,
may not take
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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 NYSE 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 (i) the NYSE is closed other than for customary weekend and
holiday closings, (ii) trading on the NYSE is restricted, (iii) 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 (iv) for such other period as the SEC
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: (i) 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 (ii) 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 IRS 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:
o For individuals whether or not covered by other
qualified plans;
o For simplified employee pensions;
o For employees of tax-exempt organizations; and
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o 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 ("FTTC") receives the
participant's election on IRS Form W-4P (available on request from FTTC, and
such other documentation as it deems necessary, as to whether or not U.S.
federal 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 IRA. 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 IRAs
are available through FTTC. Disclosure statements summarizing certain aspects of
IRAs are furnished to all persons investing in such accounts, in accordance with
IRS 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 of 1986, as amended
(the "Code"), are available through the Principal Underwriter.
Custodial services are provided by FTTC.
QUALIFIED PLAN FOR CORPORATIONS, SELF-EMPLOYED INDIVIDUALS
AND PARTNERSHIPS. For employers who wish to purchase Shares of a
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Fund in conjunction with employee retirement plans, there is a prototype master
plan which has been approved by the IRS. A "Section 401(k) plan" is also
available. FTTC 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
Shares of Templeton Americas Government Securities Fund, or $50,000 or more in
Class I Shares of Growth and Income Fund, Infrastructure Fund, Greater European
Fund, Latin America Fund or any other fund in the Franklin Group of Funds and
the Templeton Family of Funds, except Templeton Capital Accumulator Fund, Inc.,
Templeton Variable Annuity Fund, Templeton Variable Products Series Fund,
Franklin Valuemark Funds and Franklin Government Securities Trust (the "Franklin
Templeton Funds"), 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
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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
(Both Classes)" 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 Funds 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 at net asset value (without a front-end or contingent deferred sales
charge). Franklin Templeton Distributors, Inc. ("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 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; 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
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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.
Under agreements with certain banks in Taiwan, Republic of China, the
Funds' Shares are available to such banks' discretionary trust funds at net
asset value. The banks may charge service fees to their customers who
participate in the discretionary trusts. Pursuant to agreements, a portion of
such service fees may be paid to FTD, or an affiliate of FTD to help defray
expenses of maintaining a service office in Taiwan, including expenses related
to local literature fulfillment and communication facilities.
TAX STATUS
The following discussion summarizes certain U.S. Federal tax
considerations incident to an investment in a Fund.
Each Fund intends to qualify as a regulated investment company under
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
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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 such 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.
Generally, dividends and distributions are taxable to Shareholders, whether
received in cash or reinvested in Shares of a Fund. Any distributions that are
not from a Fund's net investment income or net capital realized gain may be
characterized as a return of capital to Shareholders or, in some cases, as
capital gain. Shareholders will be notified annually
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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 semiannual 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.
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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
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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
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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.
If a Fund invests in another investment company, it is possible that
the Fund would not receive information or distributions from the underlying
investment company in a time frame that permits the Fund to meet its tax-related
requirements in an optimal manner. However, it is anticipated that the Fund
would seek to minimize these risks. The diversification and distribution
requirements applicable to each Fund may limit the extent to which each Fund
will be able to invest in other investment companies.
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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 financial 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, or as a capital gain.
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.
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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 (i)
the Shareholder incurs a sales charge in acquiring the stock of a regulated
investment company, (ii) the stock is disposed of before the 91st day after the
date on which it was acquired, and (iii) 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 (i) 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, (ii) the IRS notifies the Shareholder or a Fund that the Shareholder
has failed to report properly certain interest and dividend income to the IRS
and to respond to notices to that effect, or (iii) 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.
Dividends, including capital gain dividends, 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
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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"), 700 Central Avenue, 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. Growth and Income Fund, Infrastructure
Fund, Greater European Fund and Latin America Fund also have a second class of
Shares, designated Class II Shares. Under the Plans adopted with respect to
Class II Shares, each Fund will pay 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 (i) payments to
broker-dealers who provide certain services of value to each Fund's Shareholders
(sometimes referred to as a "trail fee"); (ii) reimbursement of expenses
relating to selling and servicing efforts or of organizing and conducting sales
seminars; (iii) payments to employees or agents of the Principal Underwriter who
engage in or support distribution of Shares; (iv) payments of the costs of
preparing, printing and distributing Prospectuses and reports to prospective
investors and of printing and advertising expenses; (v) payment of dealer
commissions and wholesaler compensation in connection with sales of the Funds'
Shares and interest or carrying charges in connection therewith; and (vi) 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 adopted
with respect to Class I Shares, the costs and expenses not reimbursed in any one
given quarter (including costs and expenses not reimbursed because they exceed
0.35% of a Fund's average daily net assets attributable to Class I Shares) may
be reimbursed in subsequent quarters or years.
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During the fiscal year ended March 31, 1995, FTD incurred costs and
expenses (including advanced commissions) of $12,120 in connection with
distribution of Growth and Income Fund's Class I Shares, and $35,373 in
connection with the distribution of Infrastructure Fund's Class I Shares, which
amounts were reimbursed by the Funds pursuant to the Plans (Class II Shares were
not offered during this period). During the period from June 27, 1994
(commencement of operations) through March 31, 1995, FTD incurred costs and
expenses (including advanced commissions) of $4,630 in connection with
distribution of Americas Government Securities Fund's Class I Shares (Class II
Shares were not offered during this period), which amounts were reimbursed by
the Fund pursuant to the Plan. FTD had informed the Funds that it had no
unreimbursed expenses under the Plans at March 31, 1995. In the event that any
Plan is terminated, the Trust will not be liable to FTD for any unreimbursed
expense that have been carried forward from previous months or years. During the
fiscal year ended March 31, 1995, FTD spent, with respect to Growth and Income
Fund, the following amounts on: compensation to dealers $6,148; sales promotion
$130,769; sales materials $-0-; printing $95,785; advertising $429,842; and
wholesaler commissions $665; and with respect to Infrastructure Fund, the
following amounts on: compensation to dealer $22,699; sales promotion $142,589;
sales materials $ -0-; printing $98,041; advertising $700,934; and wholesaler
commission $2,637. During the period from June 27, 1994 (commencement of
operation) through March 31, 1995, FTD spent, with respect to Americas
Government Securities Fund, the following amounts on: compensation to dealers
$393; sales promotion $ -0-; sales materials $ -0-; printing $7,766; advertising
$ -0-; and wholesaler commissions $310.
The Distribution 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. During the fiscal year ended March 31, 1995, FTD retained
of such discount $22,379 or approximately 10.99% of the gross commissions on
sales of Growth and Income Fund and $52,041 or approximately 7.13% of the gross
commission on sales of Infrastructure Fund. During the period from June 27, 1994
(commencement of operations) through March 31, 1995, FTD retained $963 or
approximately 11.83% of the gross commissions on sales of Americas Government
Securities Fund.
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The Distribution 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 Distribution 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 Distribution 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 Distribution 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
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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, and
Americas Government Securities Fund may include its yield, 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 average annual total
return for the one-year period ended March 31, 1995 and for the period from
March 14, 1994 (commencement of operations) through March 31, 1995 was 1.43% and
- -4.40% for Growth and Income Fund and -5.41 and -10.84% for Infrastructure Fund.
The total return for the period from June 27, 1994 (commencement of operations)
through March 31, 1995, on an annualized basis, was -5.49% for Americas
Government Securities Fund. The total return for the period from May 8, 1995
(commencement of operations) through September 30, 1995 on an
- 52 -
<PAGE>
annualized basis was -1.20% for Greater European Fund and 2.20% for Latin
American Fund.
Quotation of yield for Americas Government Securities Fund will be
based on all investment income per share earned during a particular 30-day
period (including dividends and interest and calculated in accordance with a
standardized yield formula adopted by the SEC, less expenses accrued during the
period ("net investment income"), and are computed by dividing net investment
income by the maximum offering price per share on the last day of the period,
according to the following formula:
YIELD = 2 [(A-B +1)6 - 1]
cd
where,
a = dividends and interest earned during the period,
b = expenses accrued for the period (net of
reimbursements),
c = the average daily number of Shares outstanding
during the period that were entitled to receive
dividends, and
d = the maximum offering price per Share on the last
day of the period.
Americas Government Securities Fund's yield for the 30-day period ended
March 31, 1995 was 6.60%.
Performance information for each 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
- 53 -
<PAGE>
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
Corporation, 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, literacy rates, foreign investment improvements due to
a liberalization of securities laws and a reduction of foreign exchange
controls, and improving communication technology, 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.
- 54 -
<PAGE>
(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:
o "Never follow the crowd. Superior performance is
possible only if you invest differently from the
crowd."
o "Diversify by company, by industry and by country."
o "Always maintain a long-term perspective."
o "Invest for maximum total real return."
o "Invest - don't trade or speculate."
o "Remain flexible and open-minded about types of
investment."
o "Buy low."
o "When buying stocks, search for bargains among quality
stocks."
o "Buy value, not market trends or the economic outlook."
o "Diversify. In stocks and bonds, as in much else,
there is safety in numbers."
o "Do your homework or hire wise experts to help you."
o "Aggressively monitor your investments."
o "Don't panic."
o "Learn from your mistakes."
o "Outperforming the market is a difficult task."
- --------
* Sir John Templeton sold the Templeton organization to
Franklin Resources, Inc. in October, 1992 and resigned from
the Fund's Board on April 16, 1995. He is no longer
involved with the investment management process.
- 55 -
<PAGE>
o "An investor who has all the answers doesn't even
understand all the questions."
o "There's no free lunch."
o "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
of the Franklin Templeton Funds 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 Growth and Income Fund, Infrastructure Fund and Americas Government
Securities Fund, each dated March 31, 1995, are incorporated herein by
reference. The financial statements (unaudited) dated September 30, 1995 for
Greater European Fund and Latin America Fund are included herewith.
<PAGE>
TEMPLETON GREATER EUROPEAN FUND
Financial Highlights
Per share operating performance
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Class I
May 8, 1995
(commencement of operations)
to
September 30, 1995 (unaudited)
<S> <C> <C>
Net asset value, beginning of period $ 10.00
Income for investment operations:
Net investment income .06
Net realized and unrealized gain (.18)
Total from investment operations (.12)
Change in net asset value (.12)
Net asset value, end of period $ 9.88
Total Return* (1.20)%
Ratios/supplemental data
Net assets, end of period (000) $ 2,946
Ratio of expenses to average net assets 4.58% **
Ratio of expenses, net of reimbursement, to
average net assets 1.85% **
Ratio of net investment income to average net assets 3.22% **
*Total return does not reflect sales commissions. Not annualized.
**Annualized.
</TABLE>
See Notes to Financial Statements
<PAGE>
TEMPLETON GREATER EUROPEAN FUND
Financial Highlights
Per share operating performance
(For a share outstanding throughout the period)
Class II
---------------------------
May 8, 1995
(commencement of operations)
to
September 30, 1995
(unaudited)
----------------------------
Net asset value, beginning of period $ 10.00
-----------------------------
Income for investment operations:
Net investment income .08
Net realized and unrealized gain (.22)
----------------------------
Total from investment operations (.14)
----------------------------
Change in net asset value (.14)
----------------------------
Net asset value, end of period $ 9.86
============================
TOTAL RETURN* (1.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 1,136
Ratio of expenses to average net assets 5.23% **
Ratio of expenses, net of reimbursement, to
average net assets 2.50% **
Ratio of net investment income to average net assets 2.77% **
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE DEFERRED CONTINGENT
SALES CHARGE. NOT ANNUALIZED.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
TEMPLETON GREATER EUROPEAN FUND
Investment Portfolio, September 30, 1995 (unaudited)
<TABLE>
<CAPTION>
Industry Issue Country Shares Value
COMMON STOCKS: 40.6%
<S> <C> <C> <C>
Automobiles: 3.6%
Peugeot SA Fr. 560 $ 76,555
Volkswagen AG Ger. 222 71,929
148,484
Banking: 1.9%
Deutsche Bank AG Ger. 1,589 75,703
Building Materials & Components: 1.6%
Anglian Group PLC U.K. 32,500 63,141
Business & Public Services: 4.7%
Ecco SA Fr. 440 76,506
Lex Service PLC U.K. 20,700 115,089
191,595
Construction & Housing: 3.9%
European Techniki Gr. 7,100 71,396
Raine PLC U.K. 257,900 89,618
161,014
Electronic Components & Instruments: 2.6%
BICC U.K. 22,610 107,852
Energy Sources: 3.6%
Societe Elf Aquitane SA Fr. 1,020 68,849
Total SA, B Fr. 1,280 77,481
146,330
Insurance: 1.8%
Muenchener Rueckversicherungs-
Gesellschaft Ger. 41 74,081
Merchandising: 2.9%
Karstadt AG Ger. 165 73,205
W.H. Smith Group U.K. 7,400 43,048
116,253
Metals & Mining: 3.6%
Bohler Uddeholm AG, 144a Aut. 488 34,873
Pechiney SA, invt. ctf. Fr. 634 40,567
Vallourec Fr. 1,600 69,226
144,666
Telecommunications: 4.3%
Alcatel Cable SA Fr. 1,220 67,406
Tele Danmark AS, B Den. 2,050 105,948
173,354
Textiles & Apparel: 2.6%
Dawson International PLC U.K. 55,500 107,825
Utilities-Electrical & Gar: 1.7%
VEBA AG Ger. 1,794 71,120
Wholesale & International Trade: 1.8%
Computer 2000 AG Ger. 210 $ 73,698
Total Common Stocks (cost $1,717,868) 1,655,116
PREFERRED STOCKS: 3.4%
Baumax AG, pfd. Aut. 1,860 72,752
Krones AG Herman Kronseder
Maschinen Fabrik, pfd. Ger. 174 66,970
Total Preferred Stocks (cost $151,403) 139,722
</TABLE>
<TABLE>
<CAPTION>
Principal in
Local
Currenty*
<S> <C> <C> <C>
SHORT TERM OBLIGATIONS: 68.1% (cost $2,778,817)
U.S. Treasury Bills, 5.16% to 5.37% with U.S. 2,791,000 2,779,589
maturities to 11/16/95
Total Investments: 112.1% (cost $4,648,088) 4,574,427
Other Assets, less liabilities: (12.1%) (492,312)
Total net Assets: 100.0% $ 4,082,115
</TABLE>
*Currency of country indicated.
Notes to Financial Statements.
<PAGE>
TEMPLETON GREATER EUROPEAN FUND
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities Statement of Operations
September 30,1995 (unaudited) for the period May 8,1995
(commencement of operations)
to September 30,1995(unaudited)
<S> <C> <C> <C> <C>
Assets: Investment income:
(nvestments in securities, at value (net of $520 foreign taxes withheld)
(identified cost $4,648,088) $ 4,574,427 Dividends $ 2,945
Receivables: Interest 43,868
Fund shares sold 51,722 Total income $ 46,813
Dividends and interest 607
Expense reimbursement 10,520 Expenses:
Unamortized organization costs 59,150 Management fees (Note 3) 6,819
Total assets 4,696,426 Administrative fees (Note 3) 1,364
Distribution fees (Note 3)
Liabilities: Class I 2,016
Payables: Class II 3,372
Investment securities purchased 582,002 Transfer agent fees (Note 3) 625
Fund shares redeemed 1,012 Custodian fees 500
Accrued expenses 31,297 Reports to shareholders 13,250
Total liabilities 614,311 Audit fees 4,000
Net assets, at value $ 4,082,115 Legal fees (Note 3) 500
Registration and filing fees 4,665
Net assets consist of: Trustees' fees and expenses 1,500
Undistributed net investment income $ 27,805 Amortization of organization costs 5,075
Net unrealized depreciation (73,661) Other 275
Accumulated net realized loss (18.835) Total expenses 43,961
Net capital paid in on shares of Less expenses reimbursed (Note 3) (24,953)
beneficial interest 4,146,806 Total expenses less reimbursement 19,008
Net assets, at value $ 4,082,115
Net investment income 27,805
Class I:
Net asset value per share Realized and unrealized gain (loss):
($2,945,590/298,127 Net realized gain (loss) on:
shares outstanding) $ 9.88 Investments 46
Foreign currency transactions (18,881)
Maximum offering price (18,835)
($9.88/94.25%) $ 10.48 Net unrealized depreciation
on investments (73,661)
Class II: Net realized and unrealized loss (92,496)
Net asset value per share
($1,136,525/115,311 Net decrease in net assets
shares outstanding) $ 9.86 resulting from operations $ (64,691)
Maximum offering price
($9.86/99.00%) $ 9.96
</TABLE>
See Notes to Financial Statements.
<PAGE>
TEMPLETON GREATER EUROPEAN FUND
Financial Statements (cont.)
Statement of Changes In Net Assets
<TABLE>
<CAPTION>
May 8, 1995
(commencement of operations)
to
September 30, 1995 (unaudited)
<S> <C>
Increase(decrease) in net assets:
Operations:
Net investment income $ 27,805
Net realized loss on investment and foreign currency
transactions (18,835)
Net unrealized depreciation (73,661)
Net decrease in net assets resulting from operations (64,691)
Fund share transactions (Note 2)
Class I 2,993,213
Class II 1,153,593
Net increase in net assets 4,082,115
Net assets:
Beginning of period
End of period $ 4,082,115
</TABLE>
See Notes to Financial Statements
<PAGE>
TEMPLETON GREATER EUROPEAN FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Greater European Fund (the Fund) is a separate series of Templeton
Global Investment Trust (the Trust), a Delaware business trust, which is an
open-end diversified management investment company registered under the
Investment Company Act of 1940. The following summarizes the Fund's significant
accounting policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities and listed
securities for which no sale is reported are valued at the mean between the last
current bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and
approved in good faith by the Board of Trustees.
B. FOREIGN CURRENCY TRANSACTIONS:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
enters into foreign exchange contracts to minimize foreign exchange risk between
the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at the end of the
fiscal period, resulting from changes in the exchange rates.
C. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. UNAMORTIZED ORGANIZATION COSTS:
Organization costs are being amortized on a straight line basis over five years.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS, AND EXPENSES:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income from foreign
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
2. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Fund offers two classes of shares: Class I shares and Class II shares.
Shares of each class are identical except for their initial sales load, a
contingent deferred sales charge on Class II shares, distribution fees, and
voting rights on matters affecting a single class. At September 30, 1995, there
was an unlimited number of shares of beneficial interest authorized ($.01 par
value).
Transactions in the Fund's shares were as follows:
CLASS I
FOR THE PERIOD MAY 8, 1995
(COMMENCEMENT OF OPERATIONS) THROUGH
SEPTEMBER 30, 1995
SHARES AMOUNT
SHARES SOLD 318,661 $3,199,580
SHARES REDEEMED (20,534) (206,367)
-------- ---------
NET INCREASE 298,127 $2,993,213
======= ==========
CLASS II
FOR THE PERIOD MAY 8, 1995
(COMMENCEMENT OF OPERATIONS) THROUGH
SEPTEMBER 30, 1995
SHARES AMOUNT
SHARES SOLD 115,311 $1,153,593
SHARES REDEEMED -- --
-- --
NET INCREASE 115,311 $1,153,593
======= ==========
Templeton Global Investors, Inc., the Fund's administrative manager, is the
record owner of 49,955 Class I shares and 49,955 Class II shares as of
September 30, 1995.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton
Galbraith & Hansberger Ltd. (TGH), Templeton Global Investors, Inc.
(TGII), Franklin Templeton Distributors, Inc. (FTD), and Franklin Templeton
Investor Services, Inc. (FTIS), the Fund's investment manager, administrative
manager, principal underwriter, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TGH equal, on an annual
basis, to 0.75% of the Fund's average daily net assets. The Fund pays TGII
monthly its allocated share of an administrative fee of 0.15% per annum on the
first $200 million of the Trust's aggregate average daily net assets, 0.135% of
the next $500 million, 0.10% of the next $500 million, and 0.075% per annum of
average net assets in excess of $1.2 billion. TGH and TGII have voluntarily
agreed to reduce their respective fees to the extent necessary to limit total
expenses to an annual rate of 1.85% and 2.50% of average net assets of Class I
and II shares, respectively through December 31, 1995. The amount of the
reimbursement for the period ended September 30, 1995 is set forth in the
Statement of Operations. For the period ended September 30, 1995, FTD paid net
commissions of $3,817 from the sale of the Fund's shares and FTIS received fees
of $625.
Under the distribution plans for Class I and Class II shares, the Fund
reimburses FTD quarterly for FTD's costs and expenses in connection with any
activity that is primarily intended to result in a sale of Fund shares, subject
to a maximum of 0.35% and 1.00% per annum of the average daily net assets of
Class I and Class II shares, respectively. Under the Class I distribution plan,
costs and expenses exceeding the maximum may be reimbursed in subsequent
periods. At September 30, 1995, these unreimbursed expenses were $39,055. Class
II shares redeemed within 18 months are subject to a contingent deferred sales
charge. There were no contingent deferred sales charges paid to FTD for the
period ended September 30, 1995.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $500 for the period ended
September 30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
period ended September 30, 1995 aggregated $1,869,270 and $0, respectively. The
cost of securities for federal income tax purposes is the same as that shown in
the Statement of Assets and Liabilities. Realized gains and losses are reported
on an identified cost basis.
At September 30, 1995, the aggregate gross unrealized appreciation and
depreciation of portfolio securities based on cost for federal income tax
purposes, was as follows:
Unrealized appreciation $ 6,560
Unrealized depreciation (80,221)
--------
Net unrealized depreciation $(73,661)
=========
<PAGE>
TEMPLETON LATIN AMERICA FUND
FINANCIAL HIGHLIGHTS
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Class I
------------------------
May 8, 1995
(commencement of operations)
to
September 30, 1995
(unaudited)
-------------------------
Net asset value, beginning of period $ 10.00
--------------
Income for investment operations:
Net investment income .06
Net realized and unrealized gain .16
Total from investment operations .22
-------------
Change in net asset value .22
-------------
Net asset value, end of period $ 10.22
=============
TOTAL RETURN* 2.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 3,308
Ratio of expenses to average net assets 4.98% **
Ratio of expenses, net of reimbursement, to
average net assets 2.35% **
Ratio of net investment income to average net assets 2.63% **
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TEMPLETON LATIN AMERICA FUND
FINANCIAL HIGHLIGHTS
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Class II
-----------------------------
May 8, 1995
(commencement of operations)
to
September 30, 1995
(unaudited)
------------------------
Net asset value, beginning of period $ 10.00
-----------------------
Income for investment operations:
Net investment income .05
Net realized and unrealized gain .14
Total from investment operations .19
------------------------
Change in net asset value .19
------------------------
Net asset value, end of period $ 10.19
========================
TOTAL RETURN* 1.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 871
Ratio of expenses to average net assets 5.63% **
Ratio of expenses, net of reimbursement, to
average net assets 3.00% **
Ratio of net investment income to average net assets 1.99% **
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE DEFERRED CONTINGENT
SALES CHARGE. NOT ANNUALIZED.
**ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
TEMPLETON LATIN AMERICA FUND
Investment Portfolio, September 30, 1995(unaudited)
<TABLE>
<CAPTION>
Industry Issue Country Shares Value
<S> <C> <C> <C>
COMMON STOCKS:12.5%
Beverages & obacco: 1.2%
Cristalerias de Chile SA, ADR Chil. 2,000 $ 49,500
Building Materials & Components: 2.9%
Corcemar Corp. Arg. 9,200 40,022
Mirgor Comercial Industrial Financiera Inmobiliari
Agropecuaria, ADR,144a Arg. 34,000 80,750
120,772
Construction & Housing:1.8%
Empresas ICA Sociedad Controladora SA, ADR Mex. 6,700 77,050
Energy Sources:1.2%
Transportadora de Gas del Sur SA, ADR B Arg. 4,800 50,400
Food & Household Products: 2.9%
Grupo Embotellador de Mexico SA, B Mex. 14,500 84,091
Herdez SA de CV, A Mex. 150,000 38,558
122,649
Metals & Mining: 1.3%
Companhia Siderurgica Nacional Braz. 2,000,000 52,883
Utilities-Electrical & Gas:1.2%
Cia Energetica de Minas Gerais, ADR Braz. 2,200 49,168
Total Common Stocks (cost $509,094) 522,422
PREFERRED STOCKS: 5.3%
Banco Bradesco SA, pfd. Braz. 5,000,000 47,741
Petrobras-Petroleo Brasileiro SA, pfd. Braz. 480,000 50,621
Telebras-Telecomunicacoes Brasileiras SA,pfd.,ADR Braz. 1,300 61,669
Telesp-Telecomunicoes de Sao Paulo SA, pfd. Braz. 380,000 62,320
Total Preferred Stocks (costs $204,051) 222,351
Principal in
Local Currency*
SHORT TERM OBLIGATIONS: 82.6% (cost $3,451,375)
U.S. Treasury Bills, 5.16% to 5.41 % with
maturities to 11/24/95 U.S. 3,467,000 3,452,343
Total Investments:100.4% (cost:$4,164,520) 4,197,116
Other Assets, less liabilities: (0.4)% (18,586)
Total Net Assets:100.0% $ 4,178,530
*Currency of country indicated.
See Notes to Financial Statements.
<PAGE>
TEMPLETON LATIN AMERICA FUND
Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities Statement of Operations
September 30,1995(unaudited) for the period May 8,1995
(commencement of operations)
to September 30,1995(unaudited)
<S> <C> <C> <C> <C>
Assets: Investment income:
Investments in securities, at value (net of $94 foreign taxes withheld)
(identified cost $4,164,520) $ 4,197,116 Dividends $ 6,121
Cash 444 Interest 42,410
Receivables: Total income $ 48,531
Fund shares sold 65,612
Dividends and interest 174 Expenses:
Expense reimbursement 11,185 Management fees (Note 3) 12,136
Unamortized organization costs 66,502 Administrative fees (Note 3) 1,457
Total assets 4,341,033 Distribution fees (Note 3)
Class I 2,562
Liabilities: Class II 2,431
Payables: Transfer agent fees (Note 3) 1,600
Investment securities purchased 124,225 Custodian fees 250
Fund shares redeemed 21,482 Reports to shareholders 14,650
Accrued expenses 16,796 Audit fees 2,250
Total liabilities 162,503 Legal fees (Note 3) 1,500
Net assets, at value $ 4,178,530 Registration and fling fees 2,728
Trustees' fees and expenses 2,600
Net assets consist of: Amortization of organization costs 5,725
Undistributed net investment income $ 24,046 Other 203
Net unrealized appreciation 32,596 Total expenses 50,092
Accumulated net realized loss (922) Less expenses reimbursed (Note 3) (25,607)
Net capital paid in on shares of Total expenses less reimbursement 24,485
benefcial interest 4,122,810
Net assets, at value $ 4,178,530 Net investment income 24,046
Class I: Realized and unrealized gain (loss):
Net asset value per share Net realized gain (loss) on:
($3,307,397\323,647 Investments 70
shares outstanding) $ 10.22 Foreign currency transactions (992)
(922)
Maximum offering price Net unrealized appreciation
($10.22\94.25%) $ 10.84 on investments 32,596
Net realized and unrealized gain 31,674
Class II:
Net asset value per share Net increase in net assets
($871,133\85,524 resulting from operations $ 55,720
shares outstanding) $ 10.19
Maximum offering price
($10.19\99.00%) $ 10.29
</TABLE>
See Notes to Financial Statements.
<PAGE>
TEMPLETON LATIN AMERICA FUND
Financial Statements (cont.)
Statement of Changes In Net Assets
<TABLE>
<CAPTION>
May 8, 1995
(commencement of operations)
to
September 30, 1995 (unaudited)
<S> <C>
Increase(decrease) in net assets:
Operations:
Net Investment Income $ 24,046
Net realized loss on investment and foreign currency
transactions (922)
Net unrealized appreciation 32,596
Net increase in net assets resulting from operations 55,720
Fund share transactions (Note 2)
Class I 3,263,310
Class II 859,500
Net increase in net assets 4,178,530
Net assets:
Beginning of period
End of period $ 4,178,530
</TABLE>
See Notes to Financial Statements.
<PAGE>
TEMPLETON LATIN AMERICA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Latin America Fund (the Fund) is a separate series of Templeton Global
Investment Trust (the Trust), a Delaware business trust, which is an open-end
diversified management investment company registered under the Investment
Company Act of 1940. The following summarizes the Fund's significant accounting
policies.
A. SECURITIES VALUATIONS:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter securities and listed
securities for which no sale is reported are valued at the mean between the last
current bid and asked prices. Securities for which market quotations are not
readily available are valued at fair value as determined by management and
approved in good faith by the Board of Trustees.
B. FOREIGN CURRENCY TRANSACTIONS:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
enters into foreign exchange contracts to minimize foreign exchange risk between
the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities other than investments in securities at the end of the
fiscal period, resulting from changes in the exchange rates.
C. INCOME TAXES:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. UNAMORTIZED ORGANIZATION COSTS:
Organization costs are being amortized on a straight line basis over five years.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS, AND EXPENSES:
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income from foreign
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
2. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Fund offers two classes of shares: Class I shares and Class II shares.
Shares of each class are identical except for their initial sales load, a
contingent deferred sales charge on Class II shares, distribution fees, and
voting rights on matters affecting a single class. At September 30, 1995, there
was an unlimited number of shares of beneficial interest authorized ($.01 par
value).
Transactions in the Fund's shares were as follows:
CLASS I
FOR THE PERIOD MAY 8, 1995
(COMMENCEMENT OF OPERATIONS) THROUGH
SEPTEMBER 30, 1995
SHARES AMOUNT
SHARES SOLD 352,750 $3,560,321
SHARES REDEEMED (29,103) (297,011)
-------- ---------
NET INCREASE 323,647 $3,263,310
======= ==========
CLASS II
FOR THE PERIOD MAY 8, 1995
(COMMENCEMENT OF OPERATIONS) THROUGH
SEPTEMBER 30, 1995
SHARES AMOUNT
SHARES SOLD 85,633 $860,611
SHARES REDEEMED (109) (1,111)
----- -------
NET INCREASE 85,524 $859,500
====== ========
Templeton Global Investors, Inc., the Fund's administrative manager,
is the record owner of 49,955 Class I shares and 50,000 Class
II shares as of September 30, 1995.
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton
Galbraith & Hansberger Ltd., (TGH), Templeton Global Investors, Inc. (TGII),
Franklin Templeton Distributors, Inc. (FTD), and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TGH equal, on an annual
basis, to 0.75% of the Fund's average daily net assets. The Fund pays TGII
monthly its allocated share of an administrative fee of 0.15% per annum on the
first $200 million of the Trust's aggregate average daily net assets, 0.135% of
the next $500 million, 0.10% of the next $500 million, and 0.075% per annum of
average net assets in excess of $1.2 billion. TGH and TGII have voluntarily
agreed to reduce their respective fees to the extent necessary to limit total
expenses to an annual rate of 2.35% and 3.00% of average net assets of Class I
and II shares, respectively through December 31, 1995. The amount of the
reimbursement for the period ended September 30, 1995 is set forth in the
Statement of Operations. For the period ended September 30, 1995, FTD paid net
commissions of $213 from the sale of the Fund's shares and FTIS received fees of
$1,600.
Under the distribution plans for Class I and Class II shares, the Fund
reimburses FTD quarterly for FTD's costs and expenses in connection with any
activity that is primarily intended to result in a sale of Fund shares, subject
to a maximum of 0.35% and 1.00% per annum of the average daily net assets of
Class I and Class II shares, respectively. Under the Class I distribution plan,
costs and expenses exceeding the maximum may be reimbursed in subsequent
periods. At September 30, 1995, these unreimbursed expenses were $56,239. Class
II shares redeemed within 18 months are subject to a contingent deferred sales
charge. There were no contingent deferred sales charges paid to FTD for the
period ended September 30, 1995.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $1,500 for the period ended
September 30, 1995.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
period ended September 30, 1995 aggregated $713,145 and $0, respectively. The
cost of securities for federal income tax purposes is the same as that shown in
the Statement of Assets and Liabilities. Realized gains and losses are reported
on an identified cost basis.
At September 30, 1995, the aggregate gross unrealized appreciation and
depreciation of portfolio securities based on cost for federal income tax
purposes, was as follows:
Unrealized appreciation $ 62,800
Unrealized depreciation (30,204)
-------
Net unrealized appreciation $ 32,596
=========
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Incorporated by reference
from the 1995 Annual Report to Shareholders of
Templeton Global Rising Dividends Fund,
Templeton Global Infrastructure Fund and
Templeton Americas Government Securities Fund:
Financial Highlights
Independent Auditors' Report
Investment Portfolios as of March 31, 1995
Statements of Assets and Liabilities
as of March 31, 1995
Statements of Operations for the year ended
March 31, 1995
Statements of Changes in Net Assets for the year
ended March 31, 1995 and the period ended March
31, 1994
Notes to Financial Statements
Included in the Statement of Additional
Information for Templeton Greater European Fund
and Templeton Latin America Fund:
Financial Highlights
Investment Portfolios as of September 30, 1995
Statements of Assets and Liabilities
as of September 30, 1995
Statements of Operations for the period ended
September 30, 1995
Statements of Changes in Net Assets for the
period ended September 30, 1995
Notes to Financial Statements
(b) Exhibits:
(1) Trust Instrument ****
<PAGE>
(2) Bylaws****
(3) Not applicable
(4)(A) Not applicable
(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) Form of 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) Investment Letter**
<PAGE>
(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) 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**
(27) Financial Data Schedule
- --------------------
* Filed with Post-Effective Amendment No. 4 to the
Registration Statement on February 21, 1995.
** Filed with Post-Effective Amendment No. 5 to the
Registration Statement on May 1, 1995.
*** Rule 24f-2 Notice filed with the Securities & Exchange Commission
on May 26, 1995.
**** Filed with Post-Effective Amendment No. 7 to the
Registration Statement on July 7, 1995.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Record Holders
Templeton Growth and Income Fund
(formerly Templeton Global Rising Dividends Fund)
Shares of Beneficial Interest, par value $0.01 per share:
847 Class I shareholders, 46 Class II shareholders as of
September 30, 1995.
Templeton Global Infrastructure Fund
Shares of Beneficial Interest, par value $0.01 per share:
3,235 Class I shareholders, 104 Class II shareholders as
of September 30, 1995.
Templeton Americas Government Securities Fund
Shares of Beneficial Interest, par value $0.01 per share:
72 Class I shareholders, 0 Class II shareholders as of
September 30, 1995.
Templeton Greater European Fund
Shares of Beneficial Interest, par value $0.01 per share:
308 Class I shareholder, 39 Class II shareholder as of
September 30, 1995.
Templeton Latin America Fund
Shares of Beneficial Interest, par value $0.01 per share:
472 Class I shareholder, 46 Class II shareholder as of
September 30, 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
<PAGE>
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
Growth and Income 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, Templeton Variable Annuity 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 Money
Fund, Franklin Federal Tax-Free Income Fund,
Franklin Gold Fund, Franklin International
Trust, Franklin Investors Securities Trust,
<PAGE>
Franklin Managed Trust, Franklin Money Fund,
Franklin Municipal Securities Trust, Franklin New
York Tax-Free Income Fund, Franklin New York
Tax-Free Trust, Franklin Premier Return Fund,
Franklin Real Estate Securities Trust, 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
Exempt Money Fund, Franklin Tax-Free Trust,
Franklin Templeton Japan Fund, Institutional
Fiduciary Trust, Franklin Templeton Money Fund,
and Franklin Templeton Global Trust.
(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.
<TABLE>
<CAPTION>
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
<S> <C> <C>
Gregory E. Johnson President None
Charles B. Johnson Chairman of the Trustee and
Board and Director Vice President
Rupert H. Johnson, Jr. Executive Vice None
President and Director
Harmon E. Burns Executive Vice None
President 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
<PAGE>
James K. Blinn Vice President None
Richard O. Conboy Vice President None
James A. Escobedo 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
Vivian J. Palmieri Vice President None
Kent P. Strazza Vice President None
John R. Trayser Vice President None
Leslie M. Kratter Secretary None
Robert N. Geppner Assistant Vice None
President
John R. Kay Assistant Vice Vice President
500 East Broward Blvd. President
Ft. Lauderdale, FL 33394
Karen DeBellis Assistant Treasurer None
700 Central Avenue
St. Petersburg, FL 33701
Philip A. Scatena Assistant Treasurer None
</TABLE>
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
<PAGE>
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.
<PAGE>
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 Petersburg,
Florida on the 31st day of October, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
By:_____________________________
Mark G. Holowesko*
President
*By: /s/THOMAS M. MISTELE
Thomas M. Mistele
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.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
__________________ President October 31, 1995
Mark G. Holowesko* (Principal
Executive Officer)
__________________ Treasurer October 31, 1995
James R. Baio* (Principal Financial
and Accounting Officer)
__________________ Trustee October 31, 1995
Charles B. Johnson*
<PAGE>
__________________ Trustee October 31, 1995
Martin L. Flanagan*
__________________ Trustee October 31, 1995
Hasso-G von Diergardt-Naglo*
__________________ Trustee October 31, 1995
F. Bruce Clarke*
_________________ Trustee October 31, 1995
Betty P. Krahmer*
__________________ Trustee October 31, 1995
Fred R. Millsaps*
__________________ Trustee October 31, 1995
Andrew H. Hines, Jr.*
__________________ Trustee October 31, 1995
Harris J. Ashton*
__________________ Trustee October 31, 1995
S. Joseph Fortunato*
__________________ Trustee October 31, 1995
Gordon S. Macklin*
__________________ Trustee October 31, 1995
Nicholas F. Brady*
__________________ Trustee October 31, 1995
John Wm. Galbraith*
</TABLE>
*By/s/THOMAS M. MISTELE
Thomas M. Mistele
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.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, being a duly
elected Trustee of Templeton Global Investment Trust (the "Company"),
constitutes and appoints Allan S. Mostoff, Jeffrey L. Steele, William J.
Kotapish and Thomas M. Mistele, and each of them, his true and lawful
attorney-in-fact and agents with full power of substitution and resubstitution
for him in his name, place and stead, in any and all capacities, to sign the
Company's registration statement and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and conforming all that said attorneys-in-fact and agents, or any of the, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Dated: August 31, 1995
/s/ JOHN WM. GALBRAITH
John Wm. Galbraith
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS FILES WITH
POST-EFFECTIVE AMENDMENT NO. 8 TO THE
REGISTRATION STATEMENT ON FORM N-1A
TEMPLETON GLOBAL INVESTMENT TRUST
<PAGE>
EXHIBIT INDEX
Exhibit Number Name of Exhibit
(11) Consent of Independent Public
Accountants
(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 28, 1995 on the
financial statements of Templeton Growth and Income Fund, Templeton Global
Infrastructure Fund and Templeton Americas Government Securities Fund, series
Templeton Global Investment Trust, referred to therein, which appears in the
1995 Annual Reports to Shareholders and which are incorporated herein by
reference, in Post-Effective Amendment No. 8 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."
/s/MCGLADREY & PULLEN, LLP
McGladrey & Pullen, LLP
New York, New York
October 18, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL INFRASTRUCTURE FUND SEPTEMBER 30, 1995 SEMI ANNUAL
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> TEMPLETON GLOBAL INFRASTRUCTURE FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 21793856
<INVESTMENTS-AT-VALUE> 21800372
<RECEIVABLES> 131614
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 57482
<TOTAL-ASSETS> 21989468
<PAYABLE-FOR-SECURITIES> 20318
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122667
<TOTAL-LIABILITIES> 142985
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20954454
<SHARES-COMMON-STOCK> 1995526<F1>
<SHARES-COMMON-PRIOR> 1984085<F1>
<ACCUMULATED-NII-CURRENT> 123356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 762157
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6516
<NET-ASSETS> 21846483
<DIVIDEND-INCOME> 280019
<INTEREST-INCOME> 62431
<OTHER-INCOME> 0
<EXPENSES-NET> 239763
<NET-INVESTMENT-INCOME> 102687
<REALIZED-GAINS-CURRENT> 834449
<APPREC-INCREASE-CURRENT> 1389532
<NET-CHANGE-FROM-OPS> 2326668
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (50522)<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 539766<F1>
<NUMBER-OF-SHARES-REDEEMED> (532950)<F1>
<SHARES-REINVESTED> 4625<F1>
<NET-CHANGE-IN-ASSETS> 3129956
<ACCUMULATED-NII-PRIOR> 71514
<ACCUMULATED-GAINS-PRIOR> (72292)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 79208
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 249698
<AVERAGE-NET-ASSETS> 20804381<F1>
<PER-SHARE-NAV-BEGIN> 9.43<F1>
<PER-SHARE-NII> .05<F1>
<PER-SHARE-GAIN-APPREC> 1.10<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 10.55<F1>
<EXPENSE-RATIO> 2.25<F1><F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EFFECTIVE MAY 1, 1995 THE FUND OFFERED TWO CLASSES OF SHARES: CLASS I
SHARES AND CLASS II SHARES. THE INFORMATION PERTAINS TO CLASS I SHARES
ONLY.
<F2>THE EXPENSE RATIO FOR THE TEMPLETON GLOBAL INFRASTRUCTURE FUND FOR SEPTEMBER
30, 1995 WITHOUT REIMBURSEMENT EQUALED 2.35%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL INFRASTRUCTURE FUND SEPTEMBER 30, 1995 SEMI ANNUAL
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> TEMPLETON GLOBAL INFRASTRUCTURE FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 21793856
<INVESTMENTS-AT-VALUE> 21800372
<RECEIVABLES> 131614
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 57482
<TOTAL-ASSETS> 21989468
<PAYABLE-FOR-SECURITIES> 20318
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122667
<TOTAL-LIABILITIES> 142985
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20954454
<SHARES-COMMON-STOCK> 76188<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 123356
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 762157
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6516
<NET-ASSETS> 21846483
<DIVIDEND-INCOME> 280019
<INTEREST-INCOME> 62431
<OTHER-INCOME> 0
<EXPENSES-NET> 239763
<NET-INVESTMENT-INCOME> 102687
<REALIZED-GAINS-CURRENT> 834449
<APPREC-INCREASE-CURRENT> 1389532
<NET-CHANGE-FROM-OPS> 2326668
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (323)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 78196<F1>
<NUMBER-OF-SHARES-REDEEMED> (39)<F1>
<SHARES-REINVESTED> 31<F1>
<NET-CHANGE-IN-ASSETS> 3129956
<ACCUMULATED-NII-PRIOR> 71514
<ACCUMULATED-GAINS-PRIOR> (72292)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 79208
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 249698
<AVERAGE-NET-ASSETS> 368330<F1>
<PER-SHARE-NAV-BEGIN> 9.73<F1>
<PER-SHARE-NII> 0<F1>
<PER-SHARE-GAIN-APPREC> .81<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> (.03)<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 10.51<F1>
<EXPENSE-RATIO> 2.97<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EFFECTIVE MAY 1, 1995 THE FUND OFFERED TWO CLASSES OF SHARES: CLASS I
SHARES AND CLASS II SHARES. THE INFORMATION PERTAINS TO CLASS II SHARES
ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GROWTH & INCOME FUND SEPTEMBER 30, 1995 SEMI ANNUAL REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> TEMPLETON GROWTH & INCOME FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 7504718
<INVESTMENTS-AT-VALUE> 7868375
<RECEIVABLES> 147731
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 55961
<TOTAL-ASSETS> 8072067
<PAYABLE-FOR-SECURITIES> 64502
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82884
<TOTAL-LIABILITIES> 147386
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7426522
<SHARES-COMMON-STOCK> 689814<F2>
<SHARES-COMMON-PRIOR> 592172<F2>
<ACCUMULATED-NII-CURRENT> 133125
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1377
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 363657
<NET-ASSETS> 7924681
<DIVIDEND-INCOME> 95297
<INTEREST-INCOME> 83073
<OTHER-INCOME> 0
<EXPENSES-NET> 43283
<NET-INVESTMENT-INCOME> 135087
<REALIZED-GAINS-CURRENT> 3432
<APPREC-INCREASE-CURRENT> 515340
<NET-CHANGE-FROM-OPS> 653859
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (40010)<F2>
<DISTRIBUTIONS-OF-GAINS> (126187)<F2>
<DISTRIBUTIONS-OTHER> 0<F2>
<NUMBER-OF-SHARES-SOLD> 180382<F2>
<NUMBER-OF-SHARES-REDEEMED> (97451)<F2>
<SHARES-REINVESTED> 14711<F2>
<NET-CHANGE-IN-ASSETS> 1971322
<ACCUMULATED-NII-PRIOR> 38177
<ACCUMULATED-GAINS-PRIOR> 124538
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25965
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103963
<AVERAGE-NET-ASSETS> 6676220<F2>
<PER-SHARE-NAV-BEGIN> 10.05<F2>
<PER-SHARE-NII> .19<F2>
<PER-SHARE-GAIN-APPREC> .82<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> (.27)<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 10.79<F2>
<EXPENSE-RATIO> 1.25<F1><F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO FOR GROWTH & INCOME FUND FOR SEPTEMBER 30, 1995
WITHOUT REIMBURSEMENT EQUALED 3.02%
<F2>EFFECTIVE MAY 1, 1995, THE FUND OFFERED TWO CLASSES OF SHARES: CLASS I
SHARES AND CLASS II SHARES. INFORMATION IS FOR CLASS I SHARES ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GROWTH & INCOME FUND SEPTEMBER 30, 1995 SEMI ANNUAL REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> TEMPLETON GROWTH & INCOME FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 7504718
<INVESTMENTS-AT-VALUE> 7868375
<RECEIVABLES> 147731
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 55961
<TOTAL-ASSETS> 8072067
<PAYABLE-FOR-SECURITIES> 64502
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82884
<TOTAL-LIABILITIES> 147386
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7426522
<SHARES-COMMON-STOCK> 44670<F2>
<SHARES-COMMON-PRIOR> 0<F2>
<ACCUMULATED-NII-CURRENT> 133125
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1377
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 363657
<NET-ASSETS> 7924681
<DIVIDEND-INCOME> 95297
<INTEREST-INCOME> 83073
<OTHER-INCOME> 0
<EXPENSES-NET> 43283
<NET-INVESTMENT-INCOME> 135087
<REALIZED-GAINS-CURRENT> 3432
<APPREC-INCREASE-CURRENT> 515340
<NET-CHANGE-FROM-OPS> 653859
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (129)<F2>
<DISTRIBUTIONS-OF-GAINS> (406)<F2>
<DISTRIBUTIONS-OTHER> 0<F2>
<NUMBER-OF-SHARES-SOLD> 44618<F2>
<NUMBER-OF-SHARES-REDEEMED> 0<F2>
<SHARES-REINVESTED> 52<F2>
<NET-CHANGE-IN-ASSETS> 1971322
<ACCUMULATED-NII-PRIOR> 38177
<ACCUMULATED-GAINS-PRIOR> 124538
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25965
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103963
<AVERAGE-NET-ASSETS> 190376<F2>
<PER-SHARE-NAV-BEGIN> 10.19<F2>
<PER-SHARE-NII> .1<F2>
<PER-SHARE-GAIN-APPREC> .75<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> (.27)<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 10.77<F2>
<EXPENSE-RATIO> 1.90<F1><F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO FOR GROWTH & INCOME FUND FOR SEPTEMBER 30, 1995 WITHOUT
REIMBURSEMENT EQUALED 3.59%
<F2>EFFECTIVE MAY 1, 1995, THE FUND OFFERED TWO CLASSES OF SHARES: CLASS I
SHARES AND CLASS II SHARES. INFORMATION IS FOR CLASS II SHARES ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
Templeton Americas Government Securities Fund September 30, 1995 semi-
annual report and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 3030021
<INVESTMENTS-AT-VALUE> 3034726
<RECEIVABLES> 114320
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 71168
<TOTAL-ASSETS> 3220214
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43453
<TOTAL-LIABILITIES> 43453
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3099949
<SHARES-COMMON-STOCK> 310503
<SHARES-COMMON-PRIOR> 294735
<ACCUMULATED-NII-CURRENT> 38298
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33809
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4705
<NET-ASSETS> 3176761
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 136851
<OTHER-INCOME> 0
<EXPENSES-NET> 19088
<NET-INVESTMENT-INCOME> 117763
<REALIZED-GAINS-CURRENT> 45239
<APPREC-INCREASE-CURRENT> 108725
<NET-CHANGE-FROM-OPS> 271727
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (79465)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24697
<NUMBER-OF-SHARES-REDEEMED> (16618)
<SHARES-REINVESTED> 7689
<NET-CHANGE-IN-ASSETS> 350700
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11430)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 92320
<AVERAGE-NET-ASSETS> 3046888
<PER-SHARE-NAV-BEGIN> 9.59
<PER-SHARE-NII> .38
<PER-SHARE-GAIN-APPREC> .52
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.26)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>The expense ratio without reimbursement equaled 6.04%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GREATER EUROPEAN FUND SEPTEMBER 30, 1995 SEMI ANNUAL REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> TEMPLETON GREATER EUROPEAN FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 4648088
<INVESTMENTS-AT-VALUE> 4574427
<RECEIVABLES> 62849
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 59150
<TOTAL-ASSETS> 4696426
<PAYABLE-FOR-SECURITIES> 582002
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32309
<TOTAL-LIABILITIES> 614311
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4146806
<SHARES-COMMON-STOCK> 298127<F2>
<SHARES-COMMON-PRIOR> 0<F2>
<ACCUMULATED-NII-CURRENT> 27805
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18835)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (73661)
<NET-ASSETS> 4082115
<DIVIDEND-INCOME> 2945
<INTEREST-INCOME> 43868
<OTHER-INCOME> 0
<EXPENSES-NET> 19008
<NET-INVESTMENT-INCOME> 27805
<REALIZED-GAINS-CURRENT> (18835)
<APPREC-INCREASE-CURRENT> (73661)
<NET-CHANGE-FROM-OPS> (64691)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 318661<F2>
<NUMBER-OF-SHARES-REDEEMED> (20534)<F2>
<SHARES-REINVESTED> 0<F2>
<NET-CHANGE-IN-ASSETS> 4082115
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6819
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 43961
<AVERAGE-NET-ASSETS> 1446454<F2>
<PER-SHARE-NAV-BEGIN> 10.00<F2>
<PER-SHARE-NII> .06<F2>
<PER-SHARE-GAIN-APPREC> (.18)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 9.88<F2>
<EXPENSE-RATIO> 1.85<F2><F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F2>THE FUND OFFERS TWO CLASSES OF SHARES: CLASS I SHARES AND CLASS II SHARES.
THE INFORMATION IS FOR CLASS I SHARES ONLY.
<F1>THE EXPENSE RATIO FOR THE TEMPLETON GREATER EUROPEAN FUND WITHOUT
REIMBURSEMENT EQUALED 4.58%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GREATER EUROPEAN FUND SEPTEMBER 30, 1995 SEMI ANNUAL REPORT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 042
<NAME> TEMPLETON GREATER EUROPEAN FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 4648088
<INVESTMENTS-AT-VALUE> 4574427
<RECEIVABLES> 62849
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 59150
<TOTAL-ASSETS> 4696426
<PAYABLE-FOR-SECURITIES> 582002
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32309
<TOTAL-LIABILITIES> 614311
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4146806
<SHARES-COMMON-STOCK> 115311<F2>
<SHARES-COMMON-PRIOR> 0<F2>
<ACCUMULATED-NII-CURRENT> 27805
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18835)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (73661)
<NET-ASSETS> 4082115
<DIVIDEND-INCOME> 2945
<INTEREST-INCOME> 43868
<OTHER-INCOME> 0
<EXPENSES-NET> 19008
<NET-INVESTMENT-INCOME> 27805
<REALIZED-GAINS-CURRENT> (18835)
<APPREC-INCREASE-CURRENT> (73661)
<NET-CHANGE-FROM-OPS> (64691)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 115311<F2>
<NUMBER-OF-SHARES-REDEEMED> 0<F2>
<SHARES-REINVESTED> 0<F2>
<NET-CHANGE-IN-ASSETS> 4082115
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6819
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 43961
<AVERAGE-NET-ASSETS> 848732<F2>
<PER-SHARE-NAV-BEGIN> 10.00<F2>
<PER-SHARE-NII> .08<F2>
<PER-SHARE-GAIN-APPREC> (.22)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 9.86<F2>
<EXPENSE-RATIO> 2.50<F1><F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO FOR THE TEMPLETON GREATER EUROPEAN FUND WITHOUT
REIMBURSEMENT EQUALED 5.23%
<F2>THE FUND OFFERS TWO CLASSES OF SHARES: CLASS I SHARES AND CLASS II
SHARES. THE INFORMATION PERTAINS TO CLASS II SHARES ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON LATIN AMERICA FUND SEPTEMBER 30, 1995 SEMI ANNUAL REPORT AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 051
<NAME> TEMPLETON LATIN AMERICA FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 4164520
<INVESTMENTS-AT-VALUE> 4197116
<RECEIVABLES> 76971
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 66946
<TOTAL-ASSETS> 4341033
<PAYABLE-FOR-SECURITIES> 124225
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38278
<TOTAL-LIABILITIES> 162503
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4122810
<SHARES-COMMON-STOCK> 323647<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 24046
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (922)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32596
<NET-ASSETS> 4178530
<DIVIDEND-INCOME> 6121
<INTEREST-INCOME> 42410
<OTHER-INCOME> 0
<EXPENSES-NET> 24485
<NET-INVESTMENT-INCOME> 24046
<REALIZED-GAINS-CURRENT> (922)
<APPREC-INCREASE-CURRENT> 32596
<NET-CHANGE-FROM-OPS> 55720
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 352750<F1>
<NUMBER-OF-SHARES-REDEEMED> (29130)<F1>
<SHARES-REINVESTED> 0<F1>
<NET-CHANGE-IN-ASSETS> 4178530
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12136
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50092
<AVERAGE-NET-ASSETS> 1838729<F1>
<PER-SHARE-NAV-BEGIN> 10.00<F1>
<PER-SHARE-NII> .06<F1>
<PER-SHARE-GAIN-APPREC> .16<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 10.22<F1>
<EXPENSE-RATIO> 2.35<F1><F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F2>THE EXPENSE RATIO FOR THE TEMPLETON LATIN AMERICA FUND WITHOUT
REIMBURSEMENT EQUALED 4.98%.
<<F1>THE FUND OFFERS TWO CLASSES OF SHARES: CLASS I SHARES AND CLASS II SHARES.
THE INFORMATION PERTAINS TO CLASS I SHARES ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON LATIN AMERICA FUND SEPTEMBER 30, 1995 SEMI ANNUAL REPORT AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 052
<NAME> TEMPLETON LATIN AMERICA FUND
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 4164520
<INVESTMENTS-AT-VALUE> 4197116
<RECEIVABLES> 76971
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 66946
<TOTAL-ASSETS> 4341033
<PAYABLE-FOR-SECURITIES> 124225
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38278
<TOTAL-LIABILITIES> 162503
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4122810
<SHARES-COMMON-STOCK> 85524<F2>
<SHARES-COMMON-PRIOR> 0<F2>
<ACCUMULATED-NII-CURRENT> 24046
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (922)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32596
<NET-ASSETS> 4178530
<DIVIDEND-INCOME> 6121
<INTEREST-INCOME> 42410
<OTHER-INCOME> 0
<EXPENSES-NET> 24485
<NET-INVESTMENT-INCOME> 24046
<REALIZED-GAINS-CURRENT> (922)
<APPREC-INCREASE-CURRENT> 32596
<NET-CHANGE-FROM-OPS> 55720
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 85633<F2>
<NUMBER-OF-SHARES-REDEEMED> (109)<F2>
<SHARES-REINVESTED> 0<F2>
<NET-CHANGE-IN-ASSETS> 4178530
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12136
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50092
<AVERAGE-NET-ASSETS> 611865<F2>
<PER-SHARE-NAV-BEGIN> 10.00<F2>
<PER-SHARE-NII> .05<F2>
<PER-SHARE-GAIN-APPREC> .14<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 10.19<F2>
<EXPENSE-RATIO> 3.00<F1><F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO FOR THE TEMPLETON LATIN AMERICA FUND WITHOUT
REIMBURSEMENT EQUALED 5.63%.
<F2>THE FUND OFFERS TWO CLASSES OF SHARES: CLASS I SHARES AND CLASS II SHARES.
THE INFORMATION PERTAINS TO CLASS II SHARES ONLY.
</FN>
</TABLE>
