File No. 33-73244
As filed with the Securities and Exchange Commission on May 10,
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. 6 X
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 8 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
Jeffrey L. Steele, Esq. Thomas M. Mistele, Esq.
Dechert Price & Rhoads Templeton Global Investors, Inc.
1500 K Street, N.W. 500 East Broward Blvd.
Washington, D.C. 20005 Fort Lauderdale, FL 33394
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a) of Rule 485
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Registrant has elected to register an indefinite number of
shares of beneficial interest, $0.01 par value per share,
pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant filed the Notice required by Rule 24f-2 with respect
to its fiscal year ended March 31, 1994 on May 24, 1994.
TEMPLETON GLOBAL INVESTMENT TRUST
CROSS-REFERENCE SHEET
Part A - Templeton Growth and Income Fund
1 Cover Page
2 Expense Table
3 Financial Highlights
4 General Description;
Investment Techniques
5 Management of the Fund
5A Not Applicable
6 General Information
7 How to Buy Shares of the Fund
8 How to Sell Shares of the Fund
9 Not Applicable
Part A - Templeton Global Infrastructure Fund
This Post-Effective Amendment No. 6 to the Registration Statement
(File No. 33-73244) on Form N-1A for Templeton Global Investment
Trust incorporates by reference the prospectus for Templeton
Global Infrastructure Fund, which was contained in Templeton
Global Investment Trust's Post-Effective Amendment No. 5 which
was filed on May 1, 1995.
Part A - Templeton Americas Government Securities Fund
This Post-Effective Amendment No. 6 to the Registration Statement
(File No. 33-73244) on Form N-1A for Templeton Global Investment
Trust incorporates by reference the prospectus for Templeton
Americas Government Securities Fund, which was contained in
Templeton Global Investment Trust's Post-Effective Amendment No.
3, which was filed on December 2, 1994.
Part A - Templeton Region Funds
This Post-Effective Amendment No. 6 to the Registration Statement
(File No. 33-73244) on Form N-1A for Templeton Global Investment
Trust incorporates by reference the prospectus for Templeton
Region Funds,(Templeton Greater European Fund and Templeton Latin
America Fund) which was contained in Templeton Global Investment
Trust's Post-Effective Amendment No. 4, which was filed on
February 21, 1995.
Part B
10 Cover Page
11 Table of Contents
12 General Information and History
13 Investment Objectives and Policies
14 Management of the Trust
15 Principal Shareholders
16 Investment Management and Other
Services
17 Brokerage Allocation
18 Description of Shares; Part A
19 Purchase, Redemption and Pricing of
Shares
20 Tax Status
21 Principal Underwriter
22 Performance Information
23 Financial Statements
<PAGE>
TEMPLETON GROWTH AND INCOME FUND PROSPECTUS -- JULY , 1995
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INVESTMENT The investment objective of Templeton Growth and Income Fund
OBJECTIVE (the "Fund") is total return. The Fund seeks to achieve its
AND POLICIES objective through a flexible policy of investing primarily in
equity and debt securities of domestic and foreign companies.
THE FUND MAY BORROW MONEY FOR INVESTMENT PURPOSES, WHICH MAY
INVOLVE GREATER RISK AND ADDITIONAL COSTS TO THE FUND. IN
ADDITION, THE FUND MAY INVEST UP TO 15% OF ITS ASSETS IN
ILLIQUID SECURITIES, INCLUDING UP TO 10% OF ITS ASSETS IN
RESTRICTED SECURITIES, WHICH MAY INVOLVE GREATER RISK AND
INCREASED FUND EXPENSES. SEE "RISK FACTORS." The Fund is a
series of Templeton Global Investment Trust.
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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
Account Services Department. The Fund offers two classes to
its investors: Templeton Growth and Income Fund--Class I
("Class I") and Templeton Growth and Income Fund--Class II
("Class II"). Investors can choose between Class I Shares,
which generally bear a higher front-end sales charge and lower
ongoing Rule 12b-1 distribution fees ("Rule 12b-1 fees"), and
Class II Shares, which generally have a lower front-end sales
charge and higher ongoing Rule 12b-1 fees. Investors should
consider the differences between the two classes, including
the impact of sales charges and distribution fees, in choosing
the more suitable class given their anticipated investment
amount and time horizon. See "How to Buy Shares of the Fund--
Alternative Purchase Arrangements." The minimum initial
investment is $100 ($25 minimum for subsequent investments).
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PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Fund that a prospective investor ought to know before
investing. Investors are advised to read and retain this
Prospectus for future reference. A Statement of Additional
Information ("SAI") dated May 1, 1995 has been filed with the
Securities and Exchange Commission (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 -- 1-800-292-9293
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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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TABLE OF CONTENTS
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EXPENSE TABLE........ 2
FINANCIAL HIGHLIGHTS. 3
GENERAL DESCRIPTION.. 3
Investment Objective
and Policies........ 4
INVESTMENT
TECHNIQUES.......... 5
Temporary
Investments......... 5
Borrowing............ 5
Loans of Portfolio
Securities.......... 5
Options on Securities
or Indices.......... 5
Forward Foreign
Currency Contracts
and Options on
Foreign Currencies.. 6
Futures Contracts.... 6
Repurchase
Agreements.......... 7
Depositary Receipts.. 7
Illiquid and
Restricted
Securities.......... 7
RISK FACTORS......... 8
HOW TO BUY SHARES OF
THE FUND............ 9
Alternative Purchase
Arrangements........ 10
Deciding Which Class
to Purchase......... 10
Offering Price....... 11
Class I.............. 11
Cumulative Quantity
Discount............ 12
Letter of Intent..... 12
Group Purchases...... 12
</TABLE>
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Class II............. 13
Net Asset Value
Purchases
(Both Classes)...... 13
Description of
Special Net Asset
Value Purchases..... 14
Additional Dealer
Compensation (Both
Classes)............ 15
Purchasing Class I
and Class II Shares. 15
Automatic Investment
Plan................ 16
Institutional
Accounts............ 16
Account Statements... 16
Templeton STAR
Service............. 16
Retirement Plans..... 17
Net Asset Value...... 17
EXCHANGE PRIVILEGE... 17
Exchanges of Class I
Shares.............. 18
Exchanges of Class II
Shares.............. 18
Transfers............ 19
Conversion Rights.... 19
Exchanges by Timing
Accounts............ 19
HOW TO SELL SHARES OF
THE FUND............ 19
Reinstatement
Privilege........... 21
Systematic Withdrawal
Plan................ 22
Redemptions by
Telephone........... 22
Contingent Deferred
Sales Charge........ 23
</TABLE>
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TELEPHONE
TRANSACTIONS........ 24
Verification
Procedures.......... 24
Restricted Accounts.. 24
General.............. 24
MANAGEMENT OF THE
FUND................ 25
Investment Manager... 25
Business Manager..... 26
Transfer Agent....... 26
Custodian............ 26
Plans of
Distributions....... 26
Brokerage
Commissions......... 27
GENERAL INFORMATION.. 27
Description of
Shares/Share
Certificates........ 27
Voting Rights........ 27
Meetings of
Shareholders........ 27
Dividends and
Distributions....... 27
Federal Tax
Information......... 28
Inquiries............ 28
Performance
Information......... 28
Statements and
Reports............. 28
WITHHOLDING
INFORMATION......... 29
CORPORATE RESOLUTION. 30
AUTHORIZATION
AGREEMENT........... 31
THE FRANKLIN
TEMPLETON GROUP..... 32
</TABLE>
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SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
EXPENSE TABLE
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a Shareholder will bear directly or indirectly
in connection with an investment in the Fund. The figures are estimates of the
Fund's expenses for the current fiscal year, restated to reflect current sales
charges and Rule 12b-1 fees for each class.
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES CLASS I CLASS II
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Maximum Sales Charge Imposed on Purchases (as a
percentage of Offering Price)......................... 5.75% 1.00%/1/
Deferred Sales Charge.................................. None/2/ 1.00%/3/
Exchange Fee (per transaction)......................... $5.00/4/ $5.00/4/
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees........................................ 0.75% 0.75%
Rule 12b-1 Fees/4/..................................... 0.35%** 1.00%
Other Expenses (audit, legal, business management,
transfer agent and custodian) (after expense
reimbursement)........................................ 0.15% 0.15%
Total Fund Operating Expenses (after expense reimburse-
ment)................................................. 1.25% 1.90%/1/
</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.
/2/ Class I investments of $1 million or more are not subject to a front-end
sales charge; however, a contingent deferred sales charge of 1%, which has
not been reflected in the Example below, is generally imposed on certain
redemptions within a "contingency period" of 12 months of the calendar
month following such investments. See "How to Sell Shares of the Fund--
Contingent Deferred Sales Charge."
/3/ Class II Shares redeemed within a "contingency period" of 18 months of the
calendar month following such investments are subject to a 1% contingent
deferred sales charge. See "How to Sell Shares of the Fund--Contingent
Deferred Sales Charge."
/4/ $5.00 fee imposed only on Timing Accounts as described under "Exchange
Privilege." All other exchanges are processed without a fee.
/5/ Annual Rule 12b-1 fees may not exceed 0.35% of the Fund's average net
assets attributable to Class I Shares and 1.00% of the Fund's average net
assets attributable to Class II Shares. Consistent with the National
Association of Securities Dealers, Inc.'s rules, it is possible that the
combination of front-end sales charges and Rule 12b-1 fees could cause long-
term Shareholders to pay more than the economic equivalent of the maximum
front-end sales charges permitted under those same rules.
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual's own
investment in the Fund. Rather, the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and
expenses. For a more detailed discussion of these matters, investors should
refer to the appropriate sections of this Prospectus.
EXAMPLE
As required by SEC regulations, the following example illustrates the
expenses, including the maximum front-end sales charge and applicable
contingent deferred sales charge, that apply to a $1,000 investment in the
Fund over various time periods assuming (1) a 5% annual rate of return and (2)
redemption at the end of each time period.
<TABLE>
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ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
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<S> <C> <C> <C> <C>
Class I........................ $69 $95 $ $
Class II....................... $33 $49 $ $
You would pay the following
expenses on the same
investment in Class II Shares,
assuming no redemption........ $ $ $ $
</TABLE>
THIS EXAMPLE IS BASED ON THE ESTIMATED ANNUAL OPERATING EXPENSES, INCLUDING
FEES SET BY CONTRACT, SHOWN ABOVE AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, WHICH MAY BE MORE OR LESS THAN
THOSE SHOWN. The operating expenses are borne by the Fund and only indirectly
by Shareholders as a result of their investment in the Fund. (See "Management
of the Fund" for a description of the Fund's expenses.) In addition, federal
securities regulations require the example to assume an annual return of 5%,
but the Fund's actual return may be more or less than 5%.
The Fund's Investment Manager, Templeton, Galbraith & Hansberger Ltd., has
voluntarily agreed to reduce its investment management fee to the extent
necessary to limit the Fund's total expenses (excluding interest, taxes,
brokerage commissions and extraordinary expenses) to 1.25% for Class I, and
1.90% for Class II, of the Fund's average daily net assets until December 31,
1995. If such fee reduction is insufficient to so limit the Fund's total
expenses, the Fund's Business Manager, Templeton Global Investors, Inc., has
agreed to reduce its fee and, to the extent necessary, assume other Fund
expenses, so as to so limit the Fund's total expenses. If this policy were not
in effect, the Fund's "Other Expenses" would be 5.01% for both classes and the
"Total Fund Operating Expenses" would be 6.11% for Class I and 6.76% for Class
II. In this case, you would pay the following expenses on a $1,000 investment,
assuming 5% annual return and redemption at the end of each time period: $115
for one year and $227 for three years for Class I; $86 for one year and $206
for three years for Class II. As long as this temporary expense limitation
continues, it may lower the Fund's expenses and increase its total return.
After December 31, 1995, the expense limitation may be terminated or revised
at any time, at which time the Fund's expenses may increase and its total
return may be reduced, depending on the total assets of the Fund.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following table of selected financial information has been audited by
McGladrey & Pullen, LLP, independent certified public accountants, for the
periods indicated in their report which is incorporated by reference and which
appears in the Fund's 1995 Annual Report to Shareholders. This statement
should be read in conjunction with the other financial statements and notes
thereto included in the Fund's 1995 Annual Report to Shareholders, which
contains further information about the Fund's performance, and which is
available to Shareholders upon request and without charge. Information
regarding Class II Shares will be included in this table after they have been
offered to the public for a reasonable period of time.
<TABLE>
<CAPTION>
MARCH 14, 1994
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
MARCH 31, 1995 MARCH 31, 1994
-------------- ----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Net asset value, beginning of period........... $ $10.00
---- ------
Income from investment operations:
Net investment income......................... .009
Net realized and unrealized gain.............. .001
---- ------
Total from investment operations............. .01
---- ------
Change in net asset value...................... .01
---- ------
Net asset value, end of period................. $ $10.01
==== ======
TOTAL RETURN*.................................. % 0.10%
RATIOS/SUPPLEMENT DATA
Net assets, end of period (000)................ $ $ 100
Ratio of expenses to average net assets........ 32.15%**
Ratio of expenses, net reimbursement, to aver-
age net assets................................ 1.25%**
Ratio of net investment income to average net
assets........................................ 1.89%**
Portfolio turnover rate........................ --
</TABLE>
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* Total return does not reflect sales charges. Not annualized.
** Annualized.
+ Based on monthly weighted average Shares outstanding.
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. It has five series of Shares, each of which is
a separate mutual fund: Templeton Growth and Income Fund (formerly Templeton
Global Rising Dividends Fund, the "Fund"), Templeton Global Infrastructure
Fund, Templeton Greater European Fund and Templeton Latin America Fund, all
diversified funds, and Templeton Americas Government Securities Fund, a non-
diversified fund. Prospectuses for Templeton Global Infrastructure Fund,
Templeton Americas Government Securities Fund, Templeton Greater European Fund
and Templeton Latin America Fund are available upon request and without charge
from the Principal Underwriter. The Fund has two classes of Shares of
beneficial interest with a par value of $.01: Templeton Growth and Income
Fund--Class I and Templeton Growth and Income Fund--Class II. All Fund Shares
outstanding before May 1, 1995 have been redesignated as Class I Shares, and
will retain their previous rights and privileges, except for legally required
modifications to Shareholder voting procedures, as discussed in "General
Information--Voting Rights."
3
<PAGE>
Shares of the Fund may be purchased (minimum investment of $100 initially
and $25 thereafter) at the current public Offering Price. The current public
Offering Price of the Class I Shares is equal to the net asset value (see "How
to Buy Shares of the Fund--Net Asset Value"), plus a variable sales charge not
exceeding 5.75% of the Offering Price depending upon the amount invested. The
current public Offering Price of the Class II Shares is equal to the net asset
value, plus a sales charge of 1.0% of the amount invested. (See "How to Buy
Shares of the Fund.")
INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is
total return, comprising a combination of income and capital appreciation. The
Fund seeks to achieve its objective through a flexible policy of investing
primarily in equity and debt securities of domestic and foreign companies. The
Fund's investment objective and the investment restrictions set forth under
"Investment Objectives and Policies--Investment Restrictions" in the SAI are
fundamental and may not be changed without Shareholder approval. All other
investment policies and practices described in this Prospectus are not
fundamental, and may be changed by the Board of Trustees without Shareholder
approval. There can be no assurance that the Fund's investment objectives will
be achieved.
The Fund will invest primarily in equity and debt securities, as defined
below, of domestic and foreign companies. 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"). The Investment
Manager will select equity investments for the Fund on the basis of
fundamental company-by-company analysis (rather than broader analyses of
specific industries or sectors of the economy). Although the Investment
Manager will consider historical value measures, such as price/earnings
ratios, operating profit margins and liquidation values, the primary factor in
selecting equity securities of companies meeting the criteria listed above
will be the company's current price relative to its long-term earnings
potential, as determined by the Investment Manager.
As used herein, "debt securities" refers to bonds, notes, debentures,
commercial paper, time deposits and bankers' acceptances, which are rated in
any rating category by Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Corporation ("S&P") or which are unrated by any rating agency. Such
securities may include high-risk, lower quality debt securities, commonly
referred to as "junk bonds." See "Risk Factors." As an operating policy, which
may be changed by the Board of Trustees, the Fund will not invest more than 5%
of its total assets in debt securities rated lower than Baa by Moody's or BBB
by S&P. Debt securities are subject to certain market and credit risks. See
"Investment Objectives and Policies--Debt Securities" in the SAI.
Securities considered for purchase by the Fund may be listed or unlisted,
and may be issued by companies in various industries, with various levels of
market capitalization. Under normal circumstances, the Fund will invest at
least 65% of its total assets in issuers domiciled in at least three different
nations (one of which may be the United States). The percentage of the Fund's
assets to be invested in equity and debt securities will vary from time to
time, based on the Investment Manager's assessment of the relative total
return potential of various investment vehicles.
The Fund may also lend its portfolio securities and borrow money for
investment purposes (i.e., "leverage" its portfolio). In addition, the Fund
may enter into transactions in options on securities, securities indices and
foreign currencies, forward foreign currency contracts, and futures contracts
and related options. These are generally referred to as derivative instruments
and involve special risk factors, which are described below. When deemed
appropriate by the Investment Manager, the Fund may invest cash balances in
repurchase agreements and other money market investments to maintain liquidity
in an amount to meet expenses or for day-to-day operating purposes. These
investment techniques are described below and under the heading "Investment
Objectives and Policies" in the SAI.
When the Investment Manager believes that market conditions warrant, the
Fund may adopt a temporary defensive position and may invest without limit in
money market securities denominated in U.S. dollars or in the currency of any
foreign country. See "Investment Techniques--Temporary Investments."
4
<PAGE>
The Fund does not emphasize short-term trading profits and usually expects
to have an annual portfolio turnover rate generally not exceeding 50%. There
can be no assurance that the Fund's investment objective will be achieved.
INVESTMENT TECHNIQUES
The Fund is authorized to use the various investment techniques described
below. Although these strategies are regularly used by some investment
companies and other institutional investors in various markets, some of these
strategies cannot at the present time be used to a significant extent by the
Fund in some of the markets in which the Fund will invest and may not be
available for extensive use in the future.
TEMPORARY INVESTMENTS. For temporary defensive purposes, the Fund may invest
up to 100% of its total assets in the following money market securities,
denominated in U.S. dollars or in the currency of any foreign country, issued
by entities organized in the United States or any foreign country: short-term
(less than twelve months to maturity) and medium-term (not greater than five
years to maturity) obligations issued or guaranteed by the U.S. Government or
the governments of foreign countries, their agencies or instrumentalities;
finance company and corporate commercial paper, and other short-term corporate
obligations, in each case rated Prime-1 by Moody's or A or better by S&P or,
if unrated, of comparable quality as determined by the Investment Manager;
obligations (including certificates of deposit, time deposits and bankers'
acceptances) of banks; and repurchase agreements with banks and broker-dealers
with respect to such securities.
BORROWING. The Fund may borrow up to one-third of the value of its total
assets from banks to increase its holdings of portfolio securities. Under the
1940 Act, the Fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of the
Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value,
and money borrowed will be subject to interest and other costs (which may
include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of the Fund's
total assets to generate income for the purpose of offsetting operating
expenses. Such loans must be secured by collateral (consisting of any
combination of cash, U.S. Government securities or irrevocable letters of
credit) in an amount at least equal (on a daily marked-to-market basis) to the
current market value of the securities loaned. The Fund may terminate the
loans at any time and obtain the return of the securities loaned within five
business days. The Fund will continue to receive any interest or dividends
paid on the loaned securities and will continue to retain any voting rights
with respect to the securities. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
the Fund could experience delays and costs in gaining access to the collateral
and could suffer a loss to the extent that the value of the collateral falls
below the market value of the borrowed securities.
OPTIONS ON SECURITIES OR INDICES. The Fund may write (i.e., sell) covered
put and call options and purchase put and call options on securities or
securities indices that are traded on United States and foreign exchanges or
in the over-the-counter markets. An option on a security is a contract that
permits the purchaser of the option, in return for the premium paid, the right
to buy a specified security (in the case of a call option) or to sell a
specified security (in the case of a put option) from or to the writer of the
option at a designated price during the term of the option. An option on a
securities index permits the purchaser of the option, in return for the
premium paid, the right to receive from the seller cash equal to the
difference between the closing price of the index and the exercise price of
the option. The Fund may write a call or put option only if the option is
"covered." This means that so long as the Fund is obligated as the
5
<PAGE>
writer of a call option, it will own the underlying securities subject to the
call, or hold a call at the same or lower exercise price, for the same
exercise period, and on the same securities as the written call. A put is
covered if the Fund maintains liquid assets with a value equal to the exercise
price in a segregated account, or holds a put on the same underlying
securities at an equal or greater exercise price. The value of the underlying
securities on which options may be written at any one time will not exceed 15%
of the total assets of the Fund. The Fund will not purchase put or call
options if the aggregate premium paid for such options would exceed 5% of its
total assets at the time of purchase.
FORWARD FOREIGN CURRENCY CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES. The
Fund will normally conduct its foreign currency exchange transactions either
on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through entering into forward contracts to
purchase or sell foreign currencies. The Fund will generally not enter into a
forward contract with a term of greater than one year. A forward contract is
an obligation to purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded by currency
traders and their customers.
The Fund will generally enter into forward contracts only under two
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed
to settle the transaction. Second, when the Investment Manager believes that
the currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to
sell or buy the former foreign currency (or another currency which acts as a
proxy for that currency) approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging." The Fund has
no specific limitation on the percentage of assets it may commit to forward
contracts, subject to its stated investment objective and policies, except
that the Fund will not enter into a forward contract if the amount of assets
set aside to cover forward contracts would impede portfolio management or the
Fund's ability to meet redemption requests. Although forward contracts will be
used primarily to protect the Fund from adverse currency movements, they also
involve the risk that anticipated currency movements will not be accurately
predicted.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines
in the U.S. dollar value of foreign currency-denominated portfolio securities
and against increases in the U.S. dollar cost of such securities to be
acquired. As in the case of other kinds of options, however, the writing of an
option on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and the Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to the Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Fund are traded on U.S. and
foreign exchanges or over-the-counter.
FUTURES CONTRACTS. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a
specified debt security at a set price on a future date. An index futures
contract is an agreement to take or make delivery of an amount of cash based
on the difference between the value of the index at the beginning and at the
end of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.
When the Fund enters into a futures contract, it must make an initial
deposit, known as "initial margin," as a partial guarantee of its performance
under the contract. As the value of the security, index or currency
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation it
may have under the contract. In addition, when the Fund enters into a futures
contract, it will segregate assets or "cover" its position in accordance with
the 1940 Act.
6
<PAGE>
See "Investment Objectives and Policies--Futures Contracts" in the SAI. With
respect to positions in futures and related options that do not constitute
"bona fide hedging" positions, the Fund will not enter into a futures contract
or related option contract if, immediately thereafter, the aggregate initial
margin deposits relating to such positions plus premiums paid by it for open
futures option positions, less the amount by which any such options are "in-
the-money," would exceed 5% of the Fund's total assets.
REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, the Fund may, without limit, enter into repurchase
agreements with U.S. banks and broker-dealers. Under a repurchase agreement,
the Fund acquires a security from a U.S. bank or a registered broker-dealer
and simultaneously agrees to resell the security back to the bank or broker-
dealer at a specified time and price. The repurchase price is in excess of the
original purchase price paid by the Fund by an amount which reflects an
agreed-upon rate of return and which is not tied to any coupon rate on the
underlying security. Under the 1940 Act, repurchase agreements are considered
to be loans collateralized by the underlying security and therefore will be
fully collateralized. However, if the bank or broker-dealer should default on
its obligation to repurchase the underlying security, the Fund may experience
a delay or difficulties in exercising its rights to realize upon the security
and might incur a loss if the value of the security declines, as well as 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 arrangements
to have its securities traded in the form of Depositary Receipts. In
unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value
of the Depositary Receipts. Depositary Receipts also involve the risks of
other investments in foreign securities, as discussed below. For purposes of
the Fund's investment policies, the Fund's investments in Depositary Receipts
will be deemed to be investments in the underlying securities.
ILLIQUID AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its
total assets in illiquid securities, for which there is a limited trading
market and for which a low trading volume of a particular security may result
in abrupt and erratic price movements. The Fund may be unable to dispose of
its holdings in illiquid securities at then-current market prices and may have
to dispose of such securities over extended periods of time. The Fund may also
invest in securities that are sold (i) in private placement transactions
between their issuers and their purchasers and that are neither listed on an
exchange nor traded over-the-counter, or (ii) in transactions between
qualified institutional buyers pursuant to Rule 144A under the U.S. Securities
Act of 1933, as amended. Such restricted securities are subject to contractual
or legal restrictions on subsequent transfer. As a result of the absence of a
public trading market, such restricted securities may in turn be less liquid
and more difficult to value than publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from the sales could, due to illiquidity, be less than those
originally paid by the Fund or less than their fair value. In addition,
issuers whose securities are not publicly traded may not be subject to the
disclosure and other investor protection requirements that may be applicable
if their securities were publicly traded. If any privately placed or Rule 144A
securities held by the Fund are required to be registered under the securities
laws of one or more jurisdictions before being resold, the Fund may be
required to bear the expenses of registration. The Fund will limit its
investment in restricted securities to 10% of its total assets, except that
Rule 144A securities determined by the Board of Trustees to be liquid are not
subject to this limitation.
7
<PAGE>
RISK FACTORS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Fund, nor
can there be any assurance that the Fund's investment objective will be
attained. As with any investment in securities, the value of, and income from,
an investment in the Fund can decrease as well as increase, depending on a
variety of factors which may affect the values and income generated by the
Fund's portfolio securities, including general economic conditions and market
factors. In addition to the factors which affect the value of individual
securities, a Shareholder may anticipate that the value of the Shares of the
Fund will fluctuate with movements in the broader equity and bond markets. A
decline in the stock market of any country in which the Fund is invested may
also be reflected in declines in the price of Shares of the Fund. Changes in
currency valuations will also affect the price of Shares of the Fund. History
reflects both decreases and increases in worldwide stock markets and currency
valuations, and these may reoccur unpredictably in the future. Additionally,
investment decisions made by the Investment Manager will not always be
profitable or prove to have been correct. The Fund is not intended as a
complete investment program.
The Fund has the right to purchase securities in any foreign country,
developed or developing. Investors should consider carefully the substantial
risks involved in investing in securities issued by companies and governments
of foreign nations, which are in addition to the usual risks inherent in
domestic investments. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations (including, for example, withholding taxes on interest and dividends)
or other taxes imposed with respect to investments in foreign nations, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), foreign investment controls on daily stock
market movements, default in foreign government securities, political or
social instability or diplomatic developments which could affect investment in
securities of issuers in foreign nations. Some countries may withhold portions
of interest and dividends at the source. In addition, in many countries there
is less publicly available information about issuers than is available in
reports about companies in the United States. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, and auditing practices and requirements may not be comparable to
those applicable to United States companies. Further, the Fund may encounter
difficulties or be unable to vote proxies, exercise shareholder rights, pursue
legal remedies, and obtain judgments in foreign courts. Commission rates in
foreign countries, which are sometimes fixed rather than subject to
negotiation as in the United States, are likely to be higher. Foreign
securities markets also have different clearance and settlement procedures,
and in certain markets there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making it difficult
to conduct such transactions. Delays in settlement could result in temporary
periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to the Fund due to subsequent declines
in value of the portfolio security or, if the Fund has entered into a contract
to sell the security, could result in possible liability to the purchaser. In
many foreign countries there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States. There is an increased risk, therefore, of uninsured
loss due to lost, stolen, or counterfeit stock certificates. In addition, the
foreign securities markets of many of the countries in which the Fund may
invest may also be smaller, less liquid, and subject to greater price
volatility than those in the United States. As an open-end investment company,
the Fund is limited in the extent to which it may invest in illiquid
securities. See "Investment Objectives and Policies--Risk Factors" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
8
<PAGE>
Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they trade. These
economies also have been and may continue to be adversely affected by economic
conditions in the countries with which they trade.
The Fund usually effects currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign exchange market.
However, some price spread on currency exchange transactions (to cover service
charges) will be incurred when the Fund converts assets from one currency to
another.
The Fund is authorized to invest in debt securities rated in any category by
S&P or Moody's and securities which are unrated by any rating agency. See
"Investment Objectives and Policies--Debt Securities" in the SAI. As an
operating policy, which may be changed by the Board of Trustees without
Shareholder approval, the Fund will not invest more than 5% of its total
assets in debt securities rated lower than BBB by S&P or Baa by Moody's. The
Board of Trustees may consider a change in this operating policy if, in its
judgment, economic conditions change such that a higher level of investment in
high-risk, lower quality debt securities would be consistent with the
interests of the Fund and its Shareholders. High-risk, lower quality debt
securities, commonly referred to as "junk bonds," are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
and may be in default. Unrated debt securities are not necessarily of lower
quality than rated securities, but they may not be attractive to as many
buyers. Regardless of rating levels, all debt securities considered for
purchase (whether rated or unrated) will be carefully analyzed by the
Investment Manager to insure, to the extent possible, that the planned
investment is sound. The Fund may, from time to time, invest up to 5% of its
total assets in defaulted debt securities if, in the opinion of the Investment
Manager, the issuer may resume interest payments in the near future.
Leveraging by means of borrowing may exaggerate the effect of any increase
or decrease in the value of portfolio securities on the Fund's net asset
value, and money borrowed will be subject to interest and other costs (which
may include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds.
Successful use of futures contracts and related options is subject to
special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation
between movements in the securities or foreign currency on which the futures
or options contract is based and movements in the securities or currency in
the Fund's portfolio. Successful use of futures or options contracts is
further dependent on the Investment Manager's ability to correctly predict
movements in the securities or foreign currency markets, and no assurance can
be given that its judgment will be correct. Successful use of options on
securities or stock indices is subject to similar risk considerations. In
addition, by writing covered call options, the Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price.
There are further risk factors, including possible losses through the
holding of securities in domestic and foreign custodian banks and
depositories, described elsewhere in this Prospectus and in the SAI.
HOW TO BUY SHARES OF THE FUND
Shares of the Fund may be purchased at the Offering Price through any broker
which has a dealer agreement with Franklin Templeton Distributors, Inc.
("FTD"), the Principal Underwriter for Shares of the Fund, or directly from
FTD upon receipt by FTD of a completed Shareholder Application and check. The
minimum initial investment is $100, and subsequent investments must be $25 or
more. These minimums may be waived when the Shares are being purchased through
retirement plans providing for regular periodic investments, as described
below under "Retirement Plans."
9
<PAGE>
ALTERNATIVE PURCHASE ARRANGEMENTS. The difference between Class I and Class
II Shares lies primarily in their front-end and contingent deferred sales
charges and Rule 12b-1 fees as described below.
Class I. All Fund Shares outstanding before the implementation of the
multiclass structure have been redesignated as Class I Shares, and will retain
their previous rights and privileges. Class I Shares are generally subject to
a variable sales charge upon purchase and not subject to any sales charge upon
redemption. Class I Shares are subject to Rule 12b-1 fees of up to an annual
maximum of 0.35% of average daily net assets of such Shares. With this
multiclass structure, Class I Shares have higher front-end sales charges than
Class II Shares and comparatively lower Rule 12b-1 fees. Class I Shares may be
purchased at reduced front-end sales charges, or at net asset value if certain
conditions are met. In most circumstances, contingent deferred sales charges
will not be assessed against redemptions of Class I Shares. See "Management of
the Fund" and "How to Sell Shares of the Fund" for more information.
Class II. The current public Offering Price of Class II Shares is equal to
the net asset value, plus a front-end sales charge of 1.0% of the amount
invested. Class II Shares are also subject to a contingent deferred sales
charge of 1.0% if Shares are redeemed within 18 months of the calendar month
following purchase. In addition, Class II Shares are subject to Rule 12b-1
fees of up to a maximum of 1.0% of average daily net assets of such Shares.
Class II Shares have lower front-end sales charges than Class I Shares and
comparatively higher Rule 12b-1 fees. See "How to Sell Shares of the Fund--
Contingent Deferred Sales Charge."
Purchases of Class II Shares are limited to purchases below $1 million. Any
purchases of $1 million or more will automatically be invested in Class I
Shares, since that is more beneficial to investors. Such purchases, however,
may be subject to a contingent deferred sales charge. Investors may exceed $1
million in Class II Shares by cumulative purchases over a period of time.
Investors who intend to make investments exceeding $1 million, however, should
consider purchasing Class I Shares through a Letter of Intent instead of
purchasing Class II Shares.
DECIDING WHICH CLASS TO PURCHASE. Investors should carefully evaluate their
anticipated investment amount and time horizon prior to determining which
class of Shares to purchase. Generally, an investor who expects to invest less
than $50,000 in the Franklin Templeton Funds and who expects to make
substantial redemptions within approximately six years or less of investment
should consider purchasing Class II Shares. However, the higher annual Rule
12b-1 fees on the Class II Shares will result in slightly higher operating
expenses and lower income dividends for Class II Shares, which will accumulate
over time to outweigh the difference in front-end sales charges. For this
reason, Class I Shares may be more attractive to long-term investors even if
no sales charge reductions are available to them.
Investors who qualify to purchase Class I Shares at reduced sales charges
definitely should consider purchasing Class I Shares, especially if they
intend to hold their Shares approximately six years or more. Investors who
qualify to purchase Class I Shares at reduced sales charges but who intend to
hold their Shares less than approximately six years should evaluate whether it
is more economical to purchase Class I Shares through a Letter of Intent or
under Cumulative Quantity Discount rather than purchasing Class II Shares.
INVESTORS INVESTING $1 MILLION OR MORE IN A SINGLE PAYMENT AND OTHER INVESTORS
WHO QUALIFY TO PURCHASE CLASS I SHARES AT NET ASSET VALUE WILL BE PRECLUDED
FROM PURCHASING CLASS II SHARES.
Each class represents the same interest in the investment portfolio of the
Fund and has the same rights, except that each class has a different sales
charge, bears the separate expenses of its Rule 12b-1 distribution plan, and
has exclusive voting rights with respect to such plan. The two classes also
have separate exchange privileges.
In determining which Shares are more appropriate for a Shareholder's
investment objectives and income needs, a Shareholder should also consider
that the higher Rule 12b-1 fees for Class II will generally result in lower
dividends and consequently lower yields for Class II Shares as compared to
Class I Shares.
10
<PAGE>
OFFERING PRICE. Shares of both classes of the Fund are offered at their
respective public Offering Prices, which are determined by adding the net
asset value per share plus a front-end sales charge, next computed (i) after
the Shareholder's securities dealer receives the order which is promptly
transmitted to the Fund or (ii) after receipt of an order by mail from the
Shareholder directly in proper form (which generally means a completed
Shareholder Application accompanied by a negotiable check).
CLASS I. The sales charge for Class I Shares is a variable percentage of the
Offering Price depending upon the amount of the sale. A description of the
method of calculating net asset value per share is included under the caption
"Net Asset Value" below.
The price to the public on purchases of Class I Shares made by a single
purchaser, by an individual, his or her spouse and their children under age
21, or by a single trust or fiduciary account other than an employee benefit
plan holding Shares of the Fund on or before February 1, 1995, is the net
asset value per Share plus a sales charge not exceeding 5.75% of the Offering
Price (equivalent to 6.10% of the net asset value), which is reduced on larger
sales as shown below:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
-----------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE NET ASSET VALUE OFFERING PRICE
AT OFFERING PRICE OF THE SHARES PURCHASED OF THE 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)**
</TABLE>
- -------
/1/ Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
/2/ The following commissions will be paid by FTD, from its own resources, to
securities dealers who initiate and are responsible for purchases of $1
million or more; 1% on sales of $1 million but less than $2 million, plus
0.80% on sales of $2 million but less than $3 million, plus 0.50% on sales
of $3 million but less than $50 million, plus 0.25% on sales of $50 million
but less than $100 million, plus 0.15% on sales of $100 million or more.
Dealer concession breakpoints are reset every 12 months for purposes of
additional purchases.
/3/ At the discretion of FTD, all sales charges may at times be reallowed to
the securities dealer. If 90% or more of the sales commission is allowed,
such securities dealer may be deemed to be an underwriter as that term is
defined in the Securities Act of 1933.
No front-end sales charge applies on investments of $1 million or more, but
a contingent deferred sales charge of 1% is imposed on certain redemptions of
all or a portion of investments of $1 million or more within 12 months of the
calendar month following such investments ("contingency period"). See "How to
Sell Shares of the Fund--Contingent Deferred Sales Charge."
The size of a transaction which determines the applicable sales charge on
the purchase of Class I Shares is determined by adding the amount of the
Shareholder's current purchase plus the cost or current value (whichever is
higher) of a Shareholder's existing investment in one or more of the funds in
the Franklin Group of Funds(R) and the Templeton Family of Funds. Included for
these aggregation purposes are (a) the mutual funds in the Franklin Group of
Funds except Franklin Valuemark Funds and Franklin Government Securities Trust
(the "Franklin Funds"); (b) other investment products underwritten by FTD or
its affiliates (although certain investments may not have the same schedule of
sales charges and/or may not be subject to reduction); and (c) the U.S.-
registered mutual funds in the Templeton Family of Funds except Templeton
Capital Accumulator Fund, Inc., Templeton Variable Annuity Fund, and Templeton
Variable Products Series Fund (the "Templeton Funds"). (Franklin Funds and
Templeton Funds are collectively referred to as the "Franklin Templeton
Funds.") Sales charge reductions based upon aggregate holdings of (a), (b) and
(c) above ("Franklin Templeton Investments") may be effective only after
notification to FTD that the investment qualifies for a discount.
11
<PAGE>
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 nondesignated 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.
A sales charge of 4% of the Offering Price (4.17% of the net asset value) is
applicable to all purchases of Shares made for any qualified or non-qualified
employee benefit plan account which is a Shareholder in the Fund on or before
February 1, 1995. Of the 4% sales commission applicable to such purchases,
3.20% of the Offering Price will be retained by dealers.
CUMULATIVE QUANTITY DISCOUNT. The schedule of reduced sales charges also may
be applied to qualifying sales of Class I Shares on a cumulative basis. For
this purpose, the dollar amount of the sale is added to the higher of (i) the
value (calculated at the applicable Offering Price) or (ii) the purchase
price, of Franklin Templeton Investments. The cumulative quantity discount
applies to Franklin Templeton Investments owned at the time of purchase by the
purchaser, his or her spouse, and their children under age 21. In addition,
the aggregate investments of a trustee or other fiduciary account (for an
account under exclusive investment authority) may be considered in determining
whether a reduced sales charge is available, even though there may be a number
of beneficiaries of the account. For example, if the investor held Class I
Shares valued at $40,000 (or, if valued at less than $40,000, had been
purchased for $40,000) and purchased an additional $20,000 of the Fund's Class
I Shares, the sales charge for the $20,000 purchase would be at the rate of
4.50%. It is FTD's policy to give investors the best sales charge rate
possible; however, there can be no assurance that an investor will receive the
appropriate discount unless, at the time of placing the purchase order, the
investor or the dealer makes a request for the discount and gives FTD
sufficient information to determine whether the purchase will qualify for the
discount. On telephone orders from dealers for the purchase of Class I Shares
to be registered in "street name," FTD will accept the dealer's instructions
with respect to the applicable sales charge rate to be applied. The Cumulative
Quantity Discount may be amended or terminated at any time.
LETTER OF INTENT. Investors may also reduce sales charges on all investments
in Class I Shares by means of a Letter of Intent ("LOI") which expresses the
investor's intention to invest a certain amount within a 13-month period in
Class I Shares of the Fund or any other Franklin Templeton Fund. See the
Shareholder Application. Except for certain employee benefit plans, the
minimum initial investment under an LOI is 5% of the total LOI amount. Except
for Shares purchased by certain employee benefit plans, Shares purchased with
the first 5% of such amount will be held in escrow to secure payment of the
higher sales charge applicable to the Shares actually purchased if the full
amount indicated is not purchased, and such escrowed Shares will be
involuntarily redeemed to pay the additional sales charge, if necessary. A
purchase not originally made pursuant to an LOI may be included under a
subsequent LOI executed within 90 days of the purchase. Any redemptions made
by Shareholders, other than by certain employee benefit plans, during the 13-
month period will be subtracted from the amount of the purchases for purposes
of determining whether the terms of the LOI have been completed. For a further
description of the LOI, see "Purchase, Redemption and Pricing of Shares--
Letter of Intent" in the SAI.
GROUP PURCHASES. An individual who is a member of a qualified group may also
purchase Class I Shares of the Fund at the reduced sales charge applicable to
the group as a whole. The sales charge is based upon the aggregate dollar
value of Class I Shares previously purchased and still owned by the group,
plus the amount of the current purchase. For example, if members of the group
had previously invested and still held $80,000 of Class I Shares and now were
investing $25,000, the sales charge would be 3.50%. Information concerning the
current sales charge applicable to a group may be obtained by contacting FTD.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund Shares at a discount, and
(iii) satisfies uniform criteria which enable FTD to realize economies of
scale in its costs of distributing Shares. A qualified group must have more
than 10 members, must be available to arrange for group meetings between
representatives of the Fund or FTD and the members, must agree to include
sales and other materials related to the Fund in its publications and mailings
to
12
<PAGE>
members at reduced or no cost to FTD, and must seek to arrange for payroll
deduction or other bulk transmission of investments to the Fund.
If an investor selects a payroll deduction plan, subsequent investments will
be automatic and will continue until such time as the investor notifies the
Fund and the investor's employer to discontinue further investments. Due to
the varying procedures to prepare, process and forward the payroll deduction
information to the Fund, there may be a delay between the time of the payroll
deduction and the time the money reaches the Fund. The investment in the Fund
will be made at the Offering Price per Share determined on the day that both
the check and payroll deduction data are received in required form by the
Fund.
CLASS II. Unlike Class I Shares, the front-end sales charges and dealer
concessions for Class II Shares do not vary depending on the amount of
purchase. The total sales charges or underwriting commissions and dealer
concessions for Class II Shares are set forth below.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
-----------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE NET ASSET VALUE OFFERING PRICE
AT OFFERING PRICE OF THE SHARES PURCHASED OF 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 1.0% of the amount invested.
During the first year following a purchase of Class II Shares, FTD will keep
a portion of the Rule 12b-1 fees assessed on those Shares to partially
recoup fees FTD pays to securities dealers.
Class II Shares redeemed within 18 months of their purchase will be assessed
a contingent deferred sales charge of 1.0% on the lesser of the then-current
net asset value or the net asset value of such Shares at the time of purchase,
unless such charge is waived as described under "How To Sell Shares of the
Fund--Contingent Deferred Sales Charge."
NET ASSET VALUE PURCHASES (BOTH CLASSES). Class I Shares may be purchased
without the imposition of either a front-end sales charge ("net asset value")
or a contingent deferred sales charge by (i) officers, trustees, directors,
and full-time employees of the Fund, any of the Franklin Templeton Funds, or
of the Franklin Templeton Group, and their spouses and family members,
including any subsequent payments made by such parties after cessation of
employment; (ii) companies exchanging Shares with or selling assets pursuant
to a merger, acquisition or exchange offer; (iii) insurance company separate
accounts for pension plan contracts; (iv) accounts managed by the Franklin
Templeton Group; (v) shareholders of Templeton Institutional Funds, Inc.
reinvesting redemption proceeds from that fund under an employee benefit plan
qualified under Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code"), in Shares of the Fund; (vi) certain unit investment trusts and
unit holders of such trusts reinvesting their distributions from the trusts in
the Fund; (vii) registered securities dealers and their affiliates, for their
investment account only; and (viii) registered personnel and employees of
securities dealers, and their spouses and family members, in accordance with
the internal policies and procedures of the employing securities dealer.
For either Class I or Class II, the same class of Shares of the Fund may be
purchased at net asset value by persons who have redeemed, within the previous
120 days, their Shares of the Fund or another of the Franklin Templeton Funds
which were purchased with a front-end sales charge or assessed a contingent
deferred sales charge on redemption. If a different class of Shares is
purchased, the full front-end sales charge must be paid at the time of
purchase of the new Shares. An investor may reinvest an amount not exceeding
the redemption proceeds. While credit will be given for any contingent
deferred sales charge paid on the Shares redeemed and subsequently
repurchased, a new contingency period will begin. Shares of the Fund redeemed
in connection with an exchange into another fund (see "Exchange Privilege")
are not considered "redeemed" for this privilege. In order to exercise this
privilege, a written order for the purchase of Shares of the Fund must be
received by the Fund or the Fund's Transfer Agent within 120 days after the
redemption. The 120 days, however, do not begin to run on redemption proceeds
placed immediately after redemption in a Franklin
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Bank Certificate of Deposit ("CD") until the CD (including any rollover)
matures. Reinvestment at net asset value may also be handled by a securities
dealer or other financial institution, who may charge the Shareholder a fee
for this service. The redemption is a taxable transaction but reinvestment
without a sales charge may affect the amount of gain or loss recognized and
the tax basis of the Shares reinvested. If there has been a loss on the
redemption, the loss may be disallowed if a reinvestment in the same fund is
made within a 30-day period. Information regarding the possible tax
consequences of such a reinvestment is included under "General Information--
Federal Tax Information" of this Prospectus and in the SAI.
For either Class I or Class II, the same class of Shares of the Fund or of
another of the Franklin Templeton Funds may be purchased at net asset value
and without a contingent deferred sales charge by persons who have received
dividends and capital gain distributions in cash from investments in that
class of Shares of the Fund within 120 days of the payment date of such
distribution. To exercise this privilege, a written request to reinvest the
distribution must accompany the purchase order. Additional information may be
obtained from Account Services at 1-800-393-3001. See "General Information--
Dividends and Distributions."
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by investors who have, within
the past 60 days, redeemed an investment in a mutual fund which is not part of
the Franklin Templeton Funds and which charged the investor a contingent
deferred sales charge upon redemption, and which has investment objectives
similar to those of the Fund.
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by broker-dealers who have
entered into a supplemental agreement with FTD, or by registered investment
advisers affiliated with such broker-dealers, on behalf of their clients who
are participating in a comprehensive fee program (also known as a wrap fee
program).
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by anyone who has taken a
distribution from an existing retirement plan already invested in the Franklin
Templeton Funds (including former participants of the Franklin Templeton
Profit Sharing 401(k) plan), to the extent of such distribution. In order to
exercise this privilege, a written order for the purchase of Shares of the
Fund must be received by Franklin Templeton Trust Company ("FTTC"), the Fund,
or Franklin Templeton Investor Services, Inc. (the "Transfer Agent") within
120 days after the plan distribution.
Class I Shares may also be purchased at net asset value and without the
imposition of a contingent deferred sales charge by any state, county or city,
or any instrumentality, department, authority or agency thereof which has
determined that the Fund is a legally permissible investment and which is
prohibited by applicable investment laws from paying a sales charge or
commission in connection with the purchase of shares of any registered
management investment company (an "eligible governmental authority"). SUCH
INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISERS TO DETERMINE WHETHER AND TO
WHAT EXTENT THE SHARES OF THE FUND CONSTITUTE LEGAL INVESTMENTS FOR THEM.
Municipal investors considering investment of proceeds of bond offerings into
the Fund should consult with expert counsel to determine the effect, if any,
of various payments made by the Fund or its investment manager or arbitrage
rebate calculations. If an investment by an eligible governmental authority at
net asset value is made through a securities dealer who has executed a dealer
agreement with FTD, FTD or one of its affiliates may make a payment, out of
its own resources, to such securities dealer in an amount not to exceed 0.25%
of the amount invested. Contact Franklin Templeton Institutional Services for
additional information.
DESCRIPTION OF SPECIAL NET ASSET VALUE PURCHASES. Class I Shares may also be
purchased at net asset value and without the imposition of a contingent
deferred sales charge by certain designated retirement plans, including
profit-sharing, pension, 401(k) and simplified employee pension plans
("designated plans"), subject to minimum requirements with respect to number
of employees or amount of purchase, which may be established by FTD.
Currently, those criteria require that the employer establishing the plan have
200 or more employees or that the amount invested or to be invested during the
subsequent 13-month period in the Fund or in any of
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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 Fund or any of the
Franklin Templeton Investments must total at least $1 million. Orders for such
accounts will be accepted by mail accompanied by a check, or by telephone or
other means of electronic data transfer directly from the bank or trust
company, with payment by federal funds received by the close of business on
the next business day following such order.
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by trustees or other
fiduciaries purchasing securities for certain retirement plans of
organizations with collective retirement plan assets of $10 million or more,
without regard to where such assets are currently invested.
Refer to the SAI for further information regarding net asset value purchases
of Class I Shares.
ADDITIONAL DEALER COMPENSATION (BOTH CLASSES). FTD, or one of its
affiliates, from its own resources, at their expense, 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 such shares of the Franklin Templeton Funds.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Securities dealers may
not use sales of the Fund's Shares to qualify for this compensation to the
extent such may be prohibited by the laws of any state or any self-regulatory
agency, such as the National Association of Securities Dealers, Inc. None of
the aforementioned additional compensation is paid for by the Fund or its
Shareholders.
Ongoing payments will be made to qualifying dealers at the annual rate of
0.25% of the average daily net asset value of Class I Shares, and 1.00% of the
average daily net asset value of Class II Shares, registered in the name of
that broker-dealer as nominee or held in a Shareholder account that designates
that broker-dealer as dealer of record. These payments are made in order to
promote selling efforts and to compensate dealers for providing certain
services, including processing purchase and redemption transactions,
establishing Shareholder accounts and providing certain information and
assistance with respect to the Fund. For purchases on or after February 1,
1995 of Class I Shares that are subject to a contingent deferred charge, the
dealer will receive ongoing payments beginning in the thirteenth month after
the date of purchase. For all purchases of Class II Shares that are subject to
a contingent deferred sales charge, the dealer will receive payments
representing a service fee (0.25% of average daily net asset value of the
Shares) beginning in the first month after the date of the purchase, and will
receive payments representing compensation for distribution (0.75% of average
daily net asset value of the Shares) beginning in the thirteenth month after
the date of the purchase.
PURCHASING CLASS I AND CLASS II SHARES. When placing purchase orders,
investors should clearly indicate which class of Shares they intend to
purchase. A purchase order that fails to specify a class will automatically be
invested in Class I Shares. Purchases of $1 million or more in a single
payment will be invested in Class I Shares. There are no conversion features
attached to either class of Shares.
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<PAGE>
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 the
Fund's Shares next computed after the purchase order accompanied by payment
has been received by FTD. Such payment must be by check in U.S. currency drawn
on a commercial bank in the United States and, if over $100,000, may not be
deemed to have been received until the proceeds have been collected unless the
check is certified or issued by such bank. Any subscription may be rejected by
FTD or by the Fund.
The Fund may impose a $10 charge against a Shareholder account in the event
that a check or draft submitted for the purchase of Fund Shares is returned
unpaid to the Fund.
Investors should promptly check the confirmation advice that is mailed after
each purchase (or redemption) in order to ensure that it has been accurately
recorded in the investor's account.
AUTOMATIC INVESTMENT PLAN. Investors may accumulate Fund Shares regularly
each month by means of automatic debits to their checking accounts ($25
minimum). Forms for this purpose are in the Shareholder Application in this
Prospectus. Such a plan is voluntary and may be discontinued by written notice
to FTD, which must be received at least 10 days prior to the collection date,
or by FTD upon written notice to the investor at least 30 days prior to the
collection date.
INSTITUTIONAL ACCOUNTS. Institutional investors will likely be required to
complete an institutional account application. There may be additional methods
of opening accounts, purchasing, redeeming or exchanging Shares of the Fund
available for institutional accounts. To obtain an institutional account
application or additional information regarding institutional accounts,
contact Franklin Templeton Institutional Services at 1-800-321-8563.
ACCOUNT STATEMENTS. Shareholder accounts are opened in accordance with the
Shareholder's registration instructions. Transactions in the account, such as
additional investments and dividend reinvestments, will be reflected on
regular confirmation statements from the Transfer Agent.
TEMPLETON STAR SERVICE. From a touch tone phone, Templeton and Franklin
Shareholders may access an automated system (day or night) which offers the
following features.
By calling the Templeton STAR Service, Shareholders may obtain current price
and yield information specific to a Templeton Fund, regardless of class, or
Franklin Class II shares; obtain account information; and request duplicate
confirmation or year-end statements and money fund checks, if applicable.
By calling the Franklin TeleFACTS system, Class I Shareholders may obtain
current price, yield or other performance information specific to a Franklin
Fund; process an exchange into an identically registered Franklin account;
obtain account information; and request duplicate confirmation or year-end
statements, money fund checks, if applicable, and deposit slips.
Share prices and account information specific to Templeton Class I or II
Shares and Franklin Class II shares may also be accessed on TeleFACTS by
Franklin Class I and Class II shareholders.
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The Templeton STAR Service is accessible by calling 1-800-654-0123. The
TeleFACTS system is accessible by calling 1-800-247-1753. Templeton Class I
and Class II Share codes for the Fund, which will be needed to access system
information, are 414 and 514, respectively. The system's automated operator
will prompt the caller with easy to follow step-by-step instructions from the
main menu. Other features may be added in the future.
RETIREMENT PLANS. Shares of the Fund may be purchased through various
retirement plans including the following plans for which FTTC or its affiliate
acts as trustee or custodian: IRAs, Simplified Employee Pensions, 403(b)
plans, qualified plans for corporations, self-employed individuals and
partnerships, and 401(k) plans. For further information about any of the
plans, agreements, applications and annual fees, contact Franklin Templeton
Distributors, Inc. To determine which retirement plan is appropriate, an
investor should contact his or her tax adviser.
NET ASSET VALUE. The net asset value per Share of each class of the Fund is
determined as of the scheduled closing time of the NYSE (generally 4:00 p.m.,
New York time) each day the NYSE is open for trading, by dividing the value of
the Fund's securities plus any cash and other assets (including accrued
interest and dividends receivable) less all liabilities (including accrued
expenses) by the number of Shares outstanding, adjusted to the nearest whole
cent. A security listed or traded on a recognized stock exchange or NASDAQ is
valued at its last sale price on the principal exchange on which the security
is traded. The value of a foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded, or as of the scheduled closing time of the NYSE (generally 4:00 p.m.,
New York time), if that is earlier, and that value is then converted into its
U.S. dollar equivalent at the foreign exchange rate in effect at noon, New
York time, on the day the value of the foreign security is determined. If no
sale is reported at that time, the mean between the current bid and asked
price is used. Occasionally, events which affect the values of such securities
and such exchange rates may occur between the times at which they are
determined and the close of the NYSE, and will therefore not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at fair value as determined by the management and approved in
good faith by the Board of Trustees. All other securities for which over-the-
counter market quotations are readily available are valued at the mean between
the current bid and asked price. Securities for which market quotations are
not readily available and other assets are valued at fair value as determined
by the management and approved in good faith by the Board of Trustees.
Each of the Fund's classes will bear, pro-rata, all of the common expenses
of the Fund. The net asset value of all outstanding Shares of each class of
the Fund will be computed on a pro-rata basis for each outstanding Share based
on the proportionate participation in the Fund represented by the value of
Shares of such classes, except that the Class I and Class II Shares will bear
the Rule 12b-1 expenses payable under their respective plans. Due to the
specific distribution expenses and other costs that will be allocable to each
class, the dividends paid to each class of the Fund may vary.
EXCHANGE PRIVILEGE
A Shareholder may exchange Shares for the same class of shares of other
funds in the Franklin Templeton Funds which are eligible for sale in the
Shareholder's state of residence and in conformity with such fund's stated
eligibility requirements and investment minimums. Some funds, however, may not
offer Class II shares. Class I Shares may be exchanged for Class I shares of
any Franklin Templeton Funds. Class II Shares may be exchanged for Class II
shares of any Franklin Templeton Funds. No exchanges between different classes
of shares will be allowed. A contingent deferred sales charge will not be
imposed on exchanges. If the exchanged Shares were subject to a contingent
deferred sales charge in the original fund purchased, and Shares are
subsequently redeemed within 12 months (Class I Shares) or 18 months (Class II
Shares) of the calendar month of the original purchase date, a contingent
deferred sales charge will be imposed. The period will be tolled (or stopped)
for the period Class I Shares are exchanged into and held in a Franklin or
Templeton money market fund. See also "How to Sell Shares of the Fund--
Contingent Deferred Sales Charge."
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<PAGE>
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 the Franklin Templeton Money Funds are
subject to applicable sales charges on the funds being purchased, unless the
Franklin Templeton Money Fund shares were acquired by an exchange from a fund
having a sales charge, or by reinvestment of dividends or capital gains
distributions. Exchanges of Class I Shares of the Fund which were purchased
with a lower sales charge to a fund which has a higher sales charge will be
charged the difference, unless the shares were held in the original fund for
at least six months prior to executing the exchange. All exchanges are
permitted only after at least 15 days have elapsed from the date of the
purchase of the Shares to be exchanged.
A Shareholder may exchange Shares by writing to the Transfer Agent (see "How
to Sell Shares of the Fund"), by contacting his or her investment dealer or--
if the Shareholder Application indicates that the Shareholder has not declined
the option--by telephoning 1-800-393-3001. Telephone exchange instructions
must be received by FTD by the scheduled closing time of the NYSE (generally
4:00 p.m., New York time). Telephonic exchanges can involve only Shares in
non-certificated form. Shares held in certificate form are not eligible, but
may be returned and qualify for these services. All accounts involved in a
telephonic exchange must have the same registration and dividend option as the
account from which the Shares are being exchanged. The Fund and the Transfer
Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Please refer to "Telephone
Transactions--Verification Procedures." Forms for declining the telephone
exchange privilege and prospectuses of the other funds in the Franklin
Templeton Group may be obtained from FTD. Exchange redemptions and purchases
are processed simultaneously at the Share prices next determined after the
exchange order is received. (See "How to Buy Shares of the Fund--Offering
Price.") A gain or loss for tax purposes generally will be realized upon the
exchange, depending on the tax basis of the Shares redeemed.
This exchange privilege is available only in states where shares of the fund
being acquired may legally be sold and may be modified, limited or terminated
at any time by the Fund upon 60 days' written notice. A Shareholder who wishes
to make an exchange should first obtain and review a current prospectus of the
fund into which he or she wishes to exchange. Broker-dealers who process
exchange orders on behalf of their customers may charge a fee for their
services. Such fee may be avoided by making requests for exchange directly to
the Transfer Agent.
EXCHANGES OF CLASS I SHARES. The contingency period of Class I Shares will
be tolled (or stopped) for the period such Shares are exchanged into and held
in a Franklin or Templeton money market fund. If a Class I account has Shares
subject to a contingent deferred sale charge, Class I Shares will be exchanged
into the new account on a "first-in, first-out" basis. See also "How to Sell
Shares of the Fund--Contingent Deferred Sales Charge."
EXCHANGES OF CLASS II SHARES. When an account is composed of Class II Shares
subject to the contingent deferred sales charge, and Shares that are not, the
Shares will be transferred proportionately into the new fund. Shares received
from reinvestment of dividends and capital gains are referred to as "free
Shares," Shares which were originally subject to a contingent deferred sales
charge but to which the contingent deferred sales charge no longer applies are
called "matured Shares," and Shares still subject to the contingent deferred
sales charge are referred to as "CDSC liable Shares." CDSC liable Shares held
for different periods of time are considered different types of CDSC liable
Shares. For instance, if a Shareholder has $1,000 in free Shares, $2,000 in
matured Shares, and $3,000 in CDSC liable Shares, and the Shareholder
exchanges $3,000 into a new fund, $500 will be exchanged from free Shares,
$1,000 from matured Shares, and $1,500 from CDSC liable Shares. Similarly, if
CDSC liable Shares have been purchased at different periods, a proportionate
amount will be taken from Shares held for each period. If, for example, the
Shareholder holds $1,000 in Shares bought three months ago, $1,000 bought six
months ago, and $1,000 bought nine months ago, and the Shareholder exchanges
$1,500 into a new fund, $500 from each of these Shares will be exchanged into
the new fund.
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<PAGE>
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.
TRANSFERS. Transfers between accounts in the same fund and class are treated
as non-monetary and non-taxable events, and are not subject to a contingent
deferred sales charge. The transferred Shares will continue to age from the
date of original purchase. Like exchanges, Class II Shares will be moved
proportionately from each type of Share in the original account.
CONVERSION RIGHTS. It is not presently anticipated that Class II Shares will
be converted to Class I Shares at this time. 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 Fund reserves the right to temporarily or permanently terminate the
exchange privilege or reject any specific purchase order for any Timing
Account or any person whose transactions seem to follow a timing pattern who:
(i) makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1% of the Fund's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
In addition, the Fund reserves the right to refuse the purchase side of
exchange requests by any Timing Account, person, or group if, in the
Investment Manager's judgment, the Fund would be unable to invest effectively
in accordance with its investment objectives and policies, or would otherwise
potentially be adversely affected. A Shareholder's exchanges into the Fund may
be restricted or refused if the Fund receives or anticipates simultaneous
orders affecting significant portions of the Fund's assets. In particular, a
pattern of exchanges that coincides with a "market timing" strategy may be
disruptive to the Fund and therefore may be refused.
Finally, as indicated above, the Fund and FTD reserve the right to refuse
any order for the purchase of Shares.
HOW TO SELL SHARES OF THE FUND
Shares will be redeemed, without charge, on request of the Shareholder in
"Proper Order" to the Transfer Agent. "PROPER ORDER" MEANS THAT THE REQUEST TO
REDEEM MUST MEET ALL OF THE FOLLOWING REQUIREMENTS:
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1. Except as provided below under "Redemptions by Telephone," it must be in
writing, signed by the Shareholder(s) exactly in the manner as the Shares are
registered, and must specify either the number of Shares, or the dollar amount
of Shares, to be redeemed and sent to Franklin Templeton Investor Services,
Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030;
2. The signature(s) of the redeeming Shareholder(s) must be guaranteed by an
"eligible guarantor," including (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 $50,000 or less, requested by and payable to all
Shareholders of record, to be sent to the address of record for that account.
However, the Fund reserves the right to require signature guarantees on all
redemptions. A signature guarantee is required in connection with any written
request for transfer of Shares. Also, a signature guarantee is required if the
Fund or the Transfer Agent believes that a signature guarantee would protect
against potential claims based on the transfer instructions, including, for
example, when (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 the Fund; (iii) the Fund has been notified of an
adverse claim; (iv) the instructions received by the Fund are given by an
agent, not the actual registered owner; (v) the 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 the Fund;
3. Any outstanding certificates must accompany the request together with a
stock power signed by the Shareholder(s), with signature(s) guaranteed as
described in Item 2 above;
4. Liquidation requests of corporate, partnership, trust and custodianship
accounts, and accounts under court jurisdiction, require the following
documentation to be in proper form:
. Corporation--(i) Signature guaranteed letter of instruction from the
authorized officer(s) of the corporation and (ii) a corporate
resolution in a form satisfactory to the Transfer Agent;
. Partnership--(i) Signature guaranteed letter of instruction from a
general partner 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 Fund's redemption requirements above.
Distributions from such plans are subject to additional requirements under the
Code, and certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. For example, distributions from
retirement plans are subject to withholding requirements under the Code, and
the IRS Form W-4P (available from the Transfer Agent) may be required to be
submitted to the Transfer Agent with the distribution request, or the
distribution will be delayed. Franklin Templeton Investor Services, Inc. and
its affiliates assume no responsibility to determine whether a distribution
satisfies the conditions of applicable tax laws and will not be responsible
for any penalties assessed.
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To avoid delay in redemption or transfer, Shareholders having questions
about these requirements should contact the Account Services Department by
calling 1-800-393-3001 or 813-823-8712.
The redemption price will be the net asset value of the Shares next computed
after the redemption request in Proper Order is received by the Transfer
Agent. 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 Fund will make redemption proceeds available when a
Shareholder's check received for the Shares purchased has been cleared for
payment by the Shareholder's bank, which, depending upon the location of the
Shareholder's bank, could take up to 15 days or more. The check will be mailed
by first-class mail to the Shareholder's registered address (or as otherwise
directed). Remittance by wire (to a commercial bank account in the same
name(s) as the Shares are registered) or express mail, if requested, are
subject to a handling charge of $15, which will be deducted from the
redemption proceeds.
The Fund, through FTD, also repurchases Shares (whether in certificate or
book-entry form) through securities dealers. The Fund normally will accept
orders to repurchase such Shares by wire or telephone from dealers for their
customers at the net asset value next computed after the dealer has received
the certificate holder's request for repurchase, if the dealer received such
request before closing time of the NYSE on that day. Dealers have the
responsibility of submitting such repurchase requests by calling not later
than 5:00 p.m., New York time, on such day in order to obtain that day's
applicable redemption price. Repurchase of Shares is for the convenience of
Shareholders and does not involve a charge by the Fund; however, securities
dealers may impose a charge on the Shareholder for transmitting the notice of
repurchase to the Fund. The Fund reserves the right to reject any order for
repurchase, which right of rejection might adversely affect Shareholders
seeking redemption through the repurchase procedure. Ordinarily, payment will
be made to the securities dealer within seven days after receipt of a
repurchase order and Share certificate (if any) in "Proper Order" as set forth
above. The Fund also will accept, from member firms of the NYSE, orders to
repurchase Shares for which no certificates have been issued by wire or
telephone without a redemption request signed by the Shareholder, provided the
member firm indemnifies the Fund and FTD from any liability resulting from the
absence of the Shareholder's signature. Forms for such indemnity agreement can
be obtained from FTD.
The Fund may involuntarily redeem an investor's Shares if the net asset
value of such Shares is less than $100, except that involuntary redemptions
will not result from fluctuations in the value of an investor's Shares. In
addition, the Fund may involuntarily redeem the Shares of any investor who has
failed to provide the Fund with a certified taxpayer identification number or
such other tax-related certifications as the Fund may require. A notice of
redemption, sent by first-class mail to the investor's address of record, will
fix a date not less than 30 days after the mailing date, and Shares will be
redeemed at net asset value at the close of business on that date, unless
sufficient additional Shares are purchased to bring the aggregate account
value up to $100 or more, or unless a certified taxpayer identification number
(or such other information as the Fund has requested) has been provided, as
the case may be. A check for the redemption proceeds will be mailed to the
investor at the address of record.
REINSTATEMENT PRIVILEGE. Shares of the Fund may be purchased at net asset
value with the proceeds from (i) a redemption of Shares of any fund in the
Franklin Templeton Group (except Templeton Capital Accumulator Fund, Inc.,
Templeton Variable Annuity Fund, Templeton Variable Products Series Fund,
Franklin Valuemark Funds and Franklin Government Securities Trust) which were
purchased with an initial sales charge or assessed a contingent deferred sales
charge on redemption, or (ii) a dividend or distribution paid by any fund in
the Franklin Templeton Group, within 120 days after the date of the redemption
or dividend or distribution. However, if a Shareholder's original investment
was in Class I shares of a fund with a lower sales charge, or no sales charge,
the Shareholder must pay the difference. While credit will be given for any
contingent deferred sales charge paid on the Shares redeemed, a new
contingency period will begin. Shares of the Fund redeemed in connection with
an exchange into another fund (see "Exchange
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Privilege") are not considered "redeemed" for this privilege. In order to
exercise this privilege, a written order for the purchase of Shares of the
Fund must be received by the Fund or the Fund's Transfer Agent within 120 days
after the redemption. The 120 days, however, do not begin to run on redemption
proceeds placed immediately after redemption in a CD until the CD (including
any rollover) matures. The amount of gain or loss resulting from a redemption
may be affected by exercise of the reinstatement privilege if the Shares
redeemed were held for 90 days or less, or if a Shareholder reinvests in the
same fund within 30 days. Reinvestment will be at the next calculated net
asset value after receipt.
SYSTEMATIC WITHDRAWAL PLAN. A Shareholder may establish a Systematic
Withdrawal Plan ("Plan") and receive periodic payments from the account
provided that the net asset value of the Shares held by the Shareholder is at
least $5,000. There are no service charges for establishing or maintaining a
Plan. The minimum amount which the Shareholder may withdraw is $50 per
withdrawal transaction although this is merely the minimum amount allowed
under the Plan and should not be mistaken for a recommended amount. The Plan
may be established on a monthly, quarterly, semi-annual or annual basis. If
the Shareholder establishes a Plan, any capital gain distributions and income
dividends paid by the Fund to the Shareholder's account must be reinvested for
the Shareholder's account in additional Shares at net asset value. Payments
are then made from the liquidation of Shares at net asset value on the day of
the liquidation (which is generally on or about the 25th of the month) to meet
the specified withdrawals. Payments are generally received three to five days
after the date of liquidation. By completing the "Special Payment Instructions
for Distributions" section of the Shareholder Application included with this
Prospectus, a Shareholder may direct the selected withdrawals to another of
the Franklin Templeton Funds, to another person, or directly to a checking
account. Liquidation of Shares may reduce or possibly exhaust the Shares in
the Shareholder's account, to the extent withdrawals exceed Shares earned
through dividends and distributions, particularly in the event of a market
decline. If the withdrawal amount exceeds the total Plan balance, the account
will be closed and the remaining balance will be sent to the Shareholder. As
with other redemptions, a liquidation to make a withdrawal payment is a sale
for Federal income tax purposes. Because the amount withdrawn under the Plan
may be more than the Shareholder's actual yield or income, part of such a Plan
payment may be a return of the Shareholder's investment.
Maintaining a Plan concurrently with purchases of additional Shares of the
Fund would be disadvantageous because of the sales charge on the additional
purchases. Also, redemptions of Class I Shares and Class II Shares may be
subject to a contingent deferred sales charge if the Shares are redeemed
within 12 months (Class I Shares) or 18 months (Class II Shares) of the
calendar month of the original purchase date. The Shareholder should
ordinarily not make additional investments of less than $5,000 or three times
the annual withdrawals under the Plan during the time such a Plan is in
effect.
With respect to Class I Shares, the contingent deferred sales charge is
waived for redemptions through a Systematic Withdrawal Plan set up prior to
February 1, 1995. With respect to Systematic Withdrawal Plans set up on or
after February 1, 1995, the applicable contingent deferred sales charge is
waived for Class I and Class II Share redemptions of up to 1% monthly of an
account's net asset value (12% annually, 6% semiannually, 3% quarterly). For
example, if a Class I account maintained an annual balance of $1,000,000, only
$120,000 could be withdrawn through a once-yearly Systematic Withdrawal Plan
free of charge; any amount over that $120,000 would be assessed a 1% (or
applicable) contingent deferred sales charge. Likewise, if a Class II account
maintained an annual balance of $10,000, only $1,200 could be withdrawn
through a once-yearly Systematic Withdrawal Plan free of charge.
A Plan may be terminated on written notice by the Shareholder or the Fund,
and it will terminate automatically if all Shares are liquidated or withdrawn
from the account, or upon the Fund's receipt of notification of the death or
incapacity of the Shareholder. Shareholders may change the amount (but not
below $50) and schedule of withdrawal payments or suspend one such payment by
giving written notice to the Transfer Agent at least seven business days prior
to the end of the month preceding a scheduled payment. Share certificates may
not be issued while a Plan is in effect.
REDEMPTIONS BY TELEPHONE. Shareholders who file a Telephone Redemption
Authorization Agreement (the "Agreement") (a copy of which is included in this
Prospectus) may redeem Shares of the Fund by telephone, subject to the
Restricted Account exception
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noted under "Telephone Transactions--Restricted Accounts." The Fund and the
Transfer Agent will employ reasonable procedures to confirm that instructions
given by telephone are genuine. Shareholders, however, bear the risk of loss
in certain cases as described under "Telephone Transactions--Verification
Procedures."
For Shareholder accounts with a completed Agreement on file, redemptions of
uncertificated Shares or Shares which have previously been deposited with the
Fund or the Transfer Agent may be made for up to $50,000 per day per Fund
account. Telephone redemption request received before the scheduled closing
time of the NYSE (generally 4:00 p.m., New York time, on any business day will
be processed that same day. The redemption check will be sent within seven
days, made payable to all the registered owners on the account, and will be
sent only to the address of record. Redemption requests by telephone will not
be accepted within 30 days following an address change by telephone. In that
case, a Shareholder should follow the other redemption procedures set forth in
this Prospectus. Institutional accounts which wish to execute redemptions in
excess of $50,000 must complete an Institutional Telephone Privileges
Agreement which is available from Franklin Templeton Institutional Services by
telephoning 1-800-321-8563.
CONTINGENT DEFERRED SALES CHARGE. Class I. In order to recover commissions
paid to securities dealers on investments of $1 million or more, a contingent
deferred sales charge of 1% applies to redemptions of those investments within
the contingency period of 12 months following the calendar month of their
purchase. The charge is 1% of the lesser of the net asset value of the Shares
redeemed (exclusive of reinvested dividends and capital gain distributions) or
the net asset value of such Shares at the time of purchase, and is retained by
FTD. The contingent deferred sales charge is waived in certain instances. See
"How to Buy Shares of the Fund -- Net Asset Value Purchases (Both Classes)."
Class II. Class II Shares redeemed within the contingency period of 18
months of the calendar month following their purchase will be assessed a
contingent deferred sales charge, unless one of the exceptions described below
applies. The charge is 1% of the lesser of the net asset value of the Shares
redeemed (exclusive of reinvested dividends and capital gain distributions) or
the net asset value at the time of purchase of such Shares, and is retained by
FTD. The contingent deferred sales charge is waived in certain instances. See
below.
Class I and Class II. In determining if a contingent deferred sales charge
applies, Shares not subject to a contingent deferred sales charge are deemed
to be redeemed first, in the following order: (i) Shares representing amounts
attributable to capital appreciation of those Shares held less than the
contingency period (12 months in the case of Class I Shares and 18 months in
the case of Class II Shares); (ii) Shares purchased with reinvested dividends
and capital gain distributions; and (iii) other Shares held longer than the
contingency period, and followed by any Shares held less than the contingency
period, on a "first in, first out" basis. For tax purposes, a contingent
deferred sales charge is treated as either a reduction in redemption proceeds
or an adjustment to the cost basis of the Shares redeemed.
The contingent deferred sales charge on each class of Shares is waived, as
applicable, for: exchanges; any account fees; distributions to participants or
beneficiaries in FTTC individual retirement plan accounts due to death,
disability or attainment of age 59 1/2; tax-free returns of excess
contributions from employee benefit plans; distributions from employee benefit
plans, including those due to plan termination or plan transfer; redemptions
through a Systematic Withdrawal Plan set up for Shares prior to February 1,
1995 and, for Systematic Withdrawal Plans set up thereafter, redemptions of up
to 1% monthly of an account's net asset value (3% quarterly, 6% semiannually
or 12% annually); redemptions initiated by the Fund due to a Shareholder's
account falling below the minimum specified account size; and redemptions
following the death of the Shareholder.
All investments made during a calendar month, regardless of when during the
month the investment occurred, will age one month on the last day of that
month and each subsequent month.
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<PAGE>
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 Fund and their dealer of record, if any, may be able to
execute various transactions by calling the Transfer Agent at 1-800-393-3001.
All Shareholders will be able to: (i) effect a change in address, (ii) change
a dividend option (see "Restricted Accounts" below), (iii) transfer Fund
Shares in one account to another identically registered account in the Fund,
and (iv) exchange Fund Shares by telephone as described in this Prospectus. In
addition, Shareholders who complete and file an Agreement as described under
"How to Sell Shares of the Fund--Redemptions by Telephone" will be able to
redeem Shares of the Fund.
VERIFICATION PROCEDURES. The Fund and the Transfer Agent, will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. These will include: recording all telephone calls requesting
account activity by telephone, requiring that the caller provide certain
personal and/or account information requested by the telephone service agent
at the time of the call for the purpose of establishing the caller's
identification, and sending a confirmation statement on redemptions to the
address of record each time account activity is initiated by telephone. So
long as the Fund and the Transfer Agent follow instructions communicated by
telephone which were reasonably believed to be genuine at the time of their
receipt, neither they nor their affiliates will be liable for any loss to the
Shareholder caused by an unauthorized transaction. The Fund and the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions in the event such reasonable procedures are not followed.
Shareholders are, of course, under no obligation to apply for or accept
telephone transaction privileges. In any instance where the Fund or the
Transfer Agent is not reasonably satisfied that instructions received by
telephone are genuine, the requested transaction will not be executed, and
neither the Fund, the Transfer Agent, nor their affiliates will be liable for
any losses which may occur because of a delay in implementing a transaction.
RESTRICTED ACCOUNTS. Telephone redemptions and dividend option changes may
not be accepted on FTTC retirement accounts. To assure compliance with all
applicable regulations, special forms are required for any distribution,
redemption or dividend payment. Although the telephone exchange privilege is
extended to these retirement accounts, a Franklin Templeton Transfer
Authorization Form must be on file in order to transfer retirement plan assets
between the Franklin Group of Funds (R) and the Templeton Family of Funds
within the same plan type. Changes to dividend options for these accounts must
also be made in writing.
To obtain further information regarding distribution or transfer procedures,
including any required forms, FTTC retirement account shareholders may call
toll free 1-800-527-2020 or 1-800-354-9191 (press "2").
GENERAL. During periods of drastic economic or market changes, it is
possible that the telephone transaction privileges will be difficult to
execute because of heavy telephone volume. In such situations, Shareholders
may wish to contact their dealer for assistance, or to send written
instructions to the Fund as detailed elsewhere in this Prospectus.
Neither the Fund nor the Transfer Agent will be liable for any losses
resulting from the inability of a Shareholder to execute a telephone
transaction.
The telephone transaction privilege may be modified or discontinued by the
Fund at any time upon 60 days' written notice to Shareholders.
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<PAGE>
MANAGEMENT OF THE FUND
The Trust is managed by its Board of Trustees and all powers of the Trust
are exercised by or under authority of the Board. Information relating to the
Trustees and Executive Officers is set forth under the heading "Management of
the Trust" in the SAI.
The Board has carefully reviewed the multiclass structure to ensure that no
material conflict exists between the two classes of Shares. Although the Board
does not expect to encounter material conflicts in the future, the Board will
continue to monitor the Fund and will take appropriate action to resolve such
conflicts if any should later arise.
In developing the multiclass structure, the Fund has retained the authority
to establish additional classes of Shares. It is the Fund's present intention
to offer only two classes of Shares, but new classes may be offered in the
future.
INVESTMENT MANAGER. The Investment Manager of the Fund is Templeton,
Galbraith & Hansberger Ltd., Nassau, Bahamas. The Investment Manager manages
the investment and reinvestment of the Fund's assets. The Investment Manager
is an indirect wholly owned subsidiary of Franklin Resources, Inc.
("Franklin"). Through its subsidiaries, Franklin is engaged in various aspects
of the financial services industry. The Investment Manager and its affiliates
serve as advisers for a wide variety of public investment mutual funds and
private clients in many nations. The Templeton organization has been investing
globally over the past 52 years and, with its affiliates, provides investment
management and advisory services to a worldwide client base, including over
4.3 million mutual fund shareholders, foundations, endowments, employee
benefit plans and individuals. The Investment Manager and its affiliates have
approximately 4,100 employees in the United States, Australia, Scotland,
Germany, Hong Kong, Luxembourg, Bahamas, Singapore, Canada and Russia.
The Investment Manager uses a disciplined, long-term approach to value-
oriented global and international investing. It has an extensive global
network of investment research sources. Securities are selected for the Fund's
portfolio on the basis of fundamental company-by-company analysis. Many
different selection methods are used for different funds and clients and these
methods are changed and improved by the Investment Manager's research on
superior selection methods.
The Investment Manager does not furnish any other services or facilities for
the Fund, although such expenses are paid by some investment advisers of other
investment companies. As compensation for its services, the Fund pays the
Investment Manager a fee which, during the most recent fiscal year,
represented 0.75% of its average daily net assets. This fee is higher than
advisory fees paid by most other U.S. investment companies, primarily because
investing in securities of companies in foreign markets, many of which are not
widely followed by professional analysts, requires the Investment Manager to
invest additional time and incur added expense in developing specialized
resources, including research facilities. The Fund also pays its own operating
expenses, including: (1) the fees and expenses of the disinterested Trustees;
(2) interest expenses; (3) taxes and governmental fees; (4) brokerage
commissions and other expenses incurred in acquiring or disposing of portfolio
securities; (5) the expenses of registering and qualifying its Shares for sale
with the SEC and with various states securities commissions; (6) expenses of
its independent public accountants and legal counsel; (7) insurance premiums;
(8) fees and expenses of the Custodian and Transfer Agent and any related
services; (9) expenses of obtaining quotations of portfolio securities and of
pricing Shares; (10) expenses of maintaining the Trust's legal existence and
of Shareholders' meetings; (11) expenses of preparation and distribution to
existing Shareholders of periodic reports, proxy materials and prospectuses;
(12) payments made pursuant to the Fund's Distribution Plans (see "Plans of
Distribution" below); and (13) fees and expenses of membership in industry
organizations.
Currently, the lead portfolio manager for the Fund is Dorian B. Foyil, Vice
President of the Investment Manager and head of Templeton's Research
Technology Group. Prior to joining the Templeton organization, Mr. Foyil was a
research analyst for four years with UBS Phillips & Drew in London, England.
Mark G. Holowesko, Executive Vice President of the Investment Manager,
exercises secondary portfolio management responsibilities with respect to the
Fund. Mr. Holowesko is responsible for coordinating equity research worldwide
for the Investment Manager. Prior to joining the Templeton organization, Mr.
Holowesko worked with Roy West Trust
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Corporation (Bahamas) Limited as an investment administrator. His duties at
Roy West included managing trust and individual accounts, as well as research
of worldwide equity markets. Further information concerning the Investment
Manager is included under the heading "Investment Management and Other
Services" in the SAI.
BUSINESS MANAGER. Templeton Global Investors, Inc. provides certain
administrative facilities and services for the Fund, including payment of
salaries of officers, preparation and maintenance of books and records,
preparation of tax returns and financial reports, monitoring compliance with
regulatory requirements and monitoring tax-deferred retirement plans. For its
services, the Fund pays the Business Manager a fee equivalent on an annual
basis to 0.15% of the combined average daily net assets of the Funds included
in the Trust (the Fund and Templeton Global Infrastructure Fund), reduced to
0.135% of such combined assets in excess of $200 million, to 0.10% of such
assets in excess of $700 million, and to 0.075% of such assets in excess of
$1,200 million.
TRANSFER AGENT. Franklin Templeton Investor Services, Inc. serves as
transfer agent and dividend disbursing agent for the Fund.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Fund's
assets.
PLANS OF DISTRIBUTIONS. A separate Plan of Distribution has been approved
and adopted for each class ("Class I Plan" and "Class II Plan," respectively,
or "Plans") pursuant to Rule 12b-1 under the 1940 Act. The Rule 12b-1 fees
charged to each class will be based solely on the distribution and servicing
fees attributable to that particular class. Any portion of fees remaining from
either Plan after distribution to securities dealers up to the maximum amount
permitted under each Plan may be used by the class to reimburse FTD for
routine ongoing promotion and distribution expenses incurred with respect to
such class. Such expenses may include, but are not limited to, the printing of
prospectuses and reports used for sales purposes, expenses, of preparing and
distributing sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of FTD's overhead
expenses attributable to the distribution of Fund Shares, as well as any
distribution or service fees paid to securities dealers or their firms or
others who have executed a servicing agreement with the Fund, FTD or its
affiliates.
The maximum amount which the Fund may pay to FTD or others under the Class I
Plan for such distribution expenses is 0.35% per annum of Class I's average
daily net assets, payable on a quarterly basis. All expenses of distribution
and marketing in excess of 0.35% per annum will be borne by FTD, or others who
have incurred them, without reimbursement from the Fund. Under the Class I
Plan, costs and expenses not reimbursed in any one given quarter (including
costs and expenses not reimbursed because they exceed the applicable limit of
the Plan) may be reimbursed in subsequent quarters or years, subject to
applicable law.
Under the Class II Plan, the maximum amount which the Fund is permitted to
pay to FTD or others for distribution expenses and related expenses is 0.75%
per annum of Class II's average daily net assets, payable quarterly. All
expenses of distribution, marketing and related services over that amount will
be borne by FTD, or others who have incurred them, without reimbursement by
the Fund. In addition, the Class II Plan provides for an additional payment by
the Fund of up to 0.25% per annum of Class II's average daily net assets as a
servicing fee, payable quarterly. This fee will be used to pay securities
dealers or others for, among other things, assisting in establishing and
maintaining customer accounts and records; assisting with purchase and
redemption requests; receiving and answering correspondence; monitoring
dividend payments from the Fund on behalf of the customers; or similar
activities related to furnishing personal services and/or maintaining
Shareholder accounts.
During the first year after the purchase of Class II Shares, FTD will keep a
portion of the Plan fees assessed on Class II Shares to partially recoup fees
FTD pays to securities dealers. FTD, or its affiliates, may pay, from its own
resources, a commission of up to 1% of the amount invested to securities
dealers who initiate and are responsible for purchases of Class II Shares.
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Both Plans also cover any payments to or by the Fund, the Investment
Manager, FTD, or other parties on behalf of the Fund, the Investment Manager
or FTD, to the extent such payments are deemed to be for the financing of any
activity primarily intended to result in the sale of Shares issued by the Fund
within the context of Rule 12b-1. The payments under the Plans are included in
the maximum operating expenses which may be borne by each class of the Fund.
For more information including a discussion of the Board's policies with
regard to the amount of each Plan's fees, please see the SAI.
BROKERAGE COMMISSIONS. The Fund's brokerage policies are described under the
heading "Brokerage Allocation" in the SAI. The Fund's brokerage policies
provide that the receipt of research services from a broker and the sale of
Shares by a broker are factors which may be taken into account in allocating
securities transactions, so long as the prices and execution provided by the
broker equal the best available within the scope of the Fund's brokerage
policies.
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The capitalization of the Trust
consists of an unlimited number of Shares of beneficial interest, par value
$0.01 per Share. The Board of Trustees is authorized, in its discretion, to
classify and allocate the unissued Shares of the Trust in an unlimited number
of separate series and may in the future divide existing series into two or
more classes. Each Share entitles the holder to one vote.
The Fund will not ordinarily issue certificates for Shares purchased. Share
certificates representing the whole (not fractional) Shares are issued only
upon the specific request of the Shareholder made in writing to the Transfer
Agent. No charge is made for the issuance of one certificate for all or some
of the Shares purchased in a single order.
VOTING RIGHTS. Shares of each class represent proportionate interests in the
assets of the Fund and have the same voting and other rights and preferences
as the other class of the Fund for matters that affect the Fund as a whole.
For matters that only affect a certain class of the Fund's Shares, however,
only Shareholders of that class will be entitled to vote. Therefore, each
class of Shares will vote separately on matters (1) affecting only that class,
(2) expressly required to be voted on separately by state law, or (3) required
to be voted on separately by the 1940 Act or the rules adopted thereunder. For
instance, if a change to the Rule 12b-1 plan relating to Class I Shares
requires Shareholder approval, only Shareholders of Class I may vote on
changes to the Rule 12b-1 plan affecting that class. Similarly, if a change to
the Rule 12b-1 plan relating to Class II Shares requires Shareholder approval,
only Shareholders of Class II may vote on the change to such plan. On the
other hand, if there is a proposed change to the investment objective of the
Fund, this affects all Shareholders, regardless of which class of Shares they
hold, and therefore, each Share has the same voting rights.
MEETINGS OF SHAREHOLDERS. The Trust is not required to hold annual meetings
of Shareholders and may elect not to do so. The Trust will call a special
meeting of Shareholders for the purpose of considering the removal of a person
serving as Trustee if requested in writing to do so by the holders of not less
than 10% of the Trust's outstanding Shares. The Trust is required to assist
Shareholder communications in connection with the calling of Shareholder
meetings to consider removal of a Trustee or Trustees.
DIVIDENDS AND DISTRIBUTIONS. Dividends and capital gain distributions (if
any) are usually paid in May and (if necessary) in December representing all
or substantially all of the Fund's net investment income and any net realized
capital gains. According to the requirements of the Code, dividends and
capital gains will be calculated and distributed in the same manner for Class
I and Class II Shares. The per share amount of any income dividends will
generally differ only to the extent that each class is subject to different
Rule 12b-1 fees. Unless otherwise requested, income dividends and capital gain
distributions paid by the Fund, other than on those Shares whose owners keep
them registered in the name of a broker-dealer, are automatically reinvested
on the payment date in whole or fractional Shares at net asset value as of the
ex-dividend date, unless a Shareholder makes a written or telephonic request
for payments in cash. Dividend and capital gain distributions are only
eligible for reinvestment at net asset value in the same class of Shares of
the Fund or the same class of another of the Franklin Templeton Funds. The
processing date for the reinvestment of dividends may vary from month to
month, and does not affect the amount or value of the Shares acquired. Income
dividends and capital gain distributions
27
<PAGE>
will be paid in cash on Shares during the time their owners keep them
registered in the name of a broker-dealer, unless the broker-dealer has made
arrangements with the Transfer Agent for reinvestment.
Prior to purchasing Shares of the Fund, the impact of dividends or capital
gain distributions which have been declared but not yet paid should be
carefully considered. Any dividend or capital gain distribution paid shortly
after a purchase by a Shareholder prior to the record date will have the
effect of reducing the per Share net asset value of the Shares by the amount
of the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, generally will be
subject to tax.
Checks are forwarded by first-class mail to the address of record. The
proceeds of any such checks which are not accepted by the addressee and
returned to the Fund will be reinvested in the Shareholder's account in whole
or fractional Shares at the net asset value next computed after the check has
been received by the Transfer Agent. Subsequent distributions automatically
will be reinvested at net asset value as of the ex-dividend date in additional
whole or fractional Shares.
FEDERAL TAX INFORMATION. The Fund intends to elect to be treated and to
qualify each year as a regulated investment company under Subchapter M of the
Code. See the SAI for a summary of requirements that must be satisfied to so
qualify. A regulated investment company generally is not subject to federal
income tax on income and gains distributed in a timely manner to its
shareholders. The Fund intends to distribute to Shareholders substantially all
of its net investment income and realized capital gains, which generally will
be taxable income or capital gains in their hands. Distributions declared in
October, November or December to Shareholders of record on a date in such
month and paid during the following January will be treated as having been
received by Shareholders on December 31 in the year such distributions were
declared. The Fund will inform Shareholders each year of the amount and nature
of such income or gains. A more detailed description of tax consequences to
Shareholders is contained in the SAI under the heading "Tax Status."
The Fund may be required to withhold federal income tax at the rate of 31%
of all taxable distributions (including redemptions) paid to Shareholders who
fail to provide the Fund with their correct taxpayer identification number or
to make required certifications or where the Fund or the Shareholder has been
notified by the Internal Revenue Service that the Shareholder is subject to
backup withholding. Corporate Shareholders and certain other Shareholders
specified in the Code are exempt from backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
Shareholder's Federal income tax liability.
INQUIRIES. Shareholders' inquiries will be answered promptly. They should be
addressed to Franklin Templeton Investor Services, Inc., P.O. Box 33030, St.
Petersburg, Florida 33733-8030--telephone 1-800-393-3001 or 813-823-8712.
Transcripts of Shareholder accounts less than three years old are provided on
request without charge; requests for transcripts going back more than three
years from the date the request is received by the Transfer Agent are subject
to a fee of up to $15 per account.
PERFORMANCE INFORMATION. The Fund may include its total return in
advertisements or reports to Shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the average
annual compounded rate of return on a hypothetical investment in the Fund over
a period of 1, 5 and 10 years (or up to the life of the Fund), will reflect
the deduction of the maximum initial sales charge and deduction of a
proportional share of Fund expenses (on an annual basis), and will assume that
all dividends and distributions are reinvested when paid. Total return may be
expressed in terms of the cumulative value of an investment in the Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Fund, see the SAI.
Because Class II Shares were not offered prior to May 1, 1995, no
performance data is available for these Shares. After a sufficient period of
time has passed, Class II performance data will be available.
STATEMENTS AND REPORTS. The Fund's fiscal year ends on March 31. Annual
reports (containing financial statements audited by independent auditors and
additional information regarding the Fund's performance) and semiannual
reports (containing unaudited financial statements) are sent to Shareholders
each year. Additional copies may be obtained, without charge, upon request to
the Account Services Department. The Fund also sends to each Shareholder a
confirmation statement after every transaction that affects the Shareholder's
account and a year-end historical confirmation statement.
28
<PAGE>
INSTRUCTIONS AND IMPORTANT NOTICE
SUBSTITUTE W-9 INSTRUCTIONS INFORMATION
GENERAL. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service ("IRS").
OBTAINING A NUMBER. If you do not have a Social Security Number/Taxpayer
Identification Number ("SSN/TIN"), you must obtain Form SS-5 or Form SS-4 from
your local Social Security or IRS office and apply for one. If you have
checked the "Awaiting TIN" box and signed the certification, withholding will
apply to payments relating to your account unless you provide a certified TIN
within 60 days.
WHAT SSN/TIN TO GIVE. Please refer to the following guidelines:
<TABLE>
<CAPTION>
ACCOUNT TYPE GIVE SSN OF ACCOUNT TYPE GIVE TAXPAYER ID # OF
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
. Individual Individual . Trust, Estate, or Trust, Estate, or
Pension Plan Trust Pension Plan Trust
- -------------------------------------------------------------------------------------
. Joint Actual owner of account, . Corporation, Corporation,
Individual or if combined funds, Partnership, or other Partnership, or other
the first-named organization organization
individual
- -------------------------------------------------------------------------------------
. Unif. Minor . Broker nominee Broker nominee
Gift/Transfer
to Minor
- -------------------------------------------------------------------------------------
. Sole Owner of business
Proprietor
- -------------------------------------------------------------------------------------
. Legal Ward, Minor, or
Guardian Incompetent
- -------------------------------------------------------------------------------------
</TABLE>
EXEMPT RECIPIENTS. Please provide your TIN and check the "Exempt Recipient"
box if you are an exempt recipient. Exempt recipients generally include:
A corporation A real estate investment trust
A financial institution A common trust fund operated by a
bank under section 584(a)
An organization exempt from tax An entity registered at all times
under section 501(a), or an under the Investment Company Act of
individual retirement plan 1940
A registered dealer in securities or
commodities registered in the U.S.
or a U.S. possession
IRS PENALTIES. If you do not supply us with your SSN/TIN, you will be subject
to an IRS $50 penalty unless your failure is due to reasonable cause and not
willful neglect. If you fail to report certain income on your Federal income
tax return, you will be treated as negligent and subject to an IRS 20% penalty
on any underpayment of tax attributable to such negligence, unless there was
reasonable cause for the resulting underpayment and you acted in good faith.
If you falsify information on this form or make any other false statement
resulting in no backup withholding on an account which should be subject to
backup withholding, you may be subject to an IRS $500 penalty and certain
criminal penalties including fines and imprisonment.
SUBSTITUTE W-8 INSTRUCTIONS INFORMATION
EXEMPT FOREIGN PERSON. Check the "Exempt Foreign Person" box if you qualify as
a non-resident alien or foreign entity that is not subject to certain U.S.
information return reporting or to backup withholding rules. Dividends paid to
your account may be subject to withholding of up to 30%. Generally, you are an
"Exempt Foreign Person" if you are not (1) a citizen or resident of the U.S.,
or (2) a U.S. corporation, partnership, estate, or trust. In the case of an
individual, an "Exempt Foreign Person" is one who has been physically present
in the U.S. for less than 31 days during the current calendar year. An
individual who is physically present in the U.S. for at least 31 days during
the current calendar year will still be treated as an "Exempt Foreign Person,"
provided that the total number of days physically present in the current
calendar year and the two preceding calendar years does not equal or exceed
183 days (counting all of the days in the current calendar year, only one-
third of the days in the first preceding calendar year and only one-sixth of
the days in the second preceding calendar year). In addition, lawful permanent
residents or green card holders may not be treated as "Exempt Foreign
Persons." If you are an individual or an entity, you must not now be, or at
this time expect to be, engaged in a U.S. trade or business with respect to
which any gain derived from transactions effected by the Fund/Payer during the
calendar year is effectively connected to the U.S.
PERMANENT ADDRESS. The Shareholder Application must contain your permanent
address if you are an "Exempt Foreign Person." If you are an individual,
provide your permanent address. If you are a partnership or corporation,
provide the address of your principal office. If you are an estate or trust,
provide the address of your permanent residence or the principal office of any
fiduciary.
NOTICE OF CHANGE IN STATUS. If you become a U.S. citizen or resident after you
have provided certification of your foreign status, or if you cease to be an
"Exempt Foreign Person," you must notify the Fund/Payer within 30 days of your
change in status. Reporting will then begin on the account(s) listed, and
backup withholding may also begin unless you certify to the Fund/Payer that
(1) the tax payer identification number you have given is correct, and (2) the
IRS has not notified you that you are subject to backup withholding because
you failed to report certain interest or dividend income. You may use Form W-
9, "Payer's Request for Taxpayer Identification Number and Certification," to
make these certifications. If an account is no longer active, you do not have
to notify a Fund/Payer or broker of your change in status unless you also have
another account with the same Fund/Payer that is still active. If you receive
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.
1/94
29
<PAGE>
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of
a resolution or other certificate of authority to authorize the purchase as
well as sale (redemption) of shares and withdrawals by checks or drafts. You
may use the following form of resolution or you may prefer to use your own. It
is understood that the Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly
elected _________________________________ of __________________________________
TITLE CORPORATE
NAME
a ___ organized under the laws of the State of ____ and that the following is a
TYPE OF ORGANIZATION STATE
true and correct copy of a resolution adopted by the Board of Directors at a
meeting duly called and held on _______________________________________________
DATE
RESOLVED, that the _________________________________________________ of this
OFFICERS' TITLES
Corporation or Association are authorized to open an account in the name of
the Corporation or Association with one or more of the Franklin Group of
Funds(R) or Templeton Family of Funds (collectively, the "Funds") and to
deposit such funds of this Corporation or Association in this account as
they deem necessary or desirable; that the persons authorized below may
endorse checks and other instruments for deposit to said account or
accounts; and
FURTHER RESOLVED, that any of the following ______ officers are authorized to
NUMBER
sign any share assignment on
behalf of this Corporation or Association and to take any other actions as
may be necessary to sell or redeem its shares in the Funds or to sign
checks or drafts withdrawing funds from the account; and
FURTHER RESOLVED, that this Corporation or Association shall hold harmless,
indemnify, and defend the Funds, their custodian bank, Franklin Templeton
Distributors, Inc., Franklin Templeton Investor Services, Inc., and their
affiliates, from any claim, loss or liability resulting in whole or in
part, directly or indirectly, from their reliance from time to time upon
any certifications by the secretary or any assistant secretary of this
Corporation or Association as to the names of the individuals occupying
such offices and their acting in reliance upon these resolutions until
actual receipt by them of a certified copy of a resolution of the Board of
Directors of the Corporation or Association modifying or revoking any or
all such resolutions.
The undersigned further certifies that the below named persons, whose
signatures appear opposite their names and office titles, are duly elected
officers of the Corporation or Association. (Attach additional list if
necessary.)
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- --------------------------------------
NAME OF CORPORATION OR ASSOCIATION DATE
Certified from minutes ________________________________________________________
NAME AND TITLE
CORPORATE SEAL (if appropriate)
30
<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.
31
<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>
<CAPTION>
<S> <C> <C>
TEMPLETON FUNDS Maryland
American Trust Massachusetts** FRANKLIN FUNDS SEEKING
American Government Michigan*** HIGH CURRENT INCOME
Securities Fund
Developing Markets Trust Minnesota*** AGE High Income Fund
Foreign Fund Missouri German Government Bond
Fund
Global Infrastructure Fund New Jersey Global Government Income
Fund
Global Opportunities Trust New York* Investment Grade Income
Fund
Global Rising Dividends North Carolina U.S. Government
Fund Securities Fund
Growth Fund Ohio*** FRANKLIN FUNDS SEEKING
Income Fund Oregon HIGH CURRENT INCOME AND
STABILITY OF PRINCIPAL
Japan Fund Pennsylvania Adjustable Rate
Securities Fund
Money Fund Tennessee** Adjustable U.S.
Government Securities
Fund
Real Estate Securities Texas Short-Intermediate U.S.
Fund Government Securities
Fund
Smaller Companies Growth Virginia
Fund
World Fund Washington** FRANKLIN FUNDS FOR NON-
U.S. INVESTORS
Tax-Advantaged High
Yield Securities Fund
FRANKLIN FUNDS FRANKLIN FUNDS Tax-Advantaged
International Bond Fund
SEEKING TAX- SEEKING CAPITAL GROWTH Tax-Advantaged U.S.
FREE INCOME Government Securities
Fund
Federal Intermediate Term California Growth Fund
Tax-Free Income Fund DynaTech Fund FRANKLIN TEMPLETON
INTERNATIONAL
Federal Tax-
Free Income Fund Equity Fund CURRENCY FUNDS
High Yield Tax-Free
Income Fund Global Health
Care Fund Global Currency Fund
Insured Tax-Free
Income Fund*** Gold Fund Hard Currency Fund
Puerto Rico Tax-Free
Income Fund Growth Fund High Income Currency
Fund
International
Equity Fund
FRANKLIN STATE-SPECIFIC
FUNDS SEEKING TAX-FREE
INCOME Pacific Growth FRANKLIN MONEY MARKET
Fund FUNDS
Alabama Real Estate California Tax-Exempt
Securities Money Fund
Fund
Arizona* Small Cap Federal Money Fund
Growth Fund IFT U.S. Treasury Money
Market Portfolio
Arkansas** FRANKLIN FUNDS SEEKING Money Fund
California* GROWTH AND INCOME New York Tax-Exempt
Money Fund
Colorado Balance Sheet Investment
Fund Tax-Exempt Money Fund
Connecticut Convertible Securities
Fund
Florida* Equity Income Fund FRANKLIN FUND FOR
CORPORATIONS
Georgia Global Utilities Fund Corporate Qualified
Dividend Fund
Hawaii** Income Fund
FRANKLIN TEMPLETON
Indiana Premier Return Fund VARIABLE ANNUITIES
Franklin Valuemark
Kentucky Rising Dividends Fund Franklin Templeton
Valuemark Income
Louisiana Strategic Income Fund Plus (an intermediate
annuity)
Utilities Fund
</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.
32
<PAGE>
NOTES
33
<PAGE>
NOTES
34
<PAGE>
NOTES
35
<PAGE>
TEMPLETON GROWTH
AND INCOME FUND
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-393-3001
Fund Information
1-800-292-9293
Institutional Services
1-800-321-8563
This Prospectus is
not an offering of
the securities
herein described
in any state in
which the offering
is not authorized.
No sales
representative,
dealer, or other
person is
authorized to give
any information or
make any
representations
other than those
contained in this
Prospectus.
Further
information may be
obtained from the
Principal
Underwriter.
[LOGO OF RECYCLED PAPER APPEARS HERE] TL14 P 05/95
TEMPLETON
GROWTH
AND
INCOME
FUND
Prospectus
May 1, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
<PAGE>
TEMPLETON GLOBAL INVESTMENT TRUST
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED JULY _, 1995,
IS NOT A PROSPECTUS. IT SHOULD BE READ IN CONJUNCTION WITH
THE PROSPECTUSES OF TEMPLETON GROWTH AND INCOME FUND,
DATED JULY __, 1995,
TEMPLETON GLOBAL INFRASTRUCTURE FUND,
DATED MAY 1, 1995, TEMPLETON AMERICAS GOVERNMENT
SECURITIES FUND, DATED JUNE 27, 1994,
AND TEMPLETON GREATER EUROPEAN FUND AND
TEMPLETON LATIN AMERICA FUND, DATED MAY 8, 1995, EACH AS
SUPPLEMENTED FROM TIME TO TIME, WHICH MAY BE OBTAINED
WITHOUT CHARGE UPON REQUEST TO THE PRINCIPAL UNDERWRITER,
FRANKLIN TEMPLETON DISTRIBUTORS, INC.,
700 CENTRAL AVENUE, P.O. BOX 33030
ST. PETERSBURG, FLORIDA 33733-8030
TOLL FREE TELEPHONE: (800) 237-0738
TABLE OF CONTENTS
General Information and History -Management Fees
Investment Objectives and Policies -The Investment Managers
-Investment Policies -Sub-Advisory Agreement
-Repurchase Agreements -Business Manager
-Debt Securities -Custodian and Transfer
-Convertible Securities Agent
-Futures Contracts -Legal Counsel
-Options on Securities, Indices -Independent Accountants
and Futures -Reports to Shareholders
-Foreign Currency Hedging Brokerage Allocation
Transactions Purchase, Redemption and
-Investment Restrictions Pricing of
-Additional Restrictions Shares
-Risk Factors -Ownership and Authority
-Trading Policies Disputes
-Personal Securities Transactions -Tax-Deferred Retirement
Management of the Trust Plans
Trustee Compensation -Letter of Intent
Principal Shareholders -Special Net Asset Value
Investment Management and Other Purchases
Services Tax Status
-Investment Management Agreements Principal Underwriter
Description of Shares
Performance Information
Financial Statements
GENERAL INFORMATION AND HISTORY
Templeton Global Investment Trust (the "Trust") was
organized as a Delaware business trust on December 21, 1993, and
is registered under the Investment Company Act of 1940 (the "1940
Act") as an open-end management investment company with 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").
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
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well. Bonds which are rated C by Moody's are the lowest rated
class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment
standing.
Bonds rated BBB by S&P are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for bonds
in this category than in higher rated categories. Bonds rated D
by S&P are the lowest rated class of bonds, and generally are in
payment default. The D rating also will be used upon the filing
of a bankruptcy petition if debt service payments are
jeopardized.
Although they may offer higher yields than do higher rated
securities, high-risk, low rated debt securities (commonly
referred to as "junk bonds") and unrated debt securities
generally involve greater volatility of price and risk of
principal and income, including the possibility of default by, or
bankruptcy of, the issuers of the securities. In addition, the
markets in which low rated and unrated debt securities are traded
are more limited than those in which higher rated securities are
traded. The existence of limited markets for particular
securities may diminish a Fund's ability to sell the securities
at fair value either to meet redemption requests or to respond to
a specific economic event such as a deterioration in the
creditworthiness of the issuer. Reduced secondary market
liquidity for certain low rated or unrated debt securities may
also make it more difficult for a Fund to obtain accurate market
quotations for the purposes of valuing the Fund's portfolio.
Market quotations are generally available on many low rated or
unrated securities only from a limited number of dealers and may
not necessarily represent firm bids of such dealers or prices for
actual sales.
Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and
liquidity of low rated debt securities, especially in a thinly
traded market. Analysis of the creditworthiness of issuers of
low rated debt securities may be more complex than for issuers of
higher rated securities, and the ability of a Fund to achieve its
investment objective may, to the extent of investment in low
rated debt securities, be more dependent upon such
creditworthiness analysis than would be the case if the Fund were
investing in higher rated securities.
Low rated debt securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions
than investment grade securities. The prices of low rated debt
securities have been found to be less sensitive to interest rate
changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments.
A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in low rated
debt securities prices because the advent of a recession could
lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If the
issuer of low rated debt securities defaults, a Fund may incur
additional expenses seeking recovery.
A Fund may accrue and report interest income on high yield
bonds, such as zero coupon bonds or pay-in-kind securities, even
though it receives no cash interest until the security's maturity
or payment date. In order to qualify for beneficial tax
treatment afforded regulated investment companies, and to
generally be relieved of federal tax liabilities, a Fund must
distribute all of its net income and gains to Shareholders (see
"Tax Status") generally on an annual basis. A Fund may have to
dispose of portfolio securities under disadvantageous
circumstances to generate cash or leverage itself by borrowing
cash in order to satisfy the distribution requirement.
Recent legislation, which requires federally insured savings
and loan associations to divest their investments in low rated
debt securities, may have a material adverse effect on a Fund's
net asset value and investment practices.
Convertible Securities. The Funds may invest in convertible
securities, including convertible debt and convertible preferred
stock. Convertible securities are fixed-income securities which
may be converted at a stated price within a specific amount of
time into a specified number of shares of common stock. These
securities are usually senior to common stock in a corporation's
capital structure, but usually are subordinated to non-
convertible debt securities. In general, the value of a
convertible security is the higher of its investment value (its
value as a fixed-income security) and its conversion value (the
value of the underlying shares of common stock if the security is
converted). The investment value of a convertible security
generally increases when interest rates decline and generally
decreases when interest rates rise. The conversion value of a
convertible security is influenced by the value of the underlying
common stock.
Futures Contracts. Each Fund may purchase and sell
financial futures contracts. Although some financial futures
contracts call for making or taking delivery of the underlying
securities, in most cases these obligations are closed out before
the settlement date. The closing of a contractual obligation is
accomplished by purchasing or selling an identical offsetting
futures contract. Other financial futures contracts by their
terms call for cash settlements.
Each Fund may also buy and sell index futures contracts with
respect to any stock or bond index traded on a recognized stock
exchange or board of trade. An index futures contract is a
contract to buy or sell units of an index at a specified future
date at a price agreed upon when the contract is made. The index
futures contract specifies that no delivery of the actual
securities making up the index will take place. Instead,
settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the
contract price and the actual level of the index at the
expiration of the contract.
At the time a Fund purchases a futures contract, an amount
of cash, U.S. Government securities, or other highly liquid debt
securities equal to the market value of the contract will be
deposited in a segregated account with the Fund's custodian.
When writing a futures contract, a Fund will maintain with its
custodian liquid assets that, when added to the amounts deposited
with a futures commission merchant or broker as margin, are equal
to the market value of the instruments underlying the contract.
Alternatively, a Fund may "cover" its position by owning the
instruments underlying the contract or, in the case of an index
futures contract, owning a portfolio with a volatility
substantially similar to that of the index on which the futures
contract is based, or holding a call option permitting the Fund
to purchase the same futures contract at a price no higher than
the price of the contract written by the Fund (or at a higher
price if the difference is maintained in liquid assets with the
Fund's custodian).
Options on Securities, Indices and Futures. Each Fund may
write covered put and call options and purchase put and call
options on securities, securities indices and futures contracts
that are traded on United States and foreign exchanges and in the
over-the-counter markets.
An option on a security or a futures contract is a contract
that gives the purchaser of the option, in return for the premium
paid, the right to buy a specified security or futures contract
(in the case of a call option) or to sell a specified security or
futures contract (in the case of a put option) from or to the
writer of the option at a designated price during the term of the
option. An option on a securities index gives the purchaser of
the option, in return for the premium paid, the right to receive
from the seller cash equal to the difference between the closing
price of the index and the exercise price of the option.
Each Fund may write a call or put option only if the option
is "covered." A call option on a security or futures contract
written by a Fund is "covered" if the Fund owns the underlying
security or futures contract covered by the call or has an
absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities held in its portfolio.
A call option on a security or futures contract is also covered
if a Fund holds a call on the same security or futures contract
and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the
exercise price of the call written or (b) is greater than the
exercise price of the call written if the difference is
maintained by the Fund in cash or high grade U.S. Government
securities in a segregated account with its custodian. A put
option on a security or futures contract written by a Fund is
"covered" if the Fund maintains cash or fixed-income securities
with a value equal to the exercise price in a segregated account
with its custodian, or else holds a put on the same security or
futures contract and in the same principal amount as the put
written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.
A Fund will cover call options on securities indices that it
writes by owning securities whose price changes, in the opinion
of the Fund's Investment Manager, are expected to be similar to
those of the index, or in such other manner as may be in
accordance with the rules of the exchange on which the option is
traded and applicable laws and regulations. Nevertheless, where
a Fund covers a call option on a securities index through
ownership of securities, such securities may not match the
composition of the index. In that event, a Fund will not be
fully covered and could be subject to risk of loss in the event
of adverse changes in the value of the index. A Fund will cover
put options on securities indices that it writes by segregating
assets equal to the option's exercise price, or in such other
manner as may be in accordance with the rules of the exchange on
which the option is traded and applicable laws and regulations.
A Fund will receive a premium from writing a put or call
option, which increases its gross income in the event the option
expires unexercised or is closed out at a profit. If the value
of a security, index or futures contract on which a Fund has
written a call option falls or remains the same, the Fund will
realize a profit in the form of the premium received (less
transaction costs) that could offset all or a portion of any
decline in the value of the portfolio securities being hedged.
If the value of the underlying security, index or futures
contract rises, however, a Fund will realize a loss in its call
option position, which will reduce the benefit of any unrealized
appreciation in its investments. By writing a put option, a Fund
assumes the risk of a decline in the underlying security, index
or futures contract. To the extent that the price changes of the
portfolio securities being hedged correlate with changes in the
value of the underlying security, index or futures contract,
writing covered put options will increase a Fund's losses in the
event of a market decline, although such losses will be offset in
part by the premium received for writing the option.
Each Fund may also purchase put options to hedge its
investments against a decline in value. By purchasing a put
option, a Fund will seek to offset a decline in the value of the
portfolio securities being hedged through appreciation of the put
option. If the value of a Fund's investments does not decline as
anticipated, or if the value of the option does not increase, its
loss will be limited to the premium paid for the option plus
related transaction costs. The success of this strategy will
depend, in part, on the accuracy of the correlation between the
changes in value of the underlying security, index or futures
contract and the changes in value of a Fund's security holdings
being hedged.
A Fund may purchase call options on individual securities or
futures contracts to hedge against an increase in the price of
securities or futures contracts that it anticipates purchasing in
the future. Similarly, a Fund may purchase call options on a
securities index to attempt to reduce the risk of missing a broad
market advance, or an advance in an industry or market segment,
at a time when the Fund holds uninvested cash or short-term debt
securities awaiting investment. When purchasing call options, a
Fund will bear the risk of losing all or a portion of the premium
paid if the value of the underlying security, index or futures
contract does not rise.
There can be no assurance that a liquid market will exist
when a Fund seeks to close out an option position. Trading could
be interrupted, for example, because of supply and demand
imbalances arising from a lack of either buyers or sellers, or
the options exchange could suspend trading after the price has
risen or fallen more than the maximum specified by the exchange.
Although a Fund may be able to offset to some extent any adverse
effects of being unable to liquidate an option position, it may
experience losses in some cases as a result of such inability.
The value of over-the-counter options purchased by a Fund, as
well as the cover for options written by a Fund, are considered
not readily marketable and are subject to the Trust's limitation
on investments in securities that are not readily marketable.
See "Investment Objectives and Policies -- Investment
Restrictions."
Foreign Currency Hedging Transactions. In order to hedge
against foreign currency exchange rate risks, each Fund may enter
into forward foreign currency exchange contracts and foreign
currency futures contracts, as well as purchase put or call
options on foreign currencies, as described below. Each Fund may
also conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market.
A Fund may enter into forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk
to the Fund from adverse changes in the relationship between the
U.S. dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers. A Fund
may enter into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S.
dollar price of the security. In addition, for example, when a
Fund believes that a foreign currency may suffer or enjoy a
substantial movement against another currency, it may enter into
a forward contract to sell an amount of the former foreign
currency approximating the value of some or all of its portfolio
securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging."
Because in connection with a Fund's forward foreign currency
transactions, an amount of its assets equal to the amount of the
purchase will be held aside or segregated to be used to pay for
the commitment, a Fund will always have cash, cash equivalents or
high quality debt securities available in an amount sufficient to
cover any commitments under these contracts or to limit any
potential risk. The segregated account will be marked-to-market
on a daily basis. While these contracts are not presently
regulated by the Commodity Futures Trading Commission ("CFTC"),
the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Funds' ability to utilize forward
contracts in the manner set forth above may be restricted.
Forward contracts may limit potential gain from a positive change
in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for a Fund than if it had not
engaged in such contracts.
A Fund may purchase and write put and call options on
foreign currencies for the purpose of protecting against declines
in the dollar value of foreign portfolio securities and against
increases in the dollar cost of foreign securities to be
acquired. As is the case with other kinds of options, however,
the writing of an option on foreign currency will constitute only
a partial hedge up to the amount of the premium received, and a
Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on foreign currency may constitute an
effective hedge against fluctuation in exchange rates, although,
in the event of rate movements adverse to its position, a Fund
may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written
or purchased by a Fund will be traded on U.S. and foreign
exchanges or over-the-counter.
A Fund may enter into exchange-traded contracts for the
purchase or sale for future delivery of foreign currencies
("foreign currency futures"). This investment technique will be
used only to hedge against anticipated future changes in exchange
rates which otherwise might adversely affect the value of a
Fund's portfolio securities or adversely affect the prices of
securities that a Fund intends to purchase at a later date. The
successful use of foreign currency futures will usually depend on
the ability of a Fund's Investment Manager to forecast currency
exchange rate movements correctly. Should exchange rates move in
an unexpected manner, a Fund may not achieve the anticipated
benefits of foreign currency futures or may realize losses.
Investment Restrictions. The Funds have imposed upon
themselves certain investment restrictions which, together with
their investment objectives, are fundamental policies except as
otherwise indicated. No changes in a Fund's investment objective
or these investment restrictions can be made without the approval
of the Shareholders of that Fund. For this purpose, the
provisions of the 1940 Act require the affirmative vote of the
lesser of either (1) 67% or more of that Fund's Shares present at
a Shareholders' meeting at which more than 50% of the outstanding
Shares are present or represented by proxy or (2) more than 50%
of the outstanding Shares of that Fund.
In accordance with these restrictions, each Fund will not:
1. Invest in real estate or mortgages on real estate
(although the Funds may invest in marketable securities
secured by real estate or interests therein); invest in
other open-end investment companies (except in
connection with a merger, consolidation, acquisition or
reorganization); invest in interests (other than
publicly issued debentures or equity stock interests)
in oil, gas or other mineral exploration or development
programs; or purchase or sell commodity contracts
(except futures contracts as described in 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 (i)
more than 5% of the Fund's total assets would then be
invested in securities of any single issuer, or (ii)
the Fund would then own more than 10% of the voting
securities of any single issuer; provided, however,
that this restriction does not apply to Americas
Government Securities Fund.
3. Act as an underwriter; issue senior securities except
as set forth in investment restriction 6 below; or
purchase on margin or sell short, except that each Fund
may make margin payments in connection with futures,
options and currency transactions.
4. Loan money, except that a Fund may (i) purchase a
portion of an issue of publicly distributed bonds,
debentures, notes and other evidences of indebtedness,
(ii) enter into repurchase agreements and (iii) lend
its portfolio securities.
5. Borrow money, except that a Fund may borrow money from
banks in an amount not exceeding 33-1/3% of the value
of its total assets (including the amount borrowed).
6. Mortgage, pledge or hypothecate its assets (except as
may be necessary in connection with permitted
borrowings); provided, however, this does not prohibit
escrow, collateral or margin arrangements in connection
with its use of options, futures contracts and options
on future contracts.
7. Invest more than 25% of its total assets in a single
industry.
8. Participate on a joint or a joint and several basis in
any trading account in securities. (See "Investment
Objectives and Policies -- Trading Policies" as to
transactions in the same securities for the Funds
and/or other mutual funds and clients with the same or
affiliated advisers.)
If a Fund receives from an issuer of securities held by the
Fund subscription rights to purchase securities of that issuer,
and if the Fund exercises such subscription rights at a time when
the Fund's portfolio holdings of securities of that issuer would
otherwise exceed the limits set forth in Investment Restrictions
2 or 7 above, it will not constitute a violation if, prior to
receipt of securities upon exercise of such rights, and after
announcement of such rights, the Fund has sold at least as many
securities of the same class and value as it would receive on
exercise of such rights.
Additional Restrictions. Each Fund has adopted the
following additional restrictions which are not fundamental and
which may be changed without Shareholder approval, to the extent
permitted by applicable law, regulation or regulatory policy.
Under these restrictions, a Fund may not:
1. Purchase or retain securities of any company in which
Trustees or officers of the Trust or of a Fund's
Investment Manager, individually owning more than 1/2
of 1% of the securities of such company, in the
aggregate own more than 5% of the securities of such
company.
2. Invest more than 5% of the value of its total assets in
securities of issuers which have been in continuous
operation less than three years.
3. Invest more than 5% of its net assets in warrants
whether or not listed on the New York or American Stock
Exchanges, and more than 2% of its net assets in
warrants that are not listed on those exchanges.
Warrants acquired in units or attached to securities
are not included in this restriction.
4. Purchase or sell real estate limited partnership
interests.
5. Purchase or sell interests in oil, gas and mineral
leases (other than securities of companies that invest
in or sponsor such programs).
6. Invest for the purpose of exercising control over
management of any company.
7. Purchase more than 10% of a company's outstanding
voting securities.
8. Invest more than 15% of the Fund's total assets in
securities that are not readily marketable (including
repurchase agreements maturing in more than seven days
and over-the-counter options purchased by the Fund),
including no more than 10% of its total assets in
restricted securities. Rule 144A securities are not
subject to the 10% limitation on restricted securities,
although a Fund will limit its investment in all
restricted securities, including 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,
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.
Despite the recent dissolution of the Soviet Union, the
Communist Party may continue to exercise a significant role in
certain Eastern European countries. To the extent of the
Communist Party's influence, investments in such countries will
involve risks of nationalization, expropriation and confiscatory
taxation. The communist governments of a number of Eastern
European countries expropriated large amounts of private property
in the past, in many cases without adequate compensation, and
there can be no assurance that such expropriation will not occur
in the future. In the event of such expropriation, a Fund could
lose a substantial portion of any investments it has made in the
affected countries. Further, no accounting standards exist in
Eastern European countries. Finally, even though certain Eastern
European currencies may be convertible into U.S. dollars, the
conversion rates may be artificial to the actual market values
and may be adverse to Fund Shareholders.
Certain Eastern European countries, which do not have market
economies, are characterized by an absence of developed legal
structures governing private and foreign investments and private
property. Certain countries require governmental approval prior
to investments by foreign persons, or limit the amount of
investment by foreign persons in a particular company, or limit
the investment of foreign persons to only a specific class of
securities of a company that may have less advantageous terms
than securities of the company available for purchase by
nationals.
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
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: (a) delays
in settling portfolio transactions and risk of loss arising out
of Russia's system of share registration and custody; (b) the
risk that it may be impossible or more difficult than in other
countries to obtain and/or enforce a judgment; (c) pervasiveness
of corruption and crime in the Russian economic system; (d)
currency exchange rate volatility and the lack of available
currency hedging instruments; (e) higher rates of inflation
(including the risk of social unrest associated with periods of
hyper-inflation); (f) 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; (g)
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; (h) the financial condition of
Russian companies, including large amounts of inter-company debt
which may create a payments crisis on a national scale and the
fact that Russian companies may be smaller, less seasoned and
newly organized companies; (i) dependency on exports and the
corresponding importance of international trade; (j) the risk
that the Russian tax system will not be reformed to prevent
inconsistent, retroactive and/or exorbitant taxation; (k) the
fact that statistical information regarding the economy of Russia
may be inaccurate or not comparable to statistical information
regarding the U.S. or other economies; (l) the risks associated
with the difficulties that may occur in pricing a Fund's
portfolio securities; and (m) possible difficulty in identifying
a purchaser of securities held by a Fund due to the
underdeveloped nature of the securities markets.
Stock corporations are a relatively new concept in Russia.
Russia does not at present have a developed body of securities
laws or laws governing corporations or joint stock companies.
Most of the company and securities laws and regulations of Russia
are in their preliminary stages of development. Laws regarding
fiduciary duties of officers and directors, and the protection of
investors, including foreign investors, are in the early stages
of development and existing laws do not cover all contingencies
or are not generally enforced.
Russia and other of the countries in which the Funds may
invest may be subject to a greater degree of economic, political
and social instability than is the case in the United States and
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 government through extra-
constitutional means; (ii) popular unrest associated with demands
for improved political, economic and social conditions; (iii)
internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious and racial disaffection.
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
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.
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
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.
Additional risks may be involved with the Funds' special
investment techniques, including loans of portfolio securities
and borrowing for investment purposes. These risks are described
under the heading "Investment Techniques" in the Prospectus.
Trading Policies. The Investment Managers and their
affiliated companies serve as investment advisers to other
investment companies and private clients. Accordingly, the
respective portfolios of these funds and clients may contain many
or some of the same securities. When any two or more of these
funds or clients are engaged simultaneously in the purchase or
sale of the same security, the transactions are placed for
execution in a manner designed to be equitable to each party.
The larger size of the transaction may affect the price of the
security and/or the quantity which may be bought or sold for each
party. If the transaction is large enough, brokerage commissions
in certain countries may be negotiated below those otherwise
chargeable.
Sale or purchase of securities, without payment of brokerage
commissions, fees (except customary transfer fees) or other
remuneration in connection therewith, may be effected between any
of these funds, or between funds and private clients, under
procedures adopted pursuant to Rule 17a-7 under the 1940 Act.
Personal Securities Transactions. Access persons of the
Franklin Templeton Group, as defined in SEC Rule 17(j) under the
1940 Act, who are employees of Franklin Resources, Inc. or their
subsidiaries, are permitted to engage in personal securities
transactions subject to the following general restrictions and
procedures: (1) The trade must receive advance clearance from a
compliance officer and must be completed within 24 hours after
this clearance; (2) Copies of all brokerage confirmations must be
sent to the compliance officer and within 10 days after the end
of each calendar quarter, a report of all securities transactions
must be provided to the compliance officer; (3) In addition to
items (1) and (2), access persons involved in preparing and
making investment decisions must file annual reports of their
securities holdings each January and also inform the compliance
officer (or other designated personnel) if they own a security
that is being considered for a fund or other client transaction
or if they are recommending a security in which they have an
ownership interest for purchase or sale by a fund or other
client.
MANAGEMENT OF THE TRUST
The name, address, principal occupation during the past five
years and other information with respect to each of the Trustees
and Principal Executive Officers of the Trust are as follows:
Name, Address and Principal Occupation
Offices with Trust During Past Five Years
MARTIN L. FLANAGAN* Senior vice president,
777 Mariners Island Blvd. treasurer, and chief financial
San Mateo, California officer of Franklin Resources,
Trustee and Vice President Inc.; director, chief executive
officer and executive vice
president of Templeton
Investment Counsel, Inc.;
director, president and chief
executive officer of Templeton
Global Investors, Inc.; director
or trustee and president or vice
president of various Templeton
Funds; accountant, Arthur
Andersen & Company (1982-1983);
member of the International
Society of Financial Analysts
and the American Institute of
Certified Public Accountants.
HASSO-G VON DIERGARDT-NAGLO Farmer; president of Clairhaven
R.R. 3 Investments, Ltd. and other
Stouffville, Ontario private investment companies; a
Trustee director or trustee of other
Templeton Funds.
F. BRUCE CLARKE Retired; former credit advisor,
19 Vista View Blvd. National Bank of Canada,
Thornhill, Ontario Toronto; a director or trustee
Trustee of other Templeton Funds.
BETTY P. KRAHMER Director or trustee of various
2201 Kentmere Parkway civic associations; former
Wilmington, Delaware economic analyst, U.S.
Trustee Government.
CHARLES B. JOHNSON* President, chief executive
777 Mariners Island Blvd. officer, and director of
San Mateo, California Franklin Resources, Inc.;
Trustee and Vice President chairman of the board and
director of Franklin Advisers,
Inc. and Franklin Templeton
Distributors, Inc.; director of
Franklin Administrative
Services, Inc., General Host
Corporation and Templeton Global
Investors, Inc.; and officer,
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.
NICHOLAS F. BRADY* Chairman of Templeton Emerging
102 East Dover Street Markets Investment Trust PLC;
Easton, Maryland chairman of Templeton Latin
Trustee 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); chairman of the board of
Dillon, Read & Co. Inc.
(investment banking) prior
thereto; and director or trustee
of other Templeton Funds.
FRED R. MILLSAPS Manager of personal investments
2665 N.E. 37th Drive (1978-present); chairman and
Fort Lauderdale, Florida chief executive officer of
Trustee Landmark Banking Corporation
(1969-1978); financial vice
president of Florida Power and
Light (1965-1969); vice
president of Federal Reserve
Bank of Atlanta (1958-1965);
director of various other
business and nonprofit
organizations.
JOHN G. BENNETT, JR. Founder, chairman of the board,
3 Radnor Corporate Center and president of the Foundation
Suite 150 for New Era Philanthropy;
100 Matsonford Road president and chairman of the
Radnor, Pennsylvania boards of the Evelyn M. Bennett
Trustee Memorial Foundation and NEP
International Trust; chairman of
the board and chief executive
officer of The Bennett Group
International, LTD; chairman of
the boards of Human Service
Systems, Inc. and Multi-Media
Communications, Inc.; director
or trustee of many national and
international organizations,
universities, and grant making
foundations serving in various
executive board capacities;
member of the Public Policy
Committee of the Advertising
Council.
ANDREW H. HINES, JR. Consultant, Triangle Consulting
150 2nd Avenue N. Group; chairman of the board and
St. Petersburg, Florida chief executive officer of
Trustee Florida Progress Corporation
(1982-February, 1990) and
director of various of its
subsidiaries; chairman and
director of Precise Power
Corporation; executive-in-
residence of Eckerd College
(1991-present); director of
Checkers Drive-In Restaurants,
Inc.; a director or trustee of
other Templeton Funds.
HARRIS J. ASHTON Chairman of the Board,
Metro Center president, and chief executive
1 Station Place officer of General Host
Stamford, Connecticut Corporation (nursery and craft
Trustee centers); director of RBC
Holdings Inc. (a bank holding
company) and Bar-S Foods; and
director, trustee or managing
general partner, as the case may
be, for most of the investment
companies in the Franklin Group
of Funds.
S. JOSEPH FORTUNATO Member of the law firm of
200 Campus Drive Pitney, Hardin, Kipp & Szuch;
Florham Park, New Jersey director of General Host
Trustee Corporation; and director,
trustee or managing general
partner, as the case may be, for
most of the investment companies
in the Franklin Group of Funds.
GORDON S. MACKLIN Chairman of White River
8212 Burning Tree Road Corporation (information
Bethesda, Maryland services); director of Fund
Trustee 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; president of the
National Association of
Securities Dealers, Inc.; and
director, trustee, or managing
general partner, as the case may
be, of most of the investment
companies in the Franklin
Templeton Group.
MARK G. HOLOWESKO President and director of
Lyford Cay Templeton, Galbraith &
Nassau, Bahamas Hansberger Ltd.; director of
President global equity research for
Templeton Worldwide, Inc.;
president or vice president of
the Templeton Funds; investment
administrator with Roy West
Trust Corporation (Bahamas)
Limited (1984-1985).
DORIAN FOYIL Vice president, Portfolio
Lyford Cay Management/Research, of
Nassau, Bahamas Templeton, Galbraith &
Vice President Hansberger Ltd.; formerly,
research analyst, UBS Phillips &
Drew (London).
SAMUEL J. FORESTER, JR. President of the Templeton
500 East Broward Blvd. Global Bond Managers Division of
Fort Lauderdale, Florida Templeton Investment Counsel,
Vice President Inc.; president or vice
president of other Templeton
Funds; founder and partner of
Forester, Hairston Investment
Management (1989-1990); managing
director (Mid-East Region) of
Merrill Lynch, Pierce, Fenner &
Smith Inc. (1987-1988); advisor
for Saudi Arabian Monetary
Agency (1982-1987).
JOHN R. KAY Vice president of the Templeton
500 East Broward Blvd. Funds; vice president and
Fort Lauderdale, Florida treasurer of Templeton Global
Vice President Investors, Inc. and Templeton
Worldwide, Inc.; assistant vice
president of Franklin Templeton
Distributors, Inc.; formerly,
vice president and controller of
the Keystone Group, Inc.
GARY CLEMONS Research analyst for Templeton
Vice President Investment Counsel, Inc. (1993-
present); formerly research
analyst for Templeton
Quantitative Advisors, Inc.
DOUGLAS R. LEMPEREUR Senior vice president of the
500 East Broward Blvd. Templeton Global Bond Managers
Fort Lauderdale, Florida Division of Templeton Investment
Vice President 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).
NEIL S. DEVLIN Senior vice president, Portfolio
500 East Broward Blvd. Management/Research, of the
Fort Lauderdale, Florida Templeton Global Bond Managers
Vice President division of Templeton Investment
Counsel, Inc.; formerly,
portfolio manager and bond
analyst, Constitutional Capital
Management (1985-1987); bond
trader and research analyst,
Bank of New England (1982-1985).
JAMES R. BAIO Certified public accountant;
500 East Broward Blvd. treasurer of the Templeton
Fort Lauderdale, Florida Funds; senior vice president,
Treasurer Templeton Worldwide, Inc.,
Templeton Global Investors,
Inc., and Templeton Funds Trust
Company; formerly, senior tax
manager of Ernst & Young
(certified public accountants)
(1977-1989).
THOMAS M. MISTELE Senior vice president of
700 Central Avenue Templeton Global Investors,
St. Petersburg, Florida Inc.; vice president of Franklin
Secretary Templeton Distributors, Inc.;
secretary of the Templeton
Funds; attorney, Dechert Price &
Rhoads (1985-1988) and Freehill,
Hollingdale & Page (1988);
judicial clerk, U.S. District
Court (Eastern District of
Virginia) (1984-1985).
JACK L. COLLINS Assistant treasurer of the
700 Central Avenue Templeton Funds; assistant vice
St. Petersburg, Florida president of Franklin Templeton
Assistant Treasurer Investor Services, Inc.; former
partner of Grant Thornton,
independent public accountants.
JEFFREY L. STEELE Partner, Dechert Price & Rhoads.
1500 K Street, N.W.
Washington, D.C.
Assistant Secretary
__________________________
* Messrs. Johnson, Flanagan and Brady are Trustees who are
"interested persons" of the Trust as that term is defined in
the 1940 Act. Mr. Brady and Franklin Resources, Inc. are
limited partners of Darby Overseas Partners, L.P. ("Darby
Overseas"). Mr. Brady established Darby Overseas in
February, 1994, and is Chairman and a shareholder of the
corporate general partner of Darby Overseas. In addition,
Darby Overseas and Templeton, Galbraith & Hansberger Ltd.
are limited partners of Darby Emerging Markets Fund, L.P.
TRUSTEE COMPENSATION
All of the Trust's Officers and Trustees also hold positions
with other investment companies in the Franklin Templeton Group.
No compensation is paid by the Trust to any officer 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, based upon the assets of the Trust as of December
31, 1994, 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.
The following table shows the total compensation paid to the
Trustees by the Trust and by all investment companies in the
Franklin Templeton Group for the fiscal year ended December 31,
1994:
Number of
Franklin Total
Aggregate Templeton Fund Compensation
Compensation Boards on from All Funds
Name of from the Which Trustee in Franklin
Trustee Trust Serves Templeton Group
Harris J. Ashton $3,525 54 $319,925
John G. Bennett, Jr. 4,525 23 105,625
Nicholas F. Brady 3,525 23 86,125
F. Bruce Clarke 4,525 19 95,275
Hasso-G von 3,525 19 75,275
Diergardt-Naglo
S. Joseph Fortunato 3,525 56 336,065
Andrew H. Hines, Jr. 4,525 23 106,125
Betty P. Krahmer 3,525 19 75,275
Gordon S. Macklin 3,525 51 303,685
Fred R. Millsaps 4,525 23 106,125
PRINCIPAL SHAREHOLDERS
As of March 31, 1995, there were 594,395 Shares of Growth
and Income Fund outstanding, of which 595 Shares (0.1%) were
owned beneficially, directly or indirectly, by all the Trustees
and Officers of the Trust as a group. As of March 31, 1995,
there were 1,982,187 Shares of Infrastructure Fund outstanding,
of which 559 Shares (0.03%) were owned beneficially, directly or
indirectly, by all the Trustees and Officers of the Trust as a
group. As of March 31, 1995, there were 294,755 Shares of
Americas Government Securities Fund outstanding, of which 170
Shares (less than 0.01%) were owned beneficially, directly or
indirectly, by all the Trustees and Officers of the Trust as a
group. As of March 31, 1995, to the knowledge of management, no
person owned beneficially 5% or more of the outstanding Shares of
Growth and Income Fund, except Templeton Global Investors, Inc.,
500 E. Broward Blvd., Suite 2100, Fort Lauderdale, Florida 33394
("Templeton Global Investors") owned 100,939 Shares (17% of the
outstanding Shares). As of March 31, 1995, to the knowledge of
management, no person owned beneficially 5% or more of the
outstanding Shares of Infrastructure Fund, except Templeton
Global Investors owned 100,321 Shares (5% of the outstanding
Shares). As of March 31, 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 255,283 Shares (86% 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 5, 1995, and will run through July 31, 1996. The Investment
Management Agreements will continue from year to year thereafter,
subject to approval annually by the Board of Trustees or by vote
of a majority of the outstanding Shares of each Fund (as defined
in the 1940 Act) and also, in either event, with the approval of
a majority of those Trustees who are not parties to the
Agreements or interested persons of any such party in person at a
meeting called for the purpose of voting on such approval.
Each Investment Management Agreement requires a Fund's
Investment Manager to manage the investment and reinvestment of
the Fund's assets. The Investment Managers are not required to
furnish any personnel, overhead items or facilities for the
Funds, including daily pricing or trading desk facilities,
although such expenses are paid by investment advisers of some
other investment companies.
Each Investment Management Agreement provides that a Fund's
Investment Manager will select brokers and dealers for execution
of a Fund's portfolio transactions consistent with the Trust's
brokerage policies (see "Brokerage Allocation"). Although the
services provided by broker-dealers in accordance with the
brokerage policies incidentally may help reduce the expenses of
or otherwise benefit the Investment Managers and other investment
advisory clients of the Investment Managers and of their
affiliates, as well as the Funds, the value of such services is
indeterminable and the Investment Managers' fees are not reduced
by any offset arrangement by reason thereof.
When the Investment Manager of a Fund determines to buy or
sell the same security for a Fund that the Investment Manager or
one or more of its affiliates has selected for one or more of its
other clients or for clients of its affiliates, the orders for
all such securities transactions are placed for execution by
methods determined by the Investment Manager, with approval by
the Board of Trustees, to be impartial and fair, in order to seek
good results for all parties. See "Investment Objectives and
Policies -- Trading Policies." Records of securities
transactions of persons who know when orders are placed by a Fund
are available for inspection at least four times annually by the
compliance officer of the Trust so that the non-interested
Trustees (as defined in the 1940 Act) can be satisfied that the
procedures are generally fair and equitable to all parties.
Each Investment Management Agreement provides that a Fund's
Investment Manager shall have no liability to the Trust, a Fund
or any Shareholder of a Fund for any error of judgment, mistake
of law, or any loss arising out of any investment or other act or
omission in the performance by the Investment Manager of its
duties under the Agreement, except liability resulting from
willful misfeasance, bad faith or gross negligence on the
Investment Manager's part or reckless disregard of its duties
under the Agreement. Each Investment Management Agreement will
terminate automatically in the event of its assignment, and may
be terminated by the Trust on behalf of a Fund at any time
without payment of any penalty on 60 days' written notice, with
the approval of a majority of the Trustees in office at the time
or by vote of a majority of the outstanding voting securities of
that Fund (as defined in the 1940 Act).
Management Fees. For its services, 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 $____________, and TICI
received from Infrastructure Fund fees of $___________. During
the period from June 27, 1994 (commencement of operations)
through March 31, 1995, TICI received from Americas Government
Securities Fund fees of $_____________.
The Investment Managers. The Investment Managers are
indirect wholly owned subsidiaries of Franklin Resources, Inc.
("Franklin"), a publicly traded company whose shares are listed
on the New York Stock Exchange. Charles B. Johnson and Rupert H.
Johnson, Jr. are principal shareholders of Franklin and own,
respectively, approximately 24% and 16% of its outstanding
shares. Messrs. Charles B. Johnson and Rupert H. Johnson, Jr.
are brothers.
Sub-Advisory Agreement. Under a Sub-Advisory Agreement
between TICI and Franklin Advisers, Inc. ("Franklin Advisers"),
Franklin Advisers provides TICI with investment advisory
assistance and portfolio management advice with respect to
Americas Government Securities Fund's portfolio. Franklin
Advisers provides TICI on an ongoing basis with research
services, including information, analytical reports, computer
screening studies, statistical data and factual resumes
pertaining to securities. For its services, TICI pays to
Franklin Advisers a fee in U.S. dollars at an annual rate of
0.25% of Americas Government Securities Fund's average daily net
assets. During the fiscal year ended March 31, 1995, Franklin
Advisers received sub-advisory fees of $______.
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;
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
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 $_______ and $________, respectively. During
the period from June 27, 1994 (commencement of operations)
through March 31, 1995, the Business Manager received from
Americas Government Securities Fund business management fees of
$___________.
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
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.
BROKERAGE ALLOCATION
The Investment Management Agreements provide that each
Fund's Investment Manager is responsible for selecting members of
securities exchanges, brokers and dealers (such members, brokers
and dealers being hereinafter referred to as "brokers") for the
execution of the Fund's portfolio transactions and, when
applicable, the negotiation of commissions in connection
therewith. All decisions and placements are made in accordance
with the following principles:
1. Purchase and sale orders are usually placed with
brokers who are selected by a Fund's Investment Manager
as able to achieve "best execution" of such orders.
"Best execution" means prompt and reliable execution at
the most favorable securities price, taking into
account the other provisions hereinafter set forth.
The determination of what may constitute best execution
and price in the execution of a securities transaction
by a broker involves a number of considerations,
including, without limitation, the overall direct net
economic result to a Fund (involving both price paid or
received and any commissions and other costs paid), the
efficiency with which the transaction is effected, the
ability to effect the transaction at all where a large
block is involved, availability of the broker to stand
ready to execute possibly difficult transactions in the
future, and the financial strength and stability of the
broker. Such considerations are judgmental and are
weighed by the Investment Managers in determining the
overall reasonableness of brokerage commissions.
2. In selecting brokers for portfolio transactions, each
Fund's Investment Manager takes into account its past
experience as to brokers qualified to achieve "best
execution," including brokers who specialize in any
foreign securities held by the Fund.
3. The Investment Managers are authorized to allocate
brokerage business to brokers who have provided
brokerage and research services, as such services are
defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "1934 Act"), for a Fund and/or other
accounts, if any, for which the Investment Managers
exercise investment discretion (as defined in Section
3(a)(35) of the 1934 Act) and, as to transactions to
which fixed minimum commission rates are not
applicable, to cause a Fund to pay a commission for
effecting a securities transaction in excess of the
amount another broker would have charged for effecting
that transaction, if the Investment Manager for that
Fund in making the selection in question determines in
good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research
services provided by such broker, viewed in terms of
either that particular transaction or the Investment
Manager's overall responsibilities with respect to that
Fund and the other accounts, if any, as to which it
exercises investment discretion. In reaching such
determination, the Investment Managers are not required
to place or attempt to place a specific dollar value on
the research or execution services of a broker or on
the portion of any commission reflecting either of said
services. In demonstrating that such determinations
were made in good faith, the Investment Managers shall
be prepared to show that all commissions were allocated
and paid for purposes contemplated by the Trust's
brokerage policy; that the research services provide
lawful and appropriate assistance to the Investment
Managers in the performance of their investment
decision-making responsibilities; and that the
commissions paid were within a reasonable range. The
determination that commissions were within a reasonable
range shall be based on any available information as to
the level of commissions known to be charged by other
brokers on comparable transactions, but there shall be
taken into account the Trust's policies that (i)
obtaining a low commission is deemed secondary to
obtaining a favorable securities price, since it is
recognized that usually it is more beneficial to a Fund
to obtain a favorable price than to pay the lowest
commission; and (ii) the quality, comprehensiveness and
frequency of research studies which are provided for
the Investment Managers are useful to the Investment
Managers in performing their advisory services under
their Investment Management Agreements with the Trust.
Research services provided by brokers to the Investment
Managers are considered to be in addition to, and not
in lieu of, services required to be performed by the
Investment Managers under its Investment Management
Agreements with the Trust. Research furnished by
brokers through whom a Fund effects securities
transactions may be used by the Investment Managers for
any of their accounts, and not all such research may be
used by the Investment Managers for the Funds. When
execution of portfolio transactions is allocated to
brokers trading on exchanges with fixed brokerage
commission rates, account may be taken of various
services provided by the broker, including quotations
outside the United States for daily pricing of foreign
securities held in a Fund's portfolio.
4. Purchases and sales of portfolio securities within the
United States other than on a securities exchange are
executed with primary market makers acting as
principal, except where, in the judgment of a Fund's
Investment Manager, better prices and execution may be
obtained on a commission basis or from other sources.
5. Sales of the Funds' Shares (which shall be deemed to
include also shares of other companies registered under
the 1940 Act which have either the same investment
adviser or an investment adviser affiliated with either
Fund's Investment Manager) made by a broker are one
factor among others to be taken into account in
deciding to allocate portfolio transactions (including
agency transactions, principal transactions, purchases
in underwritings or tenders in response to tender
offers) for the account of a Fund to that broker;
provided that the broker shall furnish "best
execution," as defined in paragraph 1 above, and that
such allocation shall be within the scope of that
Fund's other policies as stated above; and provided
further, that in every allocation made to a broker in
which the sale of Shares is taken into account there
shall be no increase in the amount of the commissions
or other compensation paid to such broker beyond a
reasonable commission or other compensation determined,
as set forth in paragraph 3 above, on the basis of best
execution alone or best execution plus research
services, without taking account of or placing any
value upon such sale of Shares.
Insofar as known to management, no Trustee or officer of the
Trust, nor the Investment Managers or Principal Underwriter or
any person affiliated with either of them, has any material
direct or indirect interest in any broker employed by or on
behalf of the Trust. Franklin Templeton Distributors, Inc., the
Trust's Principal Underwriter, is a registered broker-dealer, but
it does not intend to execute any purchase or sale transactions
for the Funds' portfolios or to participate in any commissions on
any such transactions. 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 $___________ and $________________, 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 $________________. 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
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 (1) the NYSE is
closed other than for customary weekend and holiday closings, (2)
trading on the NYSE is restricted, (3) an emergency exists as a
result of which disposal of securities owned by a Fund is not
reasonably practicable or it is not reasonably practicable for a
Fund fairly to determine the value of its net assets, or (4) for
such other period as the 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: (a) freeze the account and require the written
agreement of all persons deemed by the Fund to have a potential
property interest in the account, prior to executing instructions
regarding the account; or (b) interplead disputed funds or
accounts with a court of competent jurisdiction. Moreover, the
Fund may surrender ownership of all or a portion of the account
to the 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
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. 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
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 Class I Shares of Templeton Americas Government
Securities Fund, or $50,000 or more in Shares of Growth and
Income Fund, Infrastructure Fund, Greater European Fund, Latin
America Fund or any other fund in the Franklin Templeton Group
(except Templeton Capital Accumulator Fund, Inc., Templeton
Variable Annuity Fund, Templeton Variable Products Series Fund,
Franklin Valuemark Funds and Franklin Government Securities
Trust) within 13 months (whether in one lump sum or in
installments, the first of which may not be less than 5% of the
total intended amount and each subsequent installment not less
than $25 unless the investor is a qualifying employee benefit
plan (the "Benefit Plan"), including automatic investment and
payroll deduction plans), and to beneficially hold the total
amount of such Class I Shares fully paid for and outstanding
simultaneously for at least one full business day before the
expiration of that period, should execute a Letter of Intent
("LOI") on the form provided in the Shareholder Application in
the Prospectus. Payment for not less than 5% of the total
intended amount must accompany the executed LOI unless the
investor is a Benefit Plan. Except for purchases of Shares by a
Benefit Plan, those Class I Shares purchased with the first 5% of
the intended amount stated in the LOI will be held as "Escrowed
Shares" for as long as the LOI remains unfulfilled. Although the
Escrowed Shares are registered in the investor's name, his full
ownership of them is conditional upon fulfillment of the LOI. No
Escrowed Shares can be redeemed by the investor for any purpose
until the LOI is fulfilled or terminated. If the LOI is
terminated for any reason other than fulfillment, the Transfer
Agent will redeem that portion of the Escrowed Shares required
and apply the proceeds to pay any adjustment that may be
appropriate to the sales commission on all Class I Shares
(including the Escrowed Shares) already purchased under the LOI
and apply any unused balance to the investor's account. The LOI
is not a binding obligation to purchase any amount of Shares, but
its execution will result in the purchaser paying a lower sales
charge at the appropriate quantity purchase level. A purchase
not originally made pursuant to an LOI may be included under a
subsequent LOI executed within 90 days of such purchase. In this
case, an adjustment will be made at the end of 13 months from the
effective date of the LOI at the net asset value per Share then
in effect, unless the investor makes an earlier written request
to the Principal Underwriter upon fulfilling the purchase of
Shares under the LOI. In addition, the aggregate value of any
Shares, including Class II Shares, purchased prior to the 90-day
period referred to above may be applied to purchases under a
current LOI in fulfilling the total intended purchases under the
LOI. However, no adjustment of sales charges previously paid on
purchases prior to the 90-day period will be made.
If an LOI is executed on behalf of a benefit plan (such
plans are described under "How to Buy Shares of the Fund -- Net
Asset Value Purchases (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 Group (except
Templeton Capital Accumulator Fund, Inc., Templeton Variable
Annuity Fund, Templeton Variable Products Series Fund, Franklin
Valuemark Funds and Franklin Government Securities Trust) under
the LOI. Benefit Plans are not subject to the requirement to
reserve 5% of the total intended purchase, or to any penalty as a
result of the early termination of a plan, nor are Benefit Plans
entitled to receive retroactive adjustments in price for
investments made before executing LOIs.
Special Net Asset Value Purchases. As discussed in the
Prospectus under "How to Buy Shares of the Fund -- Description of
Special Net Asset Value Purchases," certain categories of
investors may purchase Class I Shares of a Fund 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
of $2 million but less than $3 million, plus 0.50% on sales of $3
million but less than $50 million, plus 0.25% on sales of $50
million but less than $100 million, plus 0.15% on sales of $100
million or more. These payment breakpoints are reset every 12
months for purposes of additional purchases. With respect to
purchases made at net asset value by certain trust companies and
trust departments of banks and certain retirement plans of
organizations with collective retirement plan assets of $10
million or more, FTD, or one of its affiliates, out of its own
resources, may pay up to 1% of the amount invested.
TAX STATUS
The following discussion summarizes certain U.S. Federal tax
considerations incident to an investment in a Fund.
Each Fund intends to 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
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 investment
company taxable income or net capital gain may be characterized
as a return of capital to Shareholders or, in some cases, as
capital gain. Shareholders will be notified annually as to the
Federal tax status of dividends and distributions they receive
and any tax withheld thereon.
Distributions by a Fund reduce the net asset value of the
Fund Shares. Should a distribution reduce the net asset value
below a Shareholder's cost basis, the distribution nevertheless
would be taxable to the Shareholder as ordinary income or capital
gain as described above, even though, from an investment
standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax
implication of buying Shares just prior to a distribution by a
Fund. The price of Shares purchased at that time includes the
amount of the forthcoming distribution, but the distribution will
generally be taxable to them.
Certain of the debt securities acquired by the Funds may be
treated as debt securities that were originally issued at a
discount. Original issue discount can generally be defined as
the difference between the price at which a security was issued
and its stated redemption price at maturity. Although no cash
income is actually received by the Funds, original issue discount
that accrues on a debt security in a given year generally is
treated for Federal income tax purposes as interest and,
therefore, such income would be subject to the distribution
requirements of the Code.
Some of the debt securities may be purchased by the Funds at
a discount which exceeds the original issue discount on such debt
securities, if any. This additional discount represents market
discount for Federal income tax purposes. The gain realized on
the disposition of any taxable debt security having market
discount generally will be treated as ordinary income to the
extent it does not exceed the accrued market discount on such
debt security. Generally, market discount accrues on a daily
basis for each day the debt security is held by a Fund at a
constant rate over the time remaining to the debt security's
maturity or, at the election of a Fund, at a constant yield to
maturity which takes into account the 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.
A Fund may invest in stocks of foreign companies that are
classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign company is classified as a PFIC
if at least one-half of its assets constitute investment-type
assets or 75% or more of its gross income is investment-type
income. Under the PFIC rules, an "excess distribution" received
with respect to PFIC stock is treated as having been realized
ratably over the period during which a Fund held the PFIC stock.
A Fund itself will be subject to tax on the portion, if any, of
the excess distribution that is allocated to that Fund's holding
period in prior taxable years (and an interest factor will be
added to the tax, as if the tax had actually been payable in such
prior taxable years) even though the Fund distributes the
corresponding income to Shareholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain
distributions from a PFIC. All excess distributions are taxable
as ordinary income.
A Fund may be able to elect alternative tax treatment with
respect to PFIC stock. Under an election that currently may be
available, a Fund generally would be required to include in its
gross income its share of the earnings of a PFIC on a current
basis, regardless of whether any distributions are received from
the PFIC. If this election is made, the special rules, discussed
above, relating to the taxation of excess distributions, would
not apply. In addition, another election may be available that
would involve marking to market the Funds' PFIC shares at the end
of each taxable year (and on certain other dates prescribed in
the Code), with the result that unrealized gains are treated as
though they were realized. If this election were made, tax at
the Fund level under the PFIC rules would generally be
eliminated, but the Funds could, in limited circumstances, incur
nondeductible interest charges. Each Fund's intention to qualify
annually as a regulated investment company may limit its
elections with respect to PFIC shares.
Because the application of the PFIC rules may affect, among
other things, the character of gains, the amount of gain or loss
and the timing of the recognition of income with respect to PFIC
stock, as well as subject a Fund itself to tax on certain income
from PFIC stock, the amount that must be distributed to Share-
holders, and which will be taxed to Shareholders as ordinary
income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC
stock.
Income received by a Fund from sources within foreign
countries may be subject to withholding and other income or
similar taxes imposed by such countries. If more than 50% of the
value of a Fund's total assets at the close of its taxable year
consists of securities of foreign corporations, that Fund will be
eligible and intends to elect to "pass through" to the Fund's
Shareholders the amount of foreign taxes paid by that Fund.
Pursuant to this election, a Shareholder will be required to
include in gross income (in addition to taxable dividends
actually received) his pro rata share of the foreign taxes paid
by a Fund, and will be entitled either to deduct (as an itemized
deduction) his pro rata share of foreign income and similar taxes
in computing his taxable income or to use it as a foreign tax
credit against his U.S. Federal income tax liability, subject to
limitations. No deduction for foreign taxes may be claimed by a
Shareholder who does not itemize deductions, but such a
Shareholder may be eligible to claim the foreign tax credit (see
below). Each Shareholder will be notified within 60 days after
the close of the relevant Fund's taxable year whether the foreign
taxes paid by the Fund will "pass through" for that year.
Generally, a credit for foreign taxes is subject to the
limitation that it may not exceed the Shareholder's U.S. tax
attributable to his foreign source taxable income. For this
purpose, if the pass-through election is made, the source of a
Fund's income flows through to its Shareholders. With respect to
a Fund, gains from the sale of securities will be treated as
derived from U.S. sources and certain currency fluctuation gains,
including fluctuation gains from foreign currency-denominated
debt securities, receivables and payables, will be treated as
ordinary income derived from U.S. sources. The limitation on the
foreign tax credit is applied separately to foreign source
passive income (as defined for purposes of the foreign tax
credit), including the foreign source passive income passed
through by a Fund. Shareholders may be unable to claim a credit
for the full amount of their proportionate share of the foreign
taxes paid by a Fund. Foreign taxes may not be deducted in
computing alternative minimum taxable income and the foreign tax
credit can be used to offset only 90% of the alternative minimum
tax (as computed under the Code for purposes of this limitation)
imposed on corporations and individuals. If a Fund is not
eligible to make the election to "pass through" to its
Shareholders its foreign taxes, the foreign income taxes it pays
generally will reduce investment company taxable income and the
distributions by a Fund will be treated as United States source
income.
Certain options, futures, and foreign currency forward
contracts in which the Funds may invest are "section 1256
contracts." Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or
losses ("60/40"); however, foreign currency gains or losses (as
discussed below) arising from certain section 1256 contracts may
be treated as ordinary income or loss. Also, section 1256
contracts held by a Fund at the end of each taxable year (and on
certain other dates as prescribed under the Code) are "marked-to-
market" with the result that unrealized gains or losses are
treated as though they were realized.
Generally, the hedging transactions undertaken by a Fund may
result in "straddles" for U.S. Federal income tax purposes. The
straddle rules may affect the character of gains (or losses)
realized by a Fund. In addition, losses realized by a Fund on
positions that are part of the straddle may be deferred under the
straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the
losses are realized. Because only a few regulations implementing
the straddle rules have been promulgated, the tax consequences to
a Fund of hedging transactions are not entirely clear. The
hedging transactions may increase the amount of short-term
capital gain realized by a Fund which is taxed as ordinary income
when distributed to Shareholders.
A Fund may make one or more of the elections available under
the Code which are applicable to straddles. If a Fund makes any
of the elections, the amount, character, and timing of the
recognition of gains or losses from the affected straddle
positions will be determined under rules that vary according to
the election(s) made. The rules applicable under certain of the
elections may operate to accelerate the recognition of gains or
losses from the affected straddle positions.
Because application of the straddle rules may affect the
character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle
positions, the amount which must be distributed to Shareholders
and which will be taxed to Shareholders as ordinary income or
long-term capital gain may be increased or decreased as compared
to a fund that did not engage in such hedging transactions.
Requirements relating to each Fund's tax status as a
regulated investment company may limit the extent to which a Fund
will be able to engage in transactions in options, futures, and
foreign currency forward contracts.
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.
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 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.
In some cases, Shareholders will not be permitted to take
sales charges into account for purposes of determining the amount
of gain or loss realized on the disposition of their Shares.
This prohibition generally applies where (1) the Shareholder
incurs a sales charge in acquiring the stock of a regulated
investment company, (2) the stock is disposed of before the 91st
day after the date on which it was acquired, and (3) the
Shareholder subsequently acquires shares of the same or another
regulated investment company and the otherwise applicable sales
charge is reduced or eliminated under a "reinvestment right"
received upon the initial purchase of shares of stock. In that
case, the gain or loss recognized will be determined by excluding
from the tax basis of the Shares exchanged all or a portion of
the sales charge incurred in acquiring those Shares. This
exclusion applies to the extent that the otherwise applicable
sales charge with respect to the newly acquired Shares is reduced
as a result of having incurred a sales charge initially. Sales
charges affected by this rule are treated as if they were
incurred with respect to the stock acquired under the
reinvestment right. This provision may be applied to successive
acquisitions of stock.
Each Fund generally will be required to withhold Federal
income tax at a rate of 31% ("backup withholding") from dividends
paid, capital gain distributions, and redemption proceeds to
Shareholders if (1) the Shareholder fails to furnish a Fund with
the Shareholder's correct taxpayer identification number or
social security number and to make such certifications as a Fund
may require, (2) the 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 (3) when required to do so, the Shareholder fails to
certify that he is not subject to backup withholding. Any
amounts withheld may be credited against the Shareholder's
Federal income tax liability.
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
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 (1) payments to
broker-dealers who provide certain services of value to each
Fund's Shareholders (sometimes referred to as a "trail fee"); (2)
reimbursement of expenses relating to selling and servicing
efforts or of organizing and conducting sales seminars; (3)
payments to employees or agents of the Principal Underwriter who
engage in or support distribution of Shares; (4) payments of the
costs of preparing, printing and distributing Prospectuses and
reports to prospective investors and of printing and advertising
expenses; (5) payment of dealer commissions and wholesaler
compensation in connection with sales of the Funds' Shares and
interest or carrying charges in connection therewith; and (6)
such other similar services as the Trust's Board of Trustees
determines to be reasonably calculated to result in the sale of
Shares. Under the Plans 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.
During the fiscal year ended March 31, 1995, FTD incurred
costs and expenses (including advanced commissions) of $________
in connection with distribution of Growth and Income Fund's Class
I Shares, and $_______ 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 $________ 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 has 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 expenses
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 $______; sales promotion $______; sales
materials $______; printing $______; advertising $______; and
wholesaler commissions $______; and with respect to
Infrastructure Fund, the following amounts on: compensation to
dealers $______; sales promotion $______; sales materials
$______; printing $______; advertising $______; and wholesaler
commissions $______. During the period from June 27, 1994
(commencement of operations) through March 31, 1995, FTD spent,
with respect to Americas Government Securities Fund, the
following amounts on: compensation to dealers $______; sales
promotion $______; sales materials $______; printing $______;
advertising $______; and wholesaler commissions $______.
The Underwriting Agreement provides that the Principal
Underwriter will use its best efforts to maintain a broad and
continuous distribution of each Fund's Shares among bona fide
investors and may sign selling agreements with responsible
dealers, as well as sell to individual investors. The Shares are
sold only at the Offering Price in effect at the time of sale,
and each Fund receives not less than the full net asset value of
the Shares sold. The discount between the Offering Price and the
net asset value of a Fund's Shares may be retained by the
Principal Underwriter or it may reallow all or any part of such
discount to dealers. During the fiscal year ended March 31,
1995, FTD retained of such discount $______ or approximately ___%
of the gross commissions on sales of Growth and Income Fund and
$______ or approximately ___% of the gross commissions on sales
of Infrastructure Fund. During the period from June 27, 1994
(commencement of operations) through March 31, 1995, FTD retained
of such discount $______ or approximately ___% of the gross
commissions on sales of Americas Government Securities Fund. The
Principal Underwriter in all cases buys Shares from a Fund acting
as principal for its own account. Dealers generally act as
principal for their own account in buying Shares from the
Principal Underwriter. No agency relationship exists between any
dealer and a Fund or the Principal Underwriter.
The Underwriting Agreement provides that each Fund shall pay
the costs and expenses incident to registering and qualifying its
Shares for sale under the Securities Act of 1933 and under the
applicable blue sky laws of the jurisdictions in which the
Principal Underwriter desires to distribute such Shares, and for
preparing, printing and distributing prospectuses and reports to
Shareholders. The Principal Underwriter pays the cost of
printing additional copies of prospectuses and reports to
Shareholders used for selling purposes. (The Funds pay costs of
preparation, set-up and initial supply of their prospectuses for
existing Shareholders.)
The Underwriting Agreement is subject to renewal from year
to year in accordance with the provisions of the 1940 Act and
terminates automatically in the event of its assignment. The
Underwriting Agreement may be terminated without penalty by
either party upon 60 days' written notice to the other, provided
termination by the Trust shall be approved by the Board of
Trustees or a majority (as defined in the 1940 Act) of the
Shareholders. The Principal Underwriter is relieved of liability
for any act or omission in the course of its performance of the
Underwriting Agreement, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations.
FTD is the principal underwriter for the other Templeton
Funds.
DESCRIPTION OF SHARES
The Shares of each Fund have the same preferences,
conversion and other rights, voting powers, restrictions and
limitations as to dividends, qualifications and terms and
conditions of redemption, except as follows: all consideration
received from the sale of Shares of a Fund, together with all
income, earnings, profits and proceeds thereof, belongs to that
Fund and is charged with liabilities in respect to that Fund and
of that Fund's part of general liabilities of the Trust in the
proportion that the total net assets of the Fund bear to the
total net assets of both Funds. The net asset value of a Share
of a Fund is based on the assets belonging to that Fund less the
liabilities charged to that Fund, and dividends are paid on
Shares of a Fund only out of lawfully available assets belonging
to that Fund. In the event of liquidation or dissolution of the
Trust, the Shareholders of each Fund will be entitled, out of
assets of the Trust available for distribution, to the assets
belonging to that particular Fund.
The Trust Instrument provides that the holders of not less
than two-thirds of the outstanding Shares of the Funds may remove
a person serving as Trustee either by declaration in writing or
at a meeting called for such purpose. The Trustees are required
to call a meeting for the purpose of considering the removal of a
person serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding Shares of the
Trust.
The Shares have non-cumulative voting rights so that the
holders of a plurality of the Shares voting for the election of
Trustees at a meeting at which 50% of the outstanding Shares are
present can elect all the Trustees and in such event, the holders
of the remaining Shares voting for the election of Trustees will
not be able to elect any person or persons to the Board of
Trustees.
PERFORMANCE INFORMATION
The Funds may, from time to time, include their total
return, 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 total return for the period from March 14, 1994
(commencement of operations) through September 30, 1994, on an
annualized basis, was 2.74% for Growth and Income Fund and 6.36%
for Infrastructure Fund. The total return for the period from
June 27, 1994 (commencement of operations) through September 30,
1994, on an annualized basis, was 0.00% for Americas Government
Securities Fund. The average annual total return for the one-
year period ended March 31, 1995 was _____% for Growth and Income
Fund and ____% 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 ____% for Americas
Government Securities Fund.
Quotations 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) cd) +1) 6) - 1]
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 ___%.
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
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, of various countries as published by
various statistical organizations.
(6) To assist investors in understanding the different returns
and risk characteristics of various investments, the Fund
may show historical returns of various investments and
published indices (e.g., Ibbotson Associates, Inc. Charts
and Morgan Stanley EAFE - Index).
(7) The major industries located in various jurisdictions as
published by the Morgan Stanley Index.
(8) Rankings by DALBAR Surveys, Inc. with respect to mutual fund
shareholder services.
(9) Allegorical stories illustrating the importance of
persistent long-term investing.
(10) The Fund's portfolio turnover rate and its ranking relative
to industry standards as published by Lipper Analytical
Services, Inc. or Morningstar, Inc.
(11) A description of the Templeton organization's investment
management philosophy and approach, including its worldwide
search for undervalued or "bargain" securities and its
diversification by industry, nation and type of stocks or
other securities.
(12) Quotations from the Templeton organization's founder, Sir
John Templeton,* advocating the virtues of diversification
and long-term investing, including the following:
_______________
* Sir John Templeton is not involved in investment decisions,
which are made by each Fund's Investment Manager.
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."
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 in the Franklin Templeton Group or the
dollar amount of fund and private account assets under management
in advertising materials.
FINANCIAL STATEMENTS
The financial statements contained in the Annual Reports to
Shareholders of Rising Dividends Fund, Infrastructure Fund, and
Americas Government Securities Fund, each dated March 31, 1995,
are incorporated herein by reference.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
To be incorporated by Reference from the March
31, 1995 Annual Reports to the Shareholders of
Templeton Global Rising Dividends Fund and
Templeton Global Infrastructure Fund in a
subsequent amendment to be filed pursuant to
Rule 485(b):
Independent Auditor's Reports dated April
__, 1995
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
(b) Exhibits:
(1) Trust Instrument*
(2) Bylaws**
(3) Not applicable
(4)(A) 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) Dealer Agreement**
(7) Not applicable
(8) Amended and Restated Custody
Agreement****
(9)(A) Amended and Restated Business Management
Agreement****
(B) Amended and Restated Transfer Agent
Agreement****
(C) Form of Sub-Transfer Agent Services
Agreement*****
(D) Form of Shareholder Sub-Accounting
Services Agreement*****
(10) Opinion and consent of counsel (filed
with Rule 24f-2 Notice)
(11) Consent of Independent Public Accountants
(12) Not applicable
(13)(A) Form of Initial Capital Agreement*****
(B) Investment Letter*******
(14) Not applicable
(15)(A)(i) Distribution Plan - Templeton Global
Rising Dividends Fund Class I*******
(ii) Distribution Plan - Templeton Global
Rising Dividends Fund Class II*******
(B)(i) Distribution Plan - Templeton Global
Infrastructure Fund Class I*******
(ii) Distribution Plan - Templeton Global
Infrastructure Fund Class II*******
(C) Distribution Plan - Templeton Americas
Government Securities Fund***
(D)(i) Distribution Plan - Templeton Greater
European Fund Class I****
(ii) Distribution Plan - Templeton Greater
European Fund Class II****
(E)(i) Distribution Plan - Templeton Latin
America Fund Class I****
(ii) Distribution Plan - Templeton Latin
America Fund Class II****
(16) Not applicable - Schedule showing
computation of performance quotations
provided in response to Item 22
(unaudited)
(17) Assistant Secretary's Certificate
pursuant to Rule 483(b)***
(18) Form of Multiclass Plan*******
(19)(A) Semi-Annual Report dated September 30,
1994 for Templeton Global Rising
Dividends Fund******
(B) Semi-Annual Report dated September 30,
1994 for Templeton Global Infrastructure
Fund******
(C) Semi-Annual Report dated September 30,
1994 for Templeton Americas Government
Securities Fund******
(27) Financial Data Schedule
____________________
* Filed with the initial Registration Statement on
December 21, 1993.
** Filed with Pre-Effective Amendment No. 1 to the
Registration Statement on March 1, 1994.
*** Filed with Post-Effective Amendment No. 1 to the
Registration Statement on April 28, 1994.
**** Filed with Post-Effective Amendment No. 4 to the
Registration Statement on February 21, 1995.
***** Filed with Pre-Effective Amendment No. 2 to the
Registration Statement on March 14, 1994.
****** Filed with Post-Effective Amendment No. 3 to the
Registration Statement on December 2, 1994.
******* Filed with Post-Effective Amendment No. 5 to the
Registration Statement on May 1, 1995.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Record Holders
Templeton Global Rising Dividends Fund
(Templeton Growth and Income Fund)
Shares of Beneficial Interest, par value $0.01 per
share: 745 Class I shareholders, 0 Class II
shareholders as of April 28, 1995.
Templeton Global Infrastructure Fund
Shares of Beneficial Interest, par value $0.01 per
share: 3,182 Class I shareholders, 0 Class II
shareholders as of April 28, 1995.
Templeton Americas Government Securities Fund
Shares of Beneficial Interest, par value $0.01 per
share: 48 Class I shareholders, 0 Class II
shareholders as of April 28, 1995.
Templeton Greater European Fund
Shares of Beneficial Interest, par value $0.01 per
share: 1 Class I shareholder, 1 Class II shareholder
as of May 5, 1995.
Templeton Latin America Fund
Shares of Beneficial Interest, par value $0.01 per
share: 1 Class I shareholder, 1 Class II shareholder
as of May 5, 1995.
Item 27. Indemnification
Reference is made to Article X, Section 10.02 of the
Registrant's Trust Instrument, which is filed
herewith.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant by the Registrant pursuant to the Trust
Instrument or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange
Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by trustees, officers or controlling persons of
the Registrant in connection with the successful
defense of any act, suit or proceeding) is asserted
by such trustees, officers or controlling persons in
connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is
against public policy as expressed in the Act and
will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Advisers
and their Officers and Directors
The business and other connections of Templeton,
Galbraith & Hansberger Ltd. (the investment adviser
of Templeton 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,
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, 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 Fund, Franklin Strategic
Series, Franklin Tax-Advantaged High Yield
Securities Fund, Franklin Tax-Advantaged
International Bond Fund, Franklin Tax-Advantaged
U.S. Government Securities Fund, Franklin Tax
Exempt Money Fund, Franklin Tax-Free Trust,
Franklin Templeton Japan Fund, and Institutional
Fiduciary 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.
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
Gregory E. Johnson President None
Charles B. Johnson Director Trustee and
Vice President
Rupert H. Johnson, Jr. Executive Vice 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
James K. Blinn Vice President None
Richard O. Conboy Vice President None
James A. Escobedo Vice President None
Sheppard G. Griswold Vice President None
Carolyn L. Hennion Vice President None
Peter Jones Vice President None
700 Central Avenue
St. Petersburg, FL 33701
Philip J. Kearns Vice President None
Jack Lemein Vice President None
John R. McGee Vice President None
Thomas M. Mistele Vice President Secretary
700 Central Avenue
St. Petersburg, FL 33701
Harry G. Mumford Vice President None
Thomas H. O'Connor Vice President None
Vivian J. Palmieri Vice President None
Kent P. Strazza Vice President None
John R. Trayser Vice President None
Leslie M. Kratter Secretary None
Philip Bensen Assistant Vice None
700 Central Avenue President
St. Petersburg, FL 33701
James F. Duryea Assistant Vice None
President
Robert N. Geppner Assistant Vice None
President
Rich Handrich Assistant Vice None
700 Central Avenue President
St. Petersburg, FL 33701
Brad N. Hanson Assistant Vice None
President
John R. Kay Assistant Vice Vice President
500 East Broward Blvd. President
Ft. Lauderdale, FL 33394
Richard S. Petrell Assistant Vice None
President
Janice Salvato Assistant Vice None
President
Clement Sanfilippo Assistant Vice None
700 Central Avenue President
St. Petersburg, FL 33701
Susan K. Tallarico Assistant Vice None
President
Karen DeBellis Assistant Treasurer None
700 Central Avenue
St. Petersburg, FL 33701
Philip A. Scatena Assistant Treasurer None
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of
the Investment Company Act of 1940 and rules promul-
gated thereunder are in the possession of Templeton
Global Investors, Inc., 500 East Broward Blvd., Fort
Lauderdale, Florida 33394.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant undertakes to call a meeting of
Shareholders for the purpose of voting upon the
question of removal of a Trustee or Trustees when
requested to do so by the holders of at least 10%
of the Registrant's outstanding shares of
beneficial interest and in connection with such
meeting to comply with the shareholder
communications provisions of Section 16(c) of the
Investment Company Act of 1940.
(d) Registrant undertakes to furnish to each person to
whom a Prospectus for a series of the Registrant
is provided a copy of the series' latest annual
report, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Washington, D.C. on the
8th day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
By: __________________________________
Mark G. Holowesko*
President
*By: /s/ Jeffrey L. Steele
Jeffrey L. Steele
attorney-in-fact**
Pursuant to the requirements of the Securities Act of 1933,
as amended, this amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the date indicated.
Signature Title Date
________________________ President May 8, 1995
Mark G. Holowesko* (Principal Executive
Officer)
________________________ Treasurer May 8, 1995
James R. Baio* (Principal Financial
and Accounting Officer)
________________________ Trustee May 8, 1995
Charles B. Johnson*
________________________ Trustee May 8, 1995
Martin L. Flanagan*
________________________ Trustee May 8, 1995
Hasso-G von Diergardt-Naglo*
________________________ Trustee May 8, 1995
F. Bruce Clarke*
________________________ Trustee May 8, 1995
Betty P. Krahmer*
________________________ Trustee May 8, 1995
Fred R. Millsaps*
________________________ Trustee May 8, 1995
John G. Bennett, Jr.*
________________________ Trustee May 8, 1995
Andrew H. Hines, Jr.*
________________________ Trustee May 8, 1995
Harris J. Ashton*
________________________ Trustee May 8, 1995
S. Joseph Fortunato*
________________________ Trustee May 8, 1995
Gordon S. Macklin*
________________________ Trustee May 8, 1995
Nicholas F. Brady*
*By: /s/ Jeffrey L. Steele
Jeffrey L. Steele
attorney-in-fact**
______________________
** Powers of attorney were filed in Pre-Effective Amendment No.
1 to the Registration Statement on Form N-1A of Templeton
Global Investment Trust (File No. 33-73244), filed on
March 1, 1994.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS FILED WITH
POST-EFFECTIVE AMENDMENT NO. 6 TO THE
REGISTRATION STATEMENT ON FORM N-1A
TEMPLETON GLOBAL INVESTMENT TRUST
EXHIBIT INDEX
Exhibit Number Name of Exhibit
(11) Consent of Independent Public
Accountants
(27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL RISING DIVIDENDS FUND SEPTEMBER 30, 1994 SEMI-ANNUAL
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> TEMPLETON GLOBAL RISING DIVIDENDS FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 3962605
<INVESTMENTS-AT-VALUE> 3957304
<RECEIVABLES> 295037
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 62830
<TOTAL-ASSETS> 4315171
<PAYABLE-FOR-SECURITIES> 270518
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25867
<TOTAL-LIABILITIES> 296385
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4006368
<SHARES-COMMON-STOCK> 395912
<SHARES-COMMON-PRIOR> 10022
<ACCUMULATED-NII-CURRENT> 21794
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4075)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5301)
<NET-ASSETS> 4018786
<DIVIDEND-INCOME> 9280
<INTEREST-INCOME> 24597
<OTHER-INCOME> 0
<EXPENSES-NET> 12171
<NET-INVESTMENT-INCOME> 21706
<REALIZED-GAINS-CURRENT> (4075)
<APPREC-INCREASE-CURRENT> (5329)
<NET-CHANGE-FROM-OPS> 12302
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 395877
<NUMBER-OF-SHARES-REDEEMED> 9987
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3918450
<ACCUMULATED-NII-PRIOR> 88
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7302
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 54468
<AVERAGE-NET-ASSETS> 1942103
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> .02
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALS 5.60%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL INFRASTRUCTURE FUND SEPTEMBER 30, 1994 SEMI-ANNUAL
REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> TEMPLETON GLOBAL INFRASTRUCTURE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 11947185
<INVESTMENTS-AT-VALUE> 12053767
<RECEIVABLES> 862092
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 73521
<TOTAL-ASSETS> 12989380
<PAYABLE-FOR-SECURITIES> 980373
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39324
<TOTAL-LIABILITIES> 1019697
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11845773
<SHARES-COMMON-STOCK> 1158113
<SHARES-COMMON-PRIOR> 10072
<ACCUMULATED-NII-CURRENT> 29985
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12657)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 106582
<NET-ASSETS> 11969683
<DIVIDEND-INCOME> 7638
<INTEREST-INCOME> 46292
<OTHER-INCOME> 0
<EXPENSES-NET> 24033
<NET-INVESTMENT-INCOME> 29897
<REALIZED-GAINS-CURRENT> (12657)
<APPREC-INCREASE-CURRENT> 106554
<NET-CHANGE-FROM-OPS> 123794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1165991
<NUMBER-OF-SHARES-REDEEMED> 17950
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 11868843
<ACCUMULATED-NII-PRIOR> 88
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14416
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 72031
<AVERAGE-NET-ASSETS> 3833846
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.34
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALED 3.75%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND SEPTEMBER 30, 1994 SEMI-
ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> TEMPLETON AMERICAS GOVERNMENT SECURITIES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994<F1>
<INVESTMENTS-AT-COST> 496946
<INVESTMENTS-AT-VALUE> 497137
<RECEIVABLES> 148151
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 18182
<TOTAL-ASSETS> 663470
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3052
<TOTAL-LIABILITIES> 3052
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 660344
<SHARES-COMMON-STOCK> 66032
<SHARES-COMMON-PRIOR> 50000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 117
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191
<NET-ASSETS> 660418
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5343
<OTHER-INCOME> 0
<EXPENSES-NET> 1422
<NET-INVESTMENT-INCOME> 3921
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 191
<NET-CHANGE-FROM-OPS> 4112
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4038
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15628
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 404
<NET-CHANGE-IN-ASSETS> 160418
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 683
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3658
<AVERAGE-NET-ASSETS> 506330
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .08
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 1.25<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>JUNE 27, 1994 WAS COMMENCEMENT OF OPERATIONS FOR THE FUND.
<F2>EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALED 3.22%.
</FN>
</TABLE>
McGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our reports dated April 22,
1994 on the financial statements of Templeton Global Rising
Dividends Fund and Templeton Global Infrastructure Fund, series
of Templeton Global Investment Trust, referred to therein, which
appear in the 1994 Annual Reports to Shareholders and which is
incorporated herein by reference, in Post-Effective Amendment No.
6 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
Prospectus under the caption "Financial Highlights" and in the
Statement of Additional Information under the caption
"Independent Accountants."
McGLADREY & PULLEN, LLP
New York, New York
May 5, 1995
