<PAGE>
TEMPLETON PROSPECTUS -- MAY 8, 1995
REGION FUNDS AS AMENDED MARCH 21, 1996
- -------------------------------------------------------------------------------
INVESTMENT The Templeton Region Funds are the Templeton Greater European
OBJECTIVES Fund ("Greater European Fund") and the Templeton Latin America
AND POLICIES Fund ("Latin America Fund") (each a "Fund" and collectively
the "Funds"), which are separate series of Templeton Global
Investment Trust (the "Trust"), an open-end management
investment company.
GREATER EUROPEAN FUND seeks to achieve long-term capital
appreciation by investing primarily in equity securities of
companies in Greater Europe (Western, Central and Eastern
Europe and Russia).
LATIN AMERICA FUND seeks to achieve long-term capital
appreciation by investing primarily in equity securities and
debt obligations of issuers in Latin American countries.
INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN
CONSIDERATIONS WHICH ARE NOT NORMALLY INVOLVED IN INVESTMENT
IN SECURITIES OF U.S. COMPANIES, AND AN INVESTMENT IN THE
FUNDS MAY BE CONSIDERED SPECULATIVE. EACH FUND MAY INVEST
WITHOUT LIMIT IN EMERGING MARKET COUNTRIES, BORROW MONEY FOR
INVESTMENT PURPOSES, AND MAY INVEST UP TO 15% OF ITS ASSETS IN
ILLIQUID SECURITIES, INCLUDING UP TO 10% OF ITS ASSETS IN
RESTRICTED SECURITIES, WHICH MAY INVOLVE GREATER RISK AND
INCREASED FUND EXPENSES. SEE "RISK FACTORS." INVESTORS SHOULD
CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING.
- -------------------------------------------------------------------------------
PURCHASE OF Please complete and return the Shareholder Application. If you
SHARES need assistance in completing this form, please call our
Shareholder Services Department. Each Fund offers two classes
to its investors: Greater European Fund--Class I ("Class I"),
Greater European Fund--Class II ("Class II"), Latin America
Fund--Class I ("Class I") and Latin America Fund--Class II
("Class II"). Investors can choose between Class I Shares,
which generally bear a higher front-end sales charge and lower
ongoing Rule 12b-1 distribution fees ("Rule 12b-1 fees"), and
Class II Shares, which generally have a lower front-end sales
charge and higher ongoing Rule 12b-1 fees. Investors should
consider the differences between the two classes, including
the impact of sales charges and distribution fees, in choosing
the more suitable class given their anticipated investment
amount and time horizon. See "How to Buy Shares of the Funds--
Differences Between Class I and Class II." The minimum initial
investment is $100 ($25 minimum for subsequent investments).
- -------------------------------------------------------------------------------
PROSPECTUS This Prospectus sets forth concisely information about the
INFORMATION Funds that a prospective investor ought to know before
investing. Investors are advised to read and retain this
Prospectus for future reference. A Statement of Additional
Information ("SAI") dated November 8, 1995, has been filed
with the Securities and Exchange Commission (the "SEC") and is
incorporated in its entirety by reference in and made a part
of this Prospectus. The SAI is available without charge upon
request to Franklin Templeton Distributors, Inc., P. O. Box
33030, St. Petersburg, Florida 33733-8030 or by calling the
Fund Information Department.
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FUND INFORMATION DEPARTMENT -- 1-800/DIAL BEN
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TELEFACTS(R)--Franklin Templeton's automated customer servicing system (24
hours, seven days a week access to current prices, shareholder account
balances/values, and last transaction)--1-800-247-1753.
Access Codes: Greater European Fund--419 (Class I), 519 (Class II), Latin
America Fund--418 (Class I), 518 (Class II).
- -------------------------------------------------------------------------------
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF CAPITAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
EXPENSE TABLE.......... 3
FINANCIAL HIGHLIGHTS... 5
GENERAL DESCRIPTION.... 5
INVESTMENT OBJECTIVES
AND POLICIES.......... 6
Greater European Fund.. 6
Latin America Fund..... 6
Information Regarding
Both Funds............ 6
Brady Bonds............ 7
INVESTMENT TECHNIQUES.. 8
Temporary Investments.. 8
Borrowing.............. 8
Loans of Portfolio
Securities............ 8
Options on Securities
or Indices............ 9
Forward Foreign
Currency Contracts and
Options on Foreign
Currencies............ 9
Futures Contracts...... 9
Repurchase Agreements.. 10
Depositary Receipts.... 10
Illiquid and Restricted
Securities............ 10
Structured Investments. 11
Investment Companies... 11
RISK FACTORS........... 11
Foreign Currency
Exchange.............. 12
Foreign Investments.... 12
High-Risk Debt
Securities............ 13
Leverage............... 13
Futures Contracts and
Related Options....... 13
HOW TO BUY SHARES OF
THE FUNDS............. 14
Differences Between
Class I and Class II.. 14
Deciding Which Class to
Purchase.............. 15
Offering Price--Class
I..................... 15
Offering Price--Class
II.................... 17
Net Asset Value
Purchases (Both
Classes).............. 17
Description of Special
Net Asset Value
Purchases............. 18
Additional Dealer
Compensation (Both
Classes).............. 19
Purchasing Class I and
Class II Shares....... 20
Automatic Investment
Plan.................. 20
Institutional Accounts. 20
Account Statements..... 20
TeleFACTS(R) System.... 20
Retirement Plans....... 20
Net Asset Value........ 21
EXCHANGE PRIVILEGE..... 21
Exchanges of Class I
Shares................ 22
Exchanges of Class II
Shares................ 22
Transfers.............. 23
Conversion Rights...... 23
Exchanges by Timing
Accounts.............. 23
HOW TO SELL SHARES OF
THE FUNDS............. 24
Reinstatement
Privilege............. 25
Systematic Withdrawal
Plan.................. 26
Redemptions by
Telephone............. 27
Contingent Deferred
Sales Charge........... 27
TELEPHONE TRANSACTIONS. 28
Verification
Procedures............ 28
Restricted Accounts.... 28
General................ 28
MANAGEMENT OF THE
FUNDS................. 28
Investment Manager..... 29
Business Manager....... 30
Transfer Agent......... 30
Custodian.............. 30
Plans of Distribution.. 30
Brokerage Commissions.. 31
GENERAL INFORMATION.... 31
Description of
Shares/Share
Certificates.......... 31
Voting Rights.......... 31
Meetings of
Shareholders.......... 32
Dividends and
Distributions......... 32
Federal Tax
Information........... 32
Inquiries.............. 33
Performance
Information........... 33
Statements and Reports. 33
WITHHOLDING
INFORMATION........... 34
CORPORATE RESOLUTION... 35
AUTHORIZATION
AGREEMENT............. 36
THE FRANKLIN TEMPLETON
GROUP................. 37
</TABLE>
2
<PAGE>
EXPENSE TABLE
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a Shareholder will bear directly or indirectly
in connection with an investment in the Funds. The figures are estimates of
the Funds' expenses for the current fiscal year, restated to reflect current
sales charges and Rule 12b-1 fees for each class.
<TABLE>
<CAPTION>
GREATER EUROPEAN FUND LATIN AMERICA FUND
-------------------------- -----------------------
CLASS I CLASS II CLASS I CLASS II
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
Offering Price)................ 5.75% 1.00%/1/ 5.75% 1.00%/1/
Deferred Sales Charge........... None/2/ 1.00%/3/ None/2/ 1.00%/3/
Exchange Fee (per transaction).. $ 5.00/4/ $ 5.00/4/ $ 5.00/4/ $ 5.00/4/
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets) Management Fees
(after fee reduction)........... 0.00% 0.00% 0.00% 0.00%
Rule 12b-1 Fees/5/.............. .35% 1.00%/4/ .35% 1.00%
Other Expenses (audit, legal,
business management, transfer
agent and custodian) (after fee
reduction)..................... 1.50% 1.50% 2.00% 2.00%
Total Fund Operating Expenses
(after fee reduction).......... 1.85% 2.50% 2.35% 3.00%
</TABLE>
- -------
/1/ Although Class II has a lower front-end sales charge than Class I, over time
the higher Rule 12b-1 fees for Class II may cause Shareholders to pay more
for Class II Shares than for Class I Shares. Given the maximum front-end
sales charge and the rate of Rule 12b-1 fees for each class, it is estimated
that this would take less than six years for Shareholders who maintain total
Shares valued at less than $50,000 in the Franklin Templeton Funds.
Shareholders with larger investments in the Franklin Templeton Funds will
reach the cross-over point more quickly. (See "How to Buy Shares of the
Funds.")
/2/ Class I investments of $1 million or more are not subject to a front-end
sales charge; however, a contingent deferred sales charge of 1% is generally
imposed on certain redemptions within a "contingency period" of 12 months of
the calendar month of such investments. See "How to Sell Shares of the
Funds--Contingent Deferred Sales Charge."
/3/ Class II Shares redeemed within a "contingency period" of 18 months of the
calendar month of such investments are subject to a 1% contingent deferred
sales charge. See "How to Sell Shares of the Funds--Contingent Deferred
Sales Charge."
/4/ $5.00 fee imposed only on Timing Accounts as described under "Exchange
Privilege." All other exchanges are processed without a fee.
/5/ Annual Rule 12b-1 fees may not exceed 0.35% of each Fund's average net
assets attributable to Class I Shares and 1% of each Fund's average net
assets attributable to Class II Shares. Consistent with the National
Association of Securities Dealers, Inc.'s rules, it is possible that the
combination of front-end sales charges and Rule 12b-1 fees could cause long-
term Shareholders to pay more than the economic equivalent of the maximum
front-end sales charges permitted under those same rules.
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual's own
investment in the Funds. Rather, the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and
expenses. The information in this table does not reflect the charge of up to
$15 per transaction if a Shareholder requests that redemption proceeds be sent
by express mail or wired to a commercial bank account. For a more detailed
discussion of these matters, investors should refer to the appropriate
sections of this Prospectus.
The Funds' investment manager, Templeton Global Advisors Limited (the
"Investment Manager"), has voluntarily agreed to reduce its investment
management fee to the extent necessary to limit total expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses) to the
following percentages of each Fund's average daily net assets: 1.85% for Class
I and 2.50% for Class II of Greater European Fund; and 2.35% for Class I and
3.00% for Class II of Latin America Fund, in each case until December 31,
1995. If such fee reduction is insufficient to so limit each Fund's total
expenses, the Funds' Business Manager, Templeton Global Investors, Inc., has
voluntarily agreed to reduce its fee and, to the extent necessary, assume
other Fund expenses, so as to so limit
3
<PAGE>
each Fund's total expenses. If this policy were not in effect, the Funds'
"Other Expenses" would be 1.90% for both classes of Greater European Fund and
2.10% for both classes of Latin America Fund and the "Total Fund Operating
Expenses" would be 3.00% for Class I and 3.65% for Class II of Greater
European Fund, and 3.70% for Class I and 4.35% for Class II of Latin America
Fund. In this case, you would pay the following expenses on a $1,000
investment, assuming a 5% annual rate of return and redemption at the end of
each time period: Greater European Fund--$86 for one year and $145 for three
years for Class I; $56 for one year and $121 for three years for Class II; and
Latin America Fund--$93 for one year and $164 for three years for Class I; $63
for one year and $140 for three years for Class II. As long as this temporary
expense limitation continues, it may lower each Fund's expenses and increase
its total return. After December 31, 1995, the expense limitation may be
terminated or revised at any time, at which time each Fund's expenses may
increase and its total return may be reduced, depending on the total assets of
the Fund.
EXAMPLE
As required by SEC regulations, the following example illustrates the
expenses, including the maximum front-end sales charge and applicable
contingent deferred sales charge, that apply to a $1,000 investment in the
Funds over various time periods assuming (1) a 5% annual rate of return and
(2) redemption at the end of each time period.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
-------- -----------
<S> <C> <C>
Greater European Fund
Class I................................................ $75 $112
Class II............................................... $45 $ 87
Latin America Fund
Class I................................................ $80 $127
Class II............................................... $50 $102
You would pay the following expenses on the same invest-
ment in Class II Shares,
assuming no redemption:
Greater European Fund, Class II........................ $35 $ 87
Latin America Fund, Class II........................... $40 $102
</TABLE>
For the purpose of this example, it is assumed that a contingent deferred
sales charge will not apply to Class I Shares.
THIS EXAMPLE IS BASED ON THE ESTIMATED ANNUAL OPERATING EXPENSES, INCLUDING
FEES SET BY CONTRACT, SHOWN ABOVE AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, WHICH MAY BE MORE OR LESS THAN
THOSE SHOWN. The operating expenses are borne by the Funds and only indirectly
by Shareholders as a result of their investment in the Funds. In addition,
federal securities regulations require the example to assume an annual rate of
return of 5%, but each Fund's actual return may be more or less than 5%.
4
<PAGE>
FINANCIAL HIGHLIGHTS
PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the
period)
<TABLE>
<CAPTION>
TEMPLETON GREATER EUROPEAN FUND TEMPLETON LATIN AMERICA FUND
------------------------------------- -------------------------------------
CLASS I CLASS II CLASS I CLASS II
------- -------- ------- --------
MAY 8, 1995 MAY 8, 1995 MAY 8, 1995 MAY 8, 1995
(COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO OPERATIONS) TO OPERATIONS) TO OPERATIONS) TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period.... $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------
Income from investment
operations:
Net investment income.. .06 .08 .06 .05
Net realized and
unrealized gain
(loss)................ (.18) (.22) .16 .14
------ ------ ------ ------
Total from investment
operations............. (.12) (.14) .22 .19
------ ------ ------ ------
Change in net asset
value.................. (.12) (.14) .22 .19
------ ------ ------ ------
Net asset value, end of
period................. $ 9.88 $ 9.86 $10.22 $10.19
====== ====== ====== ======
TOTAL RETURN*........... (1.20)% (1.40)% 2.20% 1.90%
RATIOS/SUPPLEMENT DATA
Net assets, end of
period (000)........... $2,946 $1,136 $3,308 $ 871
Ratio of expenses to
average net assets..... 4.58%** 5.23%** 4.98%** 5.63%**
Ratio of expenses, net
of fee reduction, to
average net assets..... 1.85%** 2.50%** 2.35%** 3.00%**
Ratio of net investment
income to average net
assets................. 3.22%** 2.77%** 2.63%** 1.99%**
</TABLE>
* Total return does not reflect sales charges. Not annualized.
** Annualized.
GENERAL DESCRIPTION
Templeton Global Investment Trust (the "Trust") was organized as a business
trust under the laws of Delaware on December 21, 1993 and is registered under
the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
management investment company. In addition to the Funds, both of which are
diversified funds, the Trust has three series of shares: Templeton Americas
Government Securities Fund, a non-diversified fund, and Templeton Growth and
Income Fund and Templeton Global Infrastructure Fund, both diversified funds.
Prospectuses for Templeton Americas Government Securities Fund, Templeton
Growth and Income Fund and Templeton Global Infrastructure Fund are available
upon request and without charge from the Principal Underwriter. Each Fund has
two classes of shares of beneficial interest with a par value of $.01: Greater
European Fund--Class I, Greater European Fund--Class II, Latin America Fund--
Class I and Latin America Fund--Class II.
Shares of the Funds may be purchased (minimum investment of $100 initially
and $25 thereafter) at the current public Offering Price. The current public
Offering Price of the Class I Shares is equal to the net asset value per Share
(see "How to Buy Shares of the Funds--Net Asset Value"), plus a variable sales
charge not exceeding 5.75% of the Offering Price depending upon the amount
invested. The current public Offering Price of the Class II Shares is equal to
the net asset value per Share, plus a sales charge of 1% of the Offering
Price. (See "How to Buy Shares of the Funds.")
5
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GREATER EUROPEAN FUND has as its investment objective long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily
in equity securities (as defined below) of Greater European Companies. As used
in this Prospectus, the term "Greater European Company" means a company (i)
that is organized under the laws of, or with a principal office and domicile
in, a country in Greater Europe, (ii) for which the principal equity
securities trading market is in Greater Europe, or (iii) that derives at least
50% of its revenues or profits from goods produced or sold, investments made,
or services performed in Greater Europe or that has at least 50% of its assets
situated in Greater Europe. As used in this Prospectus, the term "Greater
Europe" means Western, Central and Eastern Europe (including Ukraine, Belarus,
Latvia, Lithuania and Estonia) and Russia. Under normal market conditions, the
Fund will invest at least 75% of its total assets in the equity securities of
Greater European Companies. The balance of the Fund's assets will be invested
in (i) debt securities (as defined below) issued by Greater European Companies
or issued or guaranteed by Greater European government entities, (ii) equity
securities and debt obligations of issuers outside Greater Europe, and (iii)
short-term and medium-term debt securities of the type described below under
"Investment Techniques--Temporary Investments."
LATIN AMERICA FUND has as its investment objective long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily
in equity and debt securities of issuers in the following Latin American
countries: Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Cuba, Ecuador, El Salvador, French Guyana, Guatemala, Guyana, Honduras,
Mexico, Nicaragua, Panama, Paraguay, Peru, Surinam, Trinidad/Tobago, Uruguay,
and Venezuela. Under normal market conditions, the Fund will invest at least
65% of its total assets in equity and debt securities of issuers in the
countries named above. The balance of the Fund's assets will be invested in
(i) equity securities and debt obligations of companies and government
entities of countries other than those named above, and (ii) short-term and
medium-term debt securities of the type described below under "Investment
Techniques--Temporary Investments."
INFORMATION REGARDING BOTH FUNDS. Each Fund's investment objective and the
investment restrictions set forth under "Investment Objectives and Policies--
Investment Restrictions" in the SAI are fundamental and may not be changed
without Shareholder approval. All other investment policies and practices
described in this Prospectus are not fundamental, and may be changed by the
Board of Trustees without Shareholder approval. There can be no assurance that
either Fund's investment objective will be achieved.
As used in this Prospectus, "equity securities" refers to common stock,
preferred stock, securities convertible into or exchangeable for such
securities, warrants or rights to subscribe to or purchase such securities,
and sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
(collectively, "Depositary Receipts"). For capital appreciation, Greater
European Fund may invest up to 25% of its total assets, and Latin America Fund
may invest without limit, in debt securities (defined as bonds, notes,
debentures, commercial paper, time deposits and bankers' acceptances, and
which may include structured investments) 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, neither Fund will invest more than 5% of its total
assets in debt securities rated lower than Baa by Moody's or BBB by S&P.
Certain debt securities can provide the potential for capital appreciation
based on various factors such as changes in interest rates, economic and
market conditions, improvement in an issuer's ability to repay principal and
pay interest, and ratings upgrades. Additionally, convertible bonds offer the
potential for capital appreciation through the conversion feature, which
enables the holder of the bonds to benefit from increases in the market price
of the securities into which they are convertible. Debt securities are subject
to certain market and credit risks. See "Investment Objectives and Policies--
Debt Securities" in the SAI.
The Funds' Investment Manager will select equity investments for the Funds
on the basis of fundamental company-by-company analysis (rather than broader
analyses of specific industries or sectors of the economy). Although the
Investment Manager will consider historical value measures, such as
price/earnings ratios, operating profit margins and liquidation values, the
primary factor in selecting
6
<PAGE>
equity securities will be the company's current price relative to its long-
term earnings potential, or real book value, as determined by the Investment
Manager. Securities considered for purchase by a Fund may be listed or
unlisted, and may be issued by companies in various industries, with various
levels of market capitalization. The Investment Manager will actively manage
the Funds' assets in response to market, political and general economic
conditions, and will seek to adjust each Fund's investments based on its
perception of which investments would best enable the Fund to achieve its
investment objective.
As a diversified investment company, each Fund, with respect to 75% of its
total assets, may invest no more than 5% of its total assets in securities
issued by any one company or government, exclusive of U.S. Government
securities. Although a Fund may invest up to 25% of its assets in a single
industry, the Funds have no present intention of doing so. A Fund may not
invest more than 5% of its assets in warrants (exclusive of warrants acquired
in units or attached to securities) or more than 15% of its assets in
securities with a limited trading market.
Each Fund may lend its portfolio securities and borrow money for investment
purposes (i.e., "leverage" its portfolio). In addition, each Fund may enter
into transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, structured investments, and
futures contracts and related options. These are generally referred to as
derivative instruments, and involve special risk factors, which are described
below. When deemed appropriate by the Investment Manager, the Funds may invest
cash balances in repurchase agreements and other money market investments to
maintain liquidity in an amount to meet expenses or for day-to-day operating
purposes. These investment techniques are described below and under the
heading "Investment Objectives and Policies" in the SAI.
When the Investment Manager believes that market conditions warrant, either
Fund may adopt a temporary defensive position and may invest without limit in
money market securities denominated in U.S. dollars or in the currency of any
foreign country. See "Investment Techniques--Temporary Investments."
The Funds do not emphasize short-term trading profits and usually expect to
have an annual portfolio turnover rate not exceeding 50%.
BRADY BONDS. Latin America Fund may invest without limit in certain debt
obligations customarily referred to as "Brady Bonds," which are created
through the exchange of existing commercial bank loans to sovereign entities
for new obligations in connection with debt restructuring under a plan
introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the
"Brady Plan"). Brady Bonds are not considered U.S. Government securities and
are considered speculative. Brady Plan debt restructurings have been
implemented to date in several countries, including Argentina, Brazil,
Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico,
Nigeria, the Philippines, Uruguay, and Venezuela (collectively, the "Brady
Countries"). It is expected that other countries will undertake a Brady Plan
debt restructuring in the future, including Panama, Peru, and Poland.
Brady Bonds have been issued only recently and, accordingly, do not have a
long payment history. They may be collateralized or uncollateralized and
issued in various currencies (although most are U.S. dollar-denominated) and
they are actively traded in the over-the-counter secondary market.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed par
bonds or floating rate discount bonds, are generally collateralized in full as
to principal by U.S. Treasury zero coupon bonds which have the same maturity
as the Brady Bonds. Interest payments on these Brady Bonds generally are
collateralized on a one-year or longer rolling-forward basis by cash or
securities in an amount that, in the case of fixed-rate bonds, is equal to at
least one year of interest payments or, in the case of floating rate bonds,
initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest
payments, but generally are not collateralized. Brady Bonds are often viewed
as having three or four valuation components: (i) the collateralized repayment
of principal at final maturity; (ii) the collateralized interest payments;
(iii) the uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts constitute
the "residual risk").
7
<PAGE>
Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or
comparable collateral denominated in other currencies) and interest coupon
payments collateralized on an 18-month rolling-forward basis by funds held in
escrow by an agent for the bondholders. A significant portion of the
Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date have
principal repayments at final maturity collateralized by U.S. Treasury zero
coupon bonds (or comparable collateral denominated in other currencies) and/or
interest coupon payments collateralized on a 14-month (for Venezuela) or 12-
month (for Argentina) rolling-forward basis by securities held by the Federal
Reserve Bank of New York as collateral agent.
Brady Bonds involve various risk factors including residual risk and the
history of defaults with respect to commercial bank loans by public and
private entities of Brady Countries. There can be no assurance that Brady
Bonds in which Latin America Fund may invest will not be subject to
restructuring arrangements or to requests for new credit, which may cause the
Fund to suffer a loss of interest or principal on any of its holdings.
INVESTMENT TECHNIQUES
The Funds are authorized to use the various investment techniques described
below. Although these strategies are regularly used by some investment
companies and other institutional investors in various markets, some of these
strategies cannot at the present time be used to a significant extent by the
Funds in some of the markets in which the Funds will invest and may not be
available for extensive use in the future.
TEMPORARY INVESTMENTS. For temporary defensive purposes, each Fund may
invest up to 100% of its total assets in the following money market
securities, denominated in U.S. dollars or in the currency of any foreign
country, issued by entities organized in the United States or any foreign
country: short-term (less than twelve months to maturity) and medium-term (not
greater than five years to maturity) obligations issued or guaranteed by the
U.S. Government or the governments of foreign countries, their agencies or
instrumentalities; finance company and corporate commercial paper, and other
short-term corporate obligations, in each case rated Prime-1 by Moody's or A
or better by S&P or, if unrated, of comparable quality as determined by the
Investment Manager; obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks; and repurchase agreements with
banks and broker-dealers with respect to such securities.
BORROWING. Each Fund may borrow up to one-third of the value of its total
assets from banks to increase its holdings of portfolio securities. Under the
1940 Act, a Fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of a
Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on a Fund's net asset value, and
money borrowed will be subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining minimum average balances) which
may or may not exceed the income received from the securities purchased with
borrowed funds.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend to broker-dealers
portfolio securities with an aggregate market value of up to one-third of the
Fund's total assets to generate income for the purpose of offsetting operating
expenses. Such loans must be secured by collateral (consisting of any
combination of cash, U.S. Government securities or irrevocable letters of
credit) in an amount at least equal (on a daily marked-to-market basis) to the
current market value of the securities loaned. A Fund may terminate the loans
at any time and obtain the return of the securities loaned within five
business days. A Fund will continue to receive any interest or dividends paid
on the loaned securities and will continue to retain any voting rights with
respect to the securities. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
a Fund could experience delays and costs in gaining access to the collateral
and could suffer a loss to the extent that the value of the collateral falls
below the market value of the borrowed securities.
8
<PAGE>
OPTIONS ON SECURITIES OR INDICES. Each Fund may write (i.e., sell) covered
put and call options and purchase put and call options on securities or
securities indices that are traded on United States and foreign exchanges or
in the over-the-counter markets. An option on a security is a contract that
permits the purchaser of the option, in return for the premium paid, the right
to buy a specified security (in the case of a call option) or to sell a
specified security (in the case of a put option) from or to the writer of the
option at a designated price during the term of the option. An option on a
securities index permits the purchaser of the option, in return for the
premium paid, the right to receive from the seller cash equal to the
difference between the closing price of the index and the exercise price of
the option. A Fund may write a call or put option only if the option is
"covered." This means that so long as a Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or
hold a call at the same or lower exercise price, for the same exercise period,
and on the same securities as the written call. A put is covered if a Fund
maintains liquid assets with a value equal to the exercise price in a
segregated account, or holds a put on the same underlying securities at an
equal or greater exercise price. The value of the underlying securities on
which options may be written at any one time will not exceed 15% of the total
assets of a Fund. A Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of its total assets at
the time of purchase.
FORWARD FOREIGN CURRENCY CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES. The
Funds will normally conduct foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward contracts to purchase or
sell foreign currencies. The Funds will generally not enter into a forward
contract with a term of greater than one year. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded by currency
traders and their customers.
The Funds will generally enter into forward contracts only under two
circumstances. First, when a Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed
to settle the transaction. Second, when the Investment Manager believes that
the currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to
sell or buy the former foreign currency (or another currency which acts as a
proxy for that currency) approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging." The Funds
have no specific limitation on the percentage of assets they may commit to
forward contracts, subject to their stated investment objective and policies,
except that a Fund will not enter into a forward contract if the amount of
assets set aside to cover forward contracts would impede portfolio management
or the Fund's ability to meet redemption requests. Although forward contracts
will be used primarily to protect the Funds from adverse currency movements,
they also involve the risk that anticipated currency movements will not be
accurately predicted.
The Funds may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines
in the U.S. dollar value of foreign currency-denominated portfolio securities
and against increases in the U.S. dollar cost of such securities to be
acquired. As in the case of other kinds of options, however, the writing of an
option on a foreign currency constitutes only a partial hedge, up to the
amount of the premium received, and a Fund could be required to purchase or
sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to a Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Funds are traded on U.S. and
foreign exchanges or over-the-counter.
FUTURES CONTRACTS. For hedging purposes only, the Funds may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a
specified debt security at a set price on a future date. An index futures
contract is an agreement to take or make delivery of an amount of cash based
on the difference between the value of the index at the beginning and at the
end
9
<PAGE>
of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.
When a Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. In addition, when a Fund enters into a futures contract, it will
segregate assets or "cover" its position in accordance with the 1940 Act. See
"Investment Objectives and Policies--Futures Contracts" in the SAI.
REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, the Funds may enter into repurchase agreements with U.S.
banks and broker-dealers. Under a repurchase agreement, a Fund acquires a
security from a U.S. bank or a registered broker-dealer and simultaneously
agrees to resell the security back to the bank or broker-dealer at a specified
time and price. The repurchase price is in excess of the original purchase
price paid by a Fund by an amount which reflects an agreed-upon rate of return
and which is not tied to any coupon rate on the underlying security. Under the
1940 Act, repurchase agreements are considered to be loans collateralized by
the underlying security and therefore will be fully collateralized. However,
if the bank or broker-dealer should default on its obligation to repurchase
the underlying security, a Fund may experience a delay or difficulties in
exercising its rights to realize upon the security and might incur a loss if
the value of the security declines, as well as incur disposition costs in
liquidating the security.
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts typically used by a U.S.
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs and GDRs are typically issued by foreign banks
or trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
foreign or a United States corporation. Generally, Depositary Receipts in
registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements
to have its securities traded in the form of Depositary Receipts. In
unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value
of the Depositary Receipts. Depositary Receipts also involve the risks of
other investments in foreign securities, as discussed below. For purposes of a
Fund's investment policies, the Fund's investments in Depositary Receipts will
be deemed to be investments in the underlying securities.
ILLIQUID AND RESTRICTED SECURITIES. Each Fund may invest up to 15% of its
total assets in illiquid securities, for which there is a limited trading
market and for which a low trading volume of a particular security may result
in abrupt and erratic price movements. A Fund may be unable to dispose of its
holdings in illiquid securities at then-current market prices and may have to
dispose of such securities over extended periods of time. A Fund may also
invest in securities that are sold (i) in private placement transactions
between their issuers and their purchasers and that are neither listed on an
exchange nor traded over-the-counter, or (ii) in transactions between
qualified institutional buyers pursuant to Rule 144A under the U.S. Securities
Act of 1933, as amended. Such restricted securities are subject to contractual
or legal restrictions on subsequent transfer. As a result of the absence of a
public trading market, such restricted securities may in turn be less liquid
and more difficult to value than publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from the sales could, due to illiquidity, be less than those
originally paid by a Fund or less than their fair value. In addition, issuers
whose securities are not publicly traded may not be subject to the disclosure
and other investor protection requirements that may be applicable if their
securities were publicly traded. If any privately placed or Rule 144A
securities held by a Fund are required to be registered under the securities
laws of one or more
10
<PAGE>
jurisdictions before being resold, a Fund may be required to bear the expenses
of registration. Each Fund will limit its investment in restricted securities
other than Rule 144A securities to 10% of its total assets, and will limit its
investment in all restricted securities, including Rule 144A securities, to
15% of its total assets. Restricted securities, other than Rule 144A
securities determined by the Board of Trustees to be liquid, are considered to
be illiquid and are subject to a Fund's limitation on investment in illiquid
securities.
STRUCTURED INVESTMENTS. Included among the issuers of debt securities in
which the Funds may invest are entities organized and operated solely for the
purpose of restructuring the investment characteristics of various securities.
These entities are typically organized by investment banking firms which
receive fees in connection with establishing each entity and arranging for the
placement of its securities. This type of restructuring involves the deposit
with or purchase by an entity, such as a corporation or trust, of specified
instruments and the issuance by that entity of one or more classes of
securities ("Structured Investments") backed by, or representing interests in,
the underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued Structured Investments to create securities
with different investment characteristics such as varying maturities, payment
priorities or interest rate provisions; the extent of the payments made with
respect to Structured Investments is dependent on the extent of the cash flow
on the underlying instruments. Because Structured Investments of the type in
which the Funds anticipate investing typically involve no credit enhancement,
their credit risk will generally be equivalent to that of the underlying
instruments.
The Funds are permitted to invest in a class of Structured Investments that
is either subordinated or unsubordinated to the right of payment of another
class. Subordinated Structured Investments typically have higher yields and
present greater risks than unsubordinated Structured Investments. Although a
Fund's purchase of subordinated Structured Investments would have a similar
economic effect to that of borrowing against the underlying securities, the
purchase will not be deemed to be leverage for purposes of the limitations
placed on the extent of a Fund's assets that may be used for borrowing
activities.
Certain issuers of Structured Investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investment in
these Structured Investments may be limited by the restrictions contained in
the 1940 Act described below under "Investment Companies." Structured
Investments are typically sold in private placement transactions, and there
currently is no active trading market for Structured Investments. To the
extent such investments are illiquid, they will be subject to the restrictions
set forth in "Investment Techniques--Illiquid and Restricted Securities" above
and in the SAI under "Investment Objectives and Policies--Investment
Restrictions."
INVESTMENT COMPANIES. Each Fund may invest in other investment companies,
except those for which the Investment Manager serves as investment adviser or
sponsor, which invest principally in securities in which the Fund is
authorized to invest. Under the 1940 Act, each Fund may invest a maximum of
10% of its total assets in the securities of other investment companies and
not more than 5% of each Fund's total assets in the securities of any one
investment company, provided the investment does not represent more than 3% of
the voting stock of the acquired investment company at the time such shares
are purchased. To the extent a Fund invests in other investment companies, a
Fund's Shareholders will incur certain duplicative fees and expenses,
including investment advisory fees. A Fund's investment in certain investment
companies will result in special U.S. federal income tax consequences
described under "Tax Status" in the SAI.
RISK FACTORS
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Funds,
nor can there be any assurance that a Fund's investment objective will be
attained. As with any investment in securities, the value of, and income from,
an investment in a Fund can decrease as well as increase, depending on a
variety of factors which may affect the values and income generated by a
Fund's portfolio securities, including general economic conditions and market
factors. In addition to the factors which affect the value of individual
securities, a Shareholder may anticipate that the value of the Shares of a
Fund will fluctuate with movements in the broader equity and bond markets. A
decline in the stock market of any
11
<PAGE>
country in which a Fund is invested in equity securities may also be reflected
in declines in the price of Shares of a Fund. Changes in the prevailing rates
of interest in any of the countries in which a Fund is invested in fixed
income securities will likely affect the value of such holdings and thus the
value of Fund Shares. Increased rates of interest, which frequently accompany
inflation and/or a growing economy, are likely to have a negative effect on
the value of Fund Shares. In addition, changes in currency valuations will
also affect the price of Shares of the Funds. History reflects both decreases
and increases in stock markets and interest rates in individual countries and
throughout the world, and in currency valuations, and these may reoccur
unpredictably in the future. Additionally, investment decisions made by the
Investment Manager will not always be profitable or prove to have been
correct. Neither Fund is intended as a complete investment program.
FOREIGN CURRENCY EXCHANGE. Since the Funds are authorized to invest in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates relative to the U.S. dollar will
affect the value of securities in the respective portfolios and the unrealized
appreciation or depreciation of investments insofar as U.S. investors are
concerned. Changes in foreign currency exchange rates relative to the U.S.
dollar will also affect a Fund's yield on assets denominated in currencies
other than the U.S. dollar. The Funds usually effect currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market or through entering into forward contracts. However,
some price spread on currency exchange transactions (to cover service charges)
will be incurred when a Fund converts assets from one currency to another.
Many of the currencies of the countries in which the Funds may invest have
experienced devaluations relative to the U.S. dollar, and may be more highly
volatile than currencies of other more established markets.
FOREIGN INVESTMENTS. The Funds have the right to purchase securities in any
foreign country, developed or developing. Investors should consider carefully
the substantial risks involved in investing in securities issued by companies
and governments of foreign nations, which are in addition to the usual risks
inherent in domestic investments. Each Fund's performance is closely tied to
economic and political conditions within the geographic area of its respective
investments. Some of the countries in which the Funds may invest are
considered emerging markets, in which the risks generally associated with
foreign investments are heightened. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations (including, for example, withholding taxes on interest and dividends)
or other taxes imposed with respect to investments in foreign nations, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), foreign investment controls on daily stock
market movements, default in foreign government securities, political or
social instability, or diplomatic developments which could affect investment
in securities of issuers in foreign nations. Some countries may withhold
portions of interest and dividends at the source. In addition, in many
countries there is less publicly available information about issuers than is
available in reports about companies in the United States. Foreign companies
are not generally subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. The Funds may
encounter difficulties or be unable to vote proxies, exercise shareholder
rights, pursue legal remedies, and obtain judgments in foreign courts.
Brokerage commissions, custodial services, and other costs relating to
investments in foreign countries are generally more expensive than in the
United States. Foreign securities markets also have different clearance and
settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause a Fund to
miss attractive investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in losses to a Fund
due to subsequent declines in value of the portfolio security or, if a Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Greater European Fund's proposed investments in
Russia are subject to the risk of total loss due to Russia's unusual system of
share registration and settlement, which is discussed in the SAI under the
12
<PAGE>
caption "Investment Objectives and Policies--Risk Factors." As a non-
fundamental policy, Greater European Fund will limit investments in Russian
companies to 5% of its total assets.
In many foreign countries there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers and
listed companies than in the United States. There is an increased risk,
therefore, of uninsured loss due to lost, stolen, or counterfeit stock
certificates. In addition, the foreign securities markets of many of the
countries in which a Fund may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States. As an
open-end investment company, each Fund is limited in the extent to which it
may invest in illiquid securities. The foregoing risks may be heightened for
investments in Eastern Europe and/or Latin America, and there are further
risks specific to investments in those regions. See "Investment Objectives and
Policies--Risk Factors" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist
measures imposed or negotiated by the countries with which they trade. These
economies also have been and may continue to be adversely affected by economic
conditions in the countries with which they trade.
HIGH-RISK DEBT SECURITIES. The Funds are authorized to invest in debt
securities rated in any category by S&P or Moody's and securities which are
unrated by any rating agency. See "Investment Objectives and Policies--Debt
Securities" in the SAI. As an operating policy, which may be changed by the
Board of Trustees without Shareholder approval, a Fund will not invest more
than 5% of its total assets in debt securities rated lower than BBB by S&P or
Baa by Moody's. The Board of Trustees may consider a change in this operating
policy if, in its judgment, economic conditions change such that a higher
level of investment in high-risk, lower quality debt securities would be
consistent with the interests of a Fund and its Shareholders. See "Investment
Objectives and Policies--Debt Securities" in the SAI for descriptions of debt
securities rated BBB by S&P and Baa by Moody's. High-risk, lower quality debt
securities, commonly referred to as "junk bonds," are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
and may be in default. Unrated debt securities are not necessarily of lower
quality than rated securities, but they may not be attractive to as many
buyers. Regardless of rating levels, all debt securities considered for
purchase (whether rated or unrated) will be carefully analyzed by the
Investment Manager to insure, to the extent possible, that the planned
investment is sound. Each Fund may, from time to time, invest up to 5% of its
total assets in defaulted debt securities if, in the opinion of the Investment
Manager, the issuer may resume interest payments in the near future.
LEVERAGE. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on a Fund's net
asset value, and money borrowed will be subject to interest and other costs
(which may include commitment fees and/or the cost of maintaining minimum
average balances) which may or may not exceed the income received from the
securities purchased with borrowed funds. The use of leverage may
significantly increase a Fund's investment risk.
FUTURES CONTRACTS AND RELATED OPTIONS. Successful use of futures contracts
and related options is subject to special risk considerations. A liquid
secondary market for any futures or options contract may not be available when
a futures or options position is sought to be closed. In addition, there may
be an imperfect correlation between movements in the securities or foreign
currency on
13
<PAGE>
which the futures or options contract is based and movements in the securities
or currency in a Fund's portfolio. Successful use of futures or options
contracts is further dependent on the Investment Manager's ability to
correctly predict movements in the securities or foreign currency markets, and
no assurance can be given that its judgment will be correct. Successful use of
options on securities or indices is subject to similar risk considerations. In
addition, by writing covered call options, a Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price.
There are further risk factors, including possible losses through the
holding of securities in domestic and foreign custodian banks and
depositories, described elsewhere in this Prospectus and in the SAI.
HOW TO BUY SHARES OF THE FUNDS
Shares of the Funds may be purchased at the Offering Price through any
broker which has a dealer agreement with Franklin Templeton Distributors, Inc.
("FTD"), the Principal Underwriter for Shares of the Funds, or directly from
FTD upon receipt by FTD of a completed Shareholder Application and check
payable in U.S. currency. Shares of both classes of the Funds are offered at
their respective public Offering Prices, which are determined by adding the
net asset value per Share plus a front-end sales charge, next computed (i)
after the Shareholder's securities dealer receives the order which is promptly
transmitted to the Funds or (ii) after receipt of an order by mail from the
Shareholder directly in proper form (which generally means a completed
Shareholder Application accompanied by a negotiable check). The minimum
initial investment is $100, and subsequent investments must be $25 or more.
These minimums may be waived when the Shares are being purchased through
retirement plans providing for regular periodic investments, as described
below under "Retirement Plans."
DIFFERENCES BETWEEN CLASS I AND CLASS II. The differences between Class I
and Class II Shares lie primarily in their front-end and contingent deferred
sales charges and Rule 12b-1 fees as described below.
Class I. Voting rights of each class will be the same on matters affecting a
Fund as a whole, but each will vote separately on matters affecting its class.
Class I Shares are generally subject to a variable sales charge upon purchase
and not subject to any sales charge upon redemption. Class I Shares are
subject to Rule 12b-1 fees of up to an annual maximum of 0.35% of average
daily net assets of such Shares. With this multiclass structure, Class I
Shares have higher front-end sales charges than Class II Shares and
comparatively lower Rule 12b-1 fees. Class I Shares may be purchased at
reduced front-end sales charges, or at net asset value if certain conditions
are met. In most circumstances, contingent deferred sales charges will not be
assessed against redemptions of Class I Shares. See "Management of the Funds"
and "How to Sell Shares of the Funds" for more information.
Class II. The current public Offering Price of Class II Shares is equal to
the net asset value per Share, plus a front-end sales charge of 1% of the
Offering Price. Class II Shares are also subject to a contingent deferred
sales charge of 1% if Shares are redeemed within 18 months of the calendar
month of the purchase. In addition, Class II Shares are subject to Rule 12b-1
fees of up to a maximum of 1% per annum of average daily net assets of such
Shares, 0.75% of which will be retained by FTD during the first year of
investment. Class II Shares have lower front-end sales charges than Class I
Shares and comparatively higher Rule 12b-1 fees. See "How to Sell Shares of
the Funds--Contingent Deferred Sales Charge."
Purchases of Class II Shares are limited to purchases below $1 million. Any
purchases of $1 million or more will automatically be invested in Class I
Shares, since that is more beneficial to investors. Such purchases, however,
may be subject to a contingent deferred sales charge. Investors may exceed $1
million in Class II Shares by cumulative purchases over a period of time.
Investors who intend to make investments exceeding $1 million, however, should
consider purchasing Class I Shares through a Letter of Intent instead of
purchasing Class II Shares.
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<PAGE>
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 Rule 12b-1
fees on the Class II Shares will result in higher operating expenses, which
will accumulate over time to outweigh the difference in front-end sales
charges and will lower dividends for Class II Shares. For this reason, Class I
Shares may be more attractive to long-term investors even if no sales charge
reductions are available to them.
Investors who qualify to purchase Class I Shares at reduced sales charges
definitely should consider purchasing Class I Shares, especially if they
intend to hold their Shares approximately six years or more. Investors who
qualify to purchase Class I Shares at reduced sales charges but who intend to
hold their Shares less than approximately six years should evaluate whether it
is more economical to purchase Class I Shares through a Letter of Intent or
under the cumulative quantity discount rather than purchasing Class II Shares.
INVESTORS INVESTING $1 MILLION OR MORE IN A SINGLE PAYMENT AND OTHER INVESTORS
WHO QUALIFY TO PURCHASE CLASS I SHARES AT NET ASSET VALUE WILL BE PRECLUDED
FROM PURCHASING CLASS II SHARES.
Each class represents the same interest in the investment portfolio of a
Fund and has the same rights, except that each class has a different sales
charge, bears the separate expenses of its Rule 12b-1 distribution plan, and
has exclusive voting rights with respect to such plan. The two classes also
have separate exchange privileges.
Each class also has a separate schedule for compensating securities dealers
for selling Shares of the Funds. Investors should take all of the factors
regarding an investment in each class into account before deciding which class
of Shares to purchase.
OFFERING PRICE--CLASS I. The sales charge for Class I Shares is a variable
percentage of the Offering Price depending upon the amount of the sale. The
method of calculating net asset value per Share is described under "Net Asset
Value."
The price to the public on purchases of Class I Shares made by a single
purchaser, by an individual together with his or her spouse and their children
under age 21 and their grandchildren under age 21, or by a single trust or
fiduciary account is the net asset value per Share plus a sales charge not
exceeding 5.75% of the Offering Price (equivalent to 6.10% of the net asset
value), which is reduced on larger sales as shown below:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
--------------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE OF THE NET ASSET VALUE OF THE OFFERING PRICE
AT OFFERING PRICE SHARES PURCHASED SHARES PURCHASED RETAINED BY DEALERS/1/,/3/
----------------- --------------------- ---------------------- --------------------------
<S> <C> <C> <C>
Less than $50,000....... 5.75% 6.10% 5.00%
$50,000 but less than
$100,000............... 4.50% 4.71% 3.75%
$100,000 but less than
$250,000............... 3.50% 3.63% 2.80%
$250,000 but less than
$500,000............... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000............. 2.00% 2.04% 1.60%
$1,000,000 or more...... none none (see below)/2/
</TABLE>
- -------
/1/ Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
/2/ The following commissions will be paid by FTD, from its own resources, to
securities dealers who initiate and are responsible for purchases of $1
million or more; 1% on sales of $1 million but less than $2 million, plus
0.80% on sales of $2 million but less than $3 million, plus 0.50% on sales
of $3 million but less than $50 million, plus 0.25% on sales of $50 million
but less than $100 million, plus 0.15% on sales of $100 million or more.
Dealer concession breakpoints are reset every 12 months for purposes of
additional purchases.
/3/ At the discretion of FTD, all sales charges may at times be reallowed to the
securities dealer. If 90% or more of the sales commission is reallowed, such
securities dealer may be deemed to be an underwriter as that term is defined
in the Securities Act of 1933.
15
<PAGE>
No front-end sales charge applies to 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 of such investments ("contingency period"). See "How to Sell
Shares of the Funds--Contingent Deferred Sales Charge."
The size of a transaction which determines the applicable sales charge on
the purchase of Class I Shares is determined by adding the amount of the
Shareholder's current purchase plus the cost or current value (whichever is
higher) of a Shareholder's existing investment in one or more of the funds in
the Franklin Group of Funds(R) and the Templeton Family of Funds. Included for
these aggregation purposes are (i) the mutual funds in the Franklin Group of
Funds(R) except Franklin Valuemark Funds and Franklin Government Securities
Trust (the "Franklin Funds"); and (ii) 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.")
Other Payments to Securities Dealers. FTD, or one of its affiliates, may
make payments, from its own resources, of up to 1% of the purchase price to
securities dealers who initiate and are responsible for purchases made at net
asset value by certain designated retirement plans (as defined below)
(excluding IRA and IRA rollovers), certain non-designated plans (as defined
below), certain trust companies and trust departments of banks and certain
retirement plans of organizations with collective retirement plan assets of $1
million or more. See definitions under "Description of Special Net Asset Value
Purchases" below, and as set forth in the SAI.
Payments by FTD or one of its affiliates to securities dealers of up to 1%
of the purchase price of Class I Shares (purchased at net asset value), may
not be made to the extent such persons are compensated by FTD or one of its
affiliates for administration or recordkeeping costs for retirement plans.
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 Funds. The cumulative quantity discount applies
to Franklin Templeton Funds owned at the time of purchase by the purchaser,
his or her spouse, their children under age 21, and their grandchildren under
age 21. In addition, the aggregate investments of a trustee or other fiduciary
account (for an account under exclusive investment authority) may be
considered in determining whether a reduced sales charge is available, even
though there may be a number of beneficiaries of the account. For example, if
the investor held Class I Shares valued at $40,000 (or, if valued at less than
$40,000, had been purchased for $40,000) and purchased an additional $20,000
of a Fund's Class I Shares, the sales charge for the $20,000 purchase would be
at the rate of 4.50%. It is FTD's policy to give investors the best sales
charge rate possible; however, there can be no assurance that an investor will
receive the appropriate discount unless, at the time of placing the purchase
order, the investor or the dealer makes a request for the discount and gives
FTD sufficient information to determine whether the purchase will qualify for
the discount. On telephone orders from dealers for the purchase of Class I
Shares to be registered in "street name," FTD will accept the dealer's
instructions with respect to the applicable sales charge rate to be applied.
The cumulative quantity discount may be amended or terminated at any time.
Letter of Intent. An Investor may be eligible for reduced sales charges on
all investments in Class I Shares by means of a Letter of Intent ("LOI") which
expresses the investor's intention to invest a certain amount within a 13-
month period in Class I Shares of the Funds or any other Franklin Templeton
Fund. See the Shareholder Application. Except for certain employee benefit
plans, the minimum initial investment under an LOI is 5% of the total LOI
amount. Except for Shares purchased by certain employee benefit plans, Shares
purchased with the first 5% of such amount will be held in escrow to secure
payment of the higher sales charge applicable to the Shares actually purchased
if the full amount indicated is not purchased, and such escrowed Shares will
be involuntarily redeemed to
16
<PAGE>
pay the additional sales charge, if necessary. A purchase not originally made
pursuant to an LOI may be included under a subsequent LOI executed within 90
days of the purchase. Any redemptions made by Shareholders, other than by
certain employee benefit plans, during the 13-month period will be subtracted
from the amount of the purchases for purposes of determining whether the terms
of the LOI have been completed. For a further description of the LOI, see
"Purchase, Redemption and Pricing of Shares--Letter of Intent" in the SAI.
Group Purchases. An individual who is a member of a qualified group may also
purchase Class I Shares of the Funds at the reduced sales charge applicable to
the group as a whole. The sales charge is based upon the aggregate dollar
value of Class I Shares previously purchased and still owned by the group,
plus the amount of the current purchase. For example, if members of the group
had previously invested and still held $80,000 of Class I Shares and now were
investing $25,000, the sales charge would be 3.50%. Information concerning the
current sales charge applicable to a group may be obtained by contacting FTD.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund Shares at a discount, and
(iii) satisfies uniform criteria which enable FTD to realize economies of
scale in its costs of distributing Shares. A qualified group must have more
than 10 members, must be available to arrange for group meetings between
representatives of the Funds or FTD and the members, must agree to include
sales and other materials related to the Funds in its publications and
mailings to members at reduced or no cost to FTD, and must seek to arrange for
payroll deduction or other bulk transmission of investments to the Funds.
If an investor selects a payroll deduction plan, subsequent investments will
be automatic and will continue until such time as the investor notifies the
Fund and the investor's employer to discontinue further investments. Due to
the varying procedures to prepare, process and forward the payroll deduction
information to a Fund, there may be a delay between the time of the payroll
deduction and the time the money reaches a Fund. The investment in a Fund will
be made at the Offering Price per Share determined on the day that both the
check and payroll deduction data are received in required form by a Fund.
OFFERING PRICE--CLASS II. Unlike Class I Shares, the front-end sales charges
and dealer concessions for Class II Shares do not vary depending on the amount
of purchase. The total sales charges or underwriting commissions and dealer
concessions for Class II Shares are set forth below.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
-----------------------------------------
AS A PERCENTAGE OF AS A PERCENTAGE OF PORTION OF TOTAL
AMOUNT OF SALE OFFERING PRICE OF NET ASSET VALUE OF OFFERING PRICE
AT OFFERING PRICE THE SHARES PURCHASED THE SHARES PURCHASED RETAINED BY DEALERS*
----------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
any amount (less than $1
million)............... 1.00% 1.01% 1.00%
</TABLE>
- -------
* FTD, or one of its affiliates, may make additional payments to securities
dealers, from its own resources, of up to 1% of the amount invested. During
the first year following a purchase of Class II Shares, FTD will keep a
portion of the Rule 12b-1 fees assessed on those Shares to partially recoup
fees FTD pays to securities dealers.
Class II Shares redeemed within 18 months of their purchase will be assessed
a contingent deferred sales charge of 1% on the lesser of the then-current net
asset value or the net asset value of such Shares at the time of purchase,
unless such charge is waived as described under "How To Sell Shares of the
Funds--Contingent Deferred Sales Charge."
NET ASSET VALUE PURCHASES (BOTH CLASSES). Class I Shares may be purchased
without the imposition of either a front-end sales charge ("net asset value")
or a contingent deferred sales charge by: (i) officers, trustees, directors,
and full-time employees of the Funds, any of the Franklin Templeton Funds, or
Franklin Resources, Inc. and its subsidiaries (the "Franklin Templeton
Group"), and their spouses and family members, including any subsequent
payments made by such parties after cessation of employment; (ii) companies
exchanging Shares with or selling assets pursuant to a merger, acquisition or
exchange offer; (iii) group annuity separate accounts offered to retirement
plans; (iv) accounts managed by the Franklin Templeton Group; (v) shareholders
of Templeton
17
<PAGE>
Institutional Funds, Inc. reinvesting redemption proceeds from that fund under
an employee benefit plan qualified under Section 401 of the Internal Revenue
Code of 1986, as amended (the "Code"), in Shares of the Funds; (vi) certain
unit investment trusts and unit holders of such trusts reinvesting their
distributions from the trusts in the Funds; (vii) registered securities
dealers and their affiliates, for their investment account only; and (viii)
registered personnel and employees of securities dealers, and their affiliates
and by their spouses and family members, in accordance with the internal
policies and procedures of the employing securities dealer.
For either Class I or Class II, the same class of Shares of a Fund may be
purchased at net asset value with the proceeds from (i) a redemption of Shares
of a Fund or shares of any other Franklin Templeton Fund (unless the
redemption proceeds are from Class I shares of a fund with a lower initial
sales charge than that charged by a Fund and have been held in that fund for
less than six months), and except any of the Franklin Templeton money market
funds, or (ii) a dividend or distribution paid by any of the Franklin
Templeton Funds or received from a real estate investment trust ("REIT")
sponsored or advised by Franklin Properties, Inc., within 365 days after the
date of the redemption or dividend or distribution. See "How to Sell Shares of
the Funds--Reinstatement Privilege." Class II Shareholders may also invest
such distributions at net asset value in Class I shares of a Franklin
Templeton Fund.
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, which was subject to a front-end sales charge or
a contingent deferred sales charge and which has investment objectives similar
to those of a Fund.
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by broker-dealers who have
entered into a supplemental agreement with FTD, or by registered investment
advisers affiliated with such broker-dealers, on behalf of their clients who
are participating in a comprehensive fee program (also known as a wrap fee
program).
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by anyone who has taken a
distribution from an existing retirement plan already invested in the Franklin
Templeton Funds (including former participants of the Franklin Templeton
Profit Sharing 401(k) plan), to the extent of such distribution. In order to
exercise this privilege, a written order for the purchase of Shares of the
Funds must be received by Franklin Templeton Trust Company ("FTTC"), the
Funds, or Franklin Templeton Investor Services, Inc. (the "Transfer Agent")
within 365 days after the plan distribution.
Class I Shares may also be purchased at net asset value and without the
imposition of a contingent deferred sales charge by any state, county or city,
or any instrumentality, department, authority or agency thereof which has
determined that the Funds are a legally permissible investment and which is
prohibited by applicable investment laws from paying a sales charge or
commission in connection with the purchase of shares of any registered
management investment company ("an eligible governmental authority"). SUCH
INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISORS TO DETERMINE WHETHER AND TO
WHAT EXTENT THE SHARES OF THE FUNDS CONSTITUTE LEGAL INVESTMENTS FOR THEM.
Municipal investors considering investment of proceeds of bond offerings into
the Funds should consult with expert counsel to determine the effect, if any,
of various payments made by the Funds or their investment manager on arbitrage
rebate calculations. If an investment by an eligible governmental authority at
net asset value is made through a securities dealer who has executed a dealer
agreement with FTD, FTD or one of its affiliates may make a payment, out of
its own resources, to such securities dealer in an amount not to exceed 0.25%
of the amount invested. Contact Franklin Templeton Institutional Services for
additional information.
To qualify to buy Shares at net asset value, please specify in writing the
privilege that applies to the purchase and include that written statement with
the purchase order. Neither a Fund nor the Transfer Agent will be responsible
for purchases that are not made at net asset value if this written statement
is not included with the order.
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
18
<PAGE>
200 or more employees or that the amount invested or to be invested during the
subsequent 13-month period in the Funds or in any of the Franklin Templeton
Funds totals at least $1 million. Employee benefit plans not designated above
or qualified under Section 401 of the Code ("non-designated plans") may be
afforded the same privilege if they meet the above requirements as well as the
uniform criteria for qualified groups previously described under "Group
Purchases," which enable FTD to realize economies of scale in its sales
efforts and sales-related expenses.
Class I Shares may be purchased at net asset value and without the
imposition of a contingent deferred sales charge by trust companies and bank
trust departments for funds over which they exercise exclusive discretionary
investment authority and which are held in a fiduciary, agency, advisory,
custodial or similar capacity. Such purchases are subject to minimum
requirements with respect to amount of purchase, which may be established by
FTD. Currently, those criteria require that the amount invested or to be
invested during the subsequent 13-month period in the Funds or any of the
Franklin Templeton Funds 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 $1 million or more,
without regard to where such assets are currently invested.
Refer to the SAI for further information regarding net asset value purchases
of Class I Shares.
ADDITIONAL DEALER COMPENSATION (BOTH CLASSES). FTD, or one of its
affiliates, from its own resources, may also provide additional compensation
to securities dealers in connection with sales of shares of the Franklin
Templeton Funds. Compensation may include financial assistance to securities
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising, sales campaigns and/or
shareholder services and programs regarding one or more of the Franklin
Templeton Funds and other dealer-sponsored programs or events. In some
instances, this compensation may be made available only to certain securities
dealers whose representatives have sold or are expected to sell significant
amounts of shares of the Franklin Templeton Funds. Compensation may include
payment for travel expenses, including lodging, incurred in connection with
trips taken by invited registered representatives and members of their
families to locations within or outside of the United States for meetings or
seminars of a business nature. Securities dealers may not use sales of the
Funds' Shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. In addition, FTD or its
affiliates may make ongoing payments to brokerage firms, financial
institutions (including banks) and others to facilitate the administration and
servicing of Shareholder accounts. None of the aforementioned additional
compensation is paid for by the Funds or their Shareholders.
Ongoing payments will be made to qualifying dealers at the annual rate of
0.25% of the average daily net asset value of Class I Shares, and 1% of the
average daily net asset value of Class II Shares, registered in the name of
that broker-dealer as nominee or held in a Shareholder account that designates
that broker-dealer as dealer of record. These payments are made in order to
promote selling efforts and to compensate dealers for providing certain
services, including processing purchase and redemption transactions,
establishing Shareholder accounts and providing certain information and
assistance with respect to the Funds. For purchases of Class I Shares for
which FTD advanced a commission to a securities dealer, the dealer will
receive ongoing payments beginning in the thirteenth month after the date of
the purchase. For all purchases of Class II Shares, the dealer will receive
payments representing a service fee (0.25% of average daily net asset value of
the Shares) beginning in the first month after the date of the purchase, and
will receive additional payments representing compensation for distribution
(0.75% of average daily net asset value of the Shares) beginning in the
thirteenth month after the date of the purchase, and beginning May 1, 1997 for
exchanges from Templeton American Trust, Inc., if the exchange shares were
purchased prior to May 1, 1995.
19
<PAGE>
PURCHASING CLASS I AND CLASS II SHARES. When placing purchase orders,
investors should clearly indicate which class of Shares they intend to
purchase. A purchase order that fails to specify a class will automatically be
invested in Class I Shares. Purchases of $1 million or more in a single
payment will be invested in Class I Shares. There are no conversion features
attached to either class of Shares.
Investors who qualify to purchase Class I Shares at net asset value should
purchase Class I rather than Class II Shares. See the section "Net Asset Value
Purchases (Both Classes)" and "Description of Special Net Asset Value
Purchases" above for a discussion of when Shares may be purchased at net asset
value.
As to telephone orders placed with FTD by dealers, the dealer must receive
the investor's order before the close of the New York Stock Exchange ("NYSE")
and transmit it to FTD by 5:00 p.m., New York time, for the investor to
receive that day's Offering Price. Payment for such orders must be by check in
U.S. currency and must be promptly submitted to FTD. Orders mailed to FTD by
dealers or individual investors are effected at the net asset value of a
Fund's Shares next computed after the purchase order accompanied by payment
has been received by FTD. Such payment must be by check in U.S. currency drawn
on a commercial bank in the U.S. and, if over $100,000, may not be deemed to
have been received until the proceeds have been collected unless the check is
certified or issued by such bank. Any subscription may be rejected by FTD or
by the Funds.
The Funds may impose a $10 charge against a Shareholder account in the event
that a check or draft submitted for the purchase of Fund Shares is returned
unpaid to the Funds.
Investors should promptly check the confirmation advice that is mailed after
each purchase (or redemption) order to insure that it has been accurately
reflected in the investor's account.
AUTOMATIC INVESTMENT PLAN. Investors may accumulate Fund Shares regularly
each month by means of automatic debits to their checking accounts ($25
minimum). Forms for this purpose are in the Shareholder Application in this
Prospectus. Such a plan is voluntary and may be discontinued by written notice
to FTD, which must be received at least 10 days prior to the collection date,
or by FTD upon written notice to the investor at least 30 days prior to the
collection date.
INSTITUTIONAL ACCOUNTS. Institutional investors will likely be required to
complete an institutional account application. There may be additional methods
of opening accounts and purchasing, redeeming or exchanging Shares of the
Funds available for institutional accounts. To obtain an institutional account
application or additional information regarding institutional accounts,
contact Franklin Templeton Institutional Services at 1-800-321-8563.
ACCOUNT STATEMENTS. Shareholder accounts are opened in accordance with the
Shareholder's registration instructions. Transactions in the account, such as
additional investments and dividend reinvestments, will be reflected on
regular confirmation statements from the Transfer Agent.
TELEFACTS(R) SYSTEM. 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 TeleFACTS(R) system at 1-800-247-1753,
shareholders may obtain Class I and Class II account information, current
price and, if available, yield or other performance information specific to a
Fund or any Franklin Templeton Fund. The codes for the Funds, which will be
needed to access information, are 419 and 519 for Class I and Class II of
Greater European Fund, respectively, and 418 and 518 for Class I and Class II
of Latin America Fund, respectively. In addition, Class I and II shareholders
may request duplicate confirmation or year-end statements and deposit slips.
Franklin Class I shareholders may process an exchange, within the same class,
into an identically registered Franklin account.
RETIREMENT PLANS. Shares of the Funds may be purchased through various
retirement plans including the following plans for which FTTC or its affiliate
acts as trustee or custodian: IRAs, Simplified Employee Pensions, 403(b)
plans, qualified plans for corporations,
20
<PAGE>
self-employed individuals and partnerships, and 401(k) plans. A plan document
must be adopted in order for a retirement plan to be in existence. For further
information about any of the plans, agreements, applications and annual fees,
contact FTD. To determine which retirement plan is appropriate, an investor
should contact his or her tax adviser.
NET ASSET VALUE. The net asset value per Share of each class of each Fund is
determined as of the scheduled closing time of the NYSE (generally 4:00 p.m.,
New York time) each day the NYSE is open for trading, by dividing the value of
a Fund's securities plus any cash and other assets (including accrued interest
and dividends receivable) less all liabilities (including accrued expenses) by
the number of Shares outstanding, adjusted to the nearest whole cent. A
security listed or traded on a recognized stock exchange or NASDAQ is valued
at its last sale price on the principal exchange on which the security is
traded. The value of a foreign security is determined in its national currency
as of the close of trading on the foreign exchange on which it is traded, or
as of the scheduled closing time of the NYSE, if that is earlier, and that
value is then converted into its U.S. dollar equivalent at the foreign
exchange rate in effect at noon, New York time, on the day the value of the
foreign security is determined. If no sale is reported at that time, the mean
between the current bid and asked price is used. Occasionally, events which
affect the values of such securities and such exchange rates may occur between
the times at which they are determined and the close of the NYSE, and will
therefore not be reflected in the computation of a Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at fair value as determined by
the management and approved in good faith by the Board of Trustees. All other
securities for which over-the-counter market quotations are readily available
are valued at the mean between the current bid and asked price. Securities for
which market quotations are not readily available and other assets are valued
at fair value as determined by the management and approved in good faith by
the Board of Trustees.
Each of the Funds' classes will bear, pro-rata, all of the common expenses
of the Fund. The net asset value of all outstanding Shares of each class of
each Fund will be computed on a pro-rata basis for each outstanding Share
based on the proportionate participation in each Fund represented by the value
of Shares of such classes, except that the Class I and Class II Shares will
bear the Rule 12b-1 expenses payable under their respective plans. Due to the
specific distribution expenses and other costs that will be allocable to each
class, the dividends paid to each class of the Funds may vary.
EXCHANGE PRIVILEGE
A Shareholder may exchange Shares for the same class of shares of other
Franklin Templeton Funds which are eligible for sale in the Shareholder's
state of residence and in conformity with such funds' 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 Templeton money
market fund. See also "How to Sell Shares of the Funds--Contingent Deferred
Sales Charge."
Exchange purchases are subject to the minimum investment requirements of the
fund purchased and no sales charge generally applies. Exchanges of the same
class of shares are made on the basis of the net asset values of the class
involved, except as set forth below. Exchanges of shares of a class which were
originally purchased without a sales charge will be charged a sales charge in
accordance with the terms of the prospectus of the fund and the class of
shares being purchased, unless the original investment on which no sales
charge was paid was transferred in from a fund on which the investor paid a
sales charge. Exchanges of shares from Franklin Templeton money market funds
are subject to applicable sales charges on the funds being purchased, unless
the Franklin Templeton money market fund shares were acquired by an exchange
from a fund having a sales charge, or by reinvestment of
21
<PAGE>
dividends or capital gain distributions. Exchanges of Class I shares of the
Funds which were purchased with a lower sales charge to a fund which has a
higher sales charge will be charged the difference, unless the shares were
held in a Fund for at least six months prior to executing the exchange. All
exchanges are permitted only after at least 15 days have elapsed from the date
of the purchase of the Shares to be exchanged.
A Shareholder may exchange Shares by writing to the Transfer Agent (see "How
to Sell Shares of the Funds"), by contacting his or her investment dealer or--
if the Shareholder Application indicates that the Shareholder has not declined
the option--by telephoning 1-800-632-2301. Telephone exchange instructions
must be received by FTD by the scheduled closing time of the NYSE (generally
4:00 p.m., New York time). Telephonic exchanges can involve only Shares in
non-certificated form. Shares held in certificate form are not eligible, but
may be returned and qualify for these services. All accounts involved in a
telephonic exchange must have the same registration and dividend option as the
account from which the Shares are being exchanged. The Trust and the Transfer
Agent will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Please refer to "Telephone
Transactions--Verification Procedures." Forms for declining the telephone
exchange privilege and prospectuses of the other funds in the Franklin
Templeton Group may be obtained from FTD. Exchange redemptions and purchases
are processed simultaneously at the Share prices next determined after the
exchange order is received. See "How to Buy Shares of the Funds--Offering
Price." A gain or loss for tax purposes generally will be realized upon the
exchange, depending on the tax basis of the Shares redeemed.
This exchange privilege is available only in states where shares of the fund
being acquired may legally be sold, and may be modified, limited or terminated
at any time by a Fund upon 60 days' written notice. A Shareholder who wishes
to make an exchange should first obtain and review a current prospectus of the
fund into which he or she wishes to exchange. Broker-dealers who process
exchange orders on behalf of their customers may charge a fee for their
services. Such fee may be avoided by making requests for exchange directly to
the Transfer Agent.
If a substantial portion of a Fund's Shareholders should, within a short
period, elect to redeem their Shares of the Fund pursuant to the exchange
privilege, the Fund might have to liquidate portfolio securities it might
otherwise hold, and incur the additional costs related to such transactions.
On the other hand, increased use of the exchange privilege may result in
periodic large inflows of money. If this should occur, it is the general
policy of the Funds to initially invest this money in short-term, interest-
bearing money market instruments, unless it is felt that attractive investment
opportunities consistent with a Fund's investment objectives exist
immediately. Subsequently, this money will be withdrawn from such short-term
money market instruments and invested in portfolio securities in as orderly a
manner as is possible when attractive investment opportunities arise.
EXCHANGES OF CLASS I SHARES. The contingency period of Class I Shares will
be tolled (or stopped) for the period such Shares are exchanged into and held
in a Franklin Templeton Class I money market fund. If a Class I account has
Shares subject to a contingent deferred sales charge, Class I Shares will be
exchanged into the new account on a "first-in, first-out" basis. See also "How
to Sell Shares of the Funds--Contingent Deferred Sales Charge."
EXCHANGES OF CLASS II SHARES. When an account is composed of Class II Shares
subject to the contingent deferred sales charge, and Shares that are not, the
Shares will be transferred proportionately into the new fund. Shares received
from reinvestment of dividends and capital gain distributions are referred to
as "free Shares," Shares which were originally subject to a contingent
deferred sales charge but to which the contingent deferred sales charge no
longer applies are called "matured Shares," and Shares still subject to the
contingent deferred sales charge are referred to as "CDSC liable Shares." CDSC
liable Shares held for different periods of time are considered different
types of CDSC liable Shares. For instance, if a Shareholder has $1,000 in free
Shares, $2,000 in matured Shares, and $3,000 in CDSC liable Shares, and the
Shareholder exchanges $3,000 into a new fund, $500 will be exchanged from free
Shares, $1,000 from matured Shares, and $1,500 from CDSC liable Shares.
Similarly, if CDSC liable Shares have been purchased at different periods, a
proportionate amount will be taken from Shares held for each period. If, for
example, the Shareholder holds $1,000
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in Shares bought 3 months ago, $1,000 bought 6 months ago, and $1,000 bought 9
months ago, and the Shareholder exchanges $1,500 into a new fund, $500 from
each of these Shares will be exchanged into the new fund.
The only money market fund exchange option available to Class II
Shareholders is the Franklin Templeton Money Fund II ("Money Fund II"), a
series of the Franklin Templeton Money Fund Trust. No drafts (checks) may be
written on Money Fund II accounts, nor may Shareholders purchase shares of
Money Fund II directly. Class II Shares exchanged for shares of Money Fund II
will continue to age and a contingent deferred sales charge will be assessed
if CDSC liable Shares are redeemed. No other money market funds are available
for Class II Shareholders for exchange purposes. Class I Shares may be
exchanged for shares of any of the money market funds in the Franklin
Templeton Funds except Money Fund II. Draft writing privileges and direct
purchases are allowed on these money market funds as described in their
respective prospectuses.
To the extent Shares are exchanged proportionately, as opposed to another
method, such as "first-in, first-out," or free Shares followed by CDSC liable
Shares, the exchanged Shares may, in some instances, be CDSC liable even
though a redemption of such Shares, as discussed elsewhere herein, may no
longer be subject to a CDSC. The proportional method is believed by management
to more closely meet and reflect the expectations of Class II Shareholders in
the event Shares are redeemed during the contingency period. For federal
income tax purposes, the cost basis of Shares redeemed or exchanged is
determined under the Code without regard to the method of transferring Shares
chosen by the Fund for purposes of exchanging or redeeming Shares.
TRANSFERS. Transfers between identically registered accounts in the same
fund and class are treated as non-monetary and non-taxable events, and are not
subject to a contingent deferred sales charge. The transferred Shares will
continue to age from the date of original purchase. Shares of each class will
be transferred on the same basis as described above for exchanges.
CONVERSION RIGHTS. It is not presently anticipated that Class II Shares will
be converted to Class I Shares. A Shareholder may, however, sell Class II
Shares and use the proceeds to purchase Class I Shares, subject to all
applicable sales charges.
EXCHANGES BY TIMING ACCOUNTS. In the case of market timing or allocation
services ("Timing Accounts"), FTD will deduct an administrative service fee of
$5.00 per exchange. Timing Accounts generally include accounts administered so
as to redeem or purchase Shares based upon certain predetermined market
indicators. In accordance with the terms of their respective prospectuses,
certain funds in the Franklin Templeton Group do not accept or may place
differing limitations than those described below on exchanges by Timing
Accounts.
The Funds reserve the right temporarily or permanently to 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 and
who: (i) makes an exchange request out of a Fund within two weeks of an
earlier exchange request out of a Fund; (ii) makes more than two exchanges out
of a Fund per calendar quarter; or (iii) exchanges Shares equal in value to at
least $5 million, or more than 1% of a Fund's net assets. Accounts under
common ownership or control, including accounts administered so as to redeem
or purchase Shares based upon certain predetermined market indicators, will be
aggregated for purposes of the exchange limits.
In addition, the Funds reserve the right to refuse the purchase side of
exchange requests by any Timing Account, person, or group if, in the
Investment Manager's judgment, a Fund would be unable to invest effectively in
accordance with its investment objective and policies, or would otherwise
potentially be adversely affected. A Shareholder's exchanges into a Fund may
be restricted or refused if a Fund receives or anticipates simultaneous orders
affecting significant portions of a Fund's assets. In particular, a pattern of
exchanges that coincides with a "market timing" strategy may be disruptive to
a Fund and therefore may be refused.
Finally, as indicated above, the Funds and FTD reserve the right to refuse
any order for the purchase of Shares.
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HOW TO SELL SHARES OF THE FUNDS
Shares will be redeemed on request of the Shareholder in "Proper Order" to
the Transfer Agent. "PROPER ORDER" MEANS THAT THE REQUEST TO REDEEM MUST MEET
ALL OF THE FOLLOWING REQUIREMENTS:
1. Except as provided below under "Redemptions by Telephone," it must be in
writing, signed by the Shareholder(s) exactly in the manner as the Shares are
registered, and must specify either the number of Shares, or the dollar amount
of Shares, to be redeemed. The request must be 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 Funds reserve the right to require signature guarantees on all
redemptions. A signature guarantee is required in connection with any written
request for transfer of Shares. Also, a signature guarantee is required if the
Funds or the Transfer Agent believes that a signature guarantee would protect
against potential claims based on the transfer instructions, including, for
example, when: (i) the current address of one or more joint owners of an
account cannot be confirmed; (ii) multiple owners have a dispute or give
inconsistent instructions to a Fund; (iii) a Fund has been notified of an
adverse claim; (iv) the instructions received by a Fund are given by an agent,
not the actual registered owner; (v) a Fund determines that joint owners who
are married to each other are separated or may be the subject of divorce
proceedings; or (vi) the authority of a representative of a corporation,
partnership, association, or other entity has not been established to the
satisfaction of a Fund;
3. Any outstanding certificates must accompany the request together with a
stock power signed by the Shareholder(s), with signature(s) guaranteed as
described in Item 2 above;
4. Liquidation requests of corporate, partnership, trust and custodial
accounts, and accounts under court jurisdiction, require the following
documentation to be in proper form:
. Corporation--(i) Signature guaranteed letter of instruction from the
authorized officer(s) of the corporation, and (ii) a corporate
resolution in a form satisfactory to the Transfer Agent;
. Partnership--(i) Signature guaranteed letter of instruction from a
general partner and, if necessary, (ii) pertinent pages from the
partnership agreement identifying the general partners or other
documentation in a form satisfactory to the Transfer Agent;
. Trust--(i) Signature guaranteed letter of instruction from the
trustee(s), and (ii) a copy of the pertinent pages of the trust
document listing the trustee(s) or a certificate of incumbency if the
trustee(s) are not listed on the account registration;
. Custodial (other than a retirement account)--Signature guaranteed
letter of instruction from the custodian;
. Accounts under court jurisdiction--Check court documents and the
applicable state law since these accounts have varying requirements,
depending upon the state of residence; and
5. Redemption of Shares held in a retirement plan for which FTTC or its
affiliate acts as trustee or custodian must conform to the distribution
requirements of the plan and the Funds' redemption requirements above.
Distributions from such plans are subject to additional requirements under the
Code, and certain documents (available from the Transfer Agent) must be
completed before the
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distribution may be made. For example, distributions from retirement plans are
subject to withholding requirements under the Code, and the IRS Form W-4P
(available from the Transfer Agent) may be required to be submitted to the
Transfer Agent with the distribution request, or the distribution will be
delayed. The Transfer Agent and its affiliates assume no responsibility to
determine whether a distribution satisfies the conditions of applicable tax
laws and will not be responsible for any penalties assessed.
To avoid delay in redemption or transfer, Shareholders having questions
about these requirements should contact the Shareholder Services Department by
calling 1-800-632-2301.
The redemption price will be the net asset value of the Shares next computed
after the redemption request in Proper Order is received by the Transfer
Agent. A gain or loss for tax purposes generally will be realized upon the
redemption, depending on the tax basis of the Shares redeemed. Payment of the
redemption price ordinarily will be made by check (or by wire at the sole
discretion of the Transfer Agent if wire transfer is requested, including name
and address of the bank and the Shareholder's account number to which payment
of the redemption proceeds is to be wired) within seven days after receipt of
the redemption request in Proper Order. However, if Shares have been purchased
by check, the Trust will make redemption proceeds available when a
Shareholder's check received for the Shares purchased has been cleared for
payment by the Shareholder's bank, which, depending upon the location of the
Shareholder's bank, could take up to 15 days or more. The redemption check
will be mailed by first-class mail to the Shareholder's registered address (or
as otherwise directed). Remittance by wire (to a commercial bank account in
the same name(s) as the Shares are registered) or express mail, if requested,
are subject to a handling charge of up to $15, which will be deducted from the
redemption proceeds.
The Funds, through FTD, also repurchase Shares (whether in certificate or
book-entry form) through securities dealers. The Funds normally will accept
orders to repurchase such Shares by wire or telephone from dealers for their
customers at the net asset value next computed after the dealer has received
the certificate holder's request for repurchase, if the dealer received such
request before closing time of the NYSE on that day. Dealers have the
responsibility of submitting such repurchase requests by calling not later
than 5:00 p.m., New York time, on such day in order to obtain that day's
applicable redemption price. Repurchase of Shares is for the convenience of
Shareholders and does not involve a charge by the Funds; however, securities
dealers may impose a charge on the Shareholder for transmitting the notice of
repurchase to the Funds. Each Fund reserves the right to reject any order for
repurchase, which right of rejection might adversely affect Shareholders
seeking redemption through the repurchase procedure. Ordinarily, payment will
be made to the securities dealer within seven days after receipt of a
repurchase order and Share certificate (if any) in "Proper Order" as set forth
above. Each Fund also will accept, from member firms of the NYSE, orders to
repurchase Shares for which no certificates have been issued by wire or
telephone without a redemption request signed by the Shareholder, provided the
member firm indemnifies the Fund and FTD from any liability resulting from the
absence of the Shareholder's signature. Forms for such indemnity agreement can
be obtained from FTD.
The Funds may involuntarily redeem an investor's Shares if the net asset
value of such Shares is less than $100, except that involuntary redemptions
will not result from fluctuations in the value of an investor's Shares. In
addition, the Funds may involuntarily redeem the Shares of any investor who
has failed to provide a Fund with a certified taxpayer identification number
or such other tax-related certifications as a Fund may require. A notice of
redemption, sent by first-class mail to the investor's address of record, will
fix a date not less than 30 days after the mailing date, and Shares will be
redeemed at net asset value at the close of business on that date, unless
sufficient additional Shares are purchased to bring the aggregate account
value up to $100 or more, or unless a certified taxpayer identification number
(or such other information as a Fund has requested) has been provided, as the
case may be. A check for the redemption proceeds will be mailed to the
investor at the address of record.
REINSTATEMENT PRIVILEGE. For either Class I or Class II, the same class of
Shares of the Funds may be purchased at net asset value with the proceeds from
(i) a redemption of Shares of a Fund or Shares of any other Franklin Templeton
Fund, except any of the Franklin Templeton money market funds (unless the
redemption proceeds are from Class I shares of a fund with a lower initial
sales charge than that charged by the Funds and have been held in that fund
for less than six months), or (ii) a dividend or distribution paid
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by any of the Franklin Templeton Funds, within 365 days after the date of the
redemption or dividend or distribution. Class II Shareholders may also invest
such distributions at net asset value in a Class I Franklin Templeton Fund.
However, if a Shareholder's original investment was in Class I shares of a
fund with a lower sales charge, or no sales charge, the Shareholder must pay
the difference. An investor may reinvest an amount not exceeding the proceeds
of the redemption or the dividend or distribution. While credit will be given
for any contingent deferred sales charge paid on the Shares redeemed, a new
contingency period will begin. Matured Shares will be reinvested at net asset
value and will not be subject to a new contingent deferred sales charge.
Shares of the Funds redeemed in connection with an exchange into another fund
(see "Exchange Privilege") are not considered "redeemed" for this privilege.
In order to exercise this privilege, a written order for the purchase of
Shares of the Funds must be received by the Funds or the Funds' Transfer Agent
within 365 days after the redemption or the payment date of the distribution.
The 365 days, however, do not begin to run on redemption proceeds placed
immediately after redemption in a Franklin Bank Certificate of Deposit ("CD")
until the CD (including any rollover) matures. Reinvestment at net asset value
may also be handled by a securities dealer or other financial institution, who
may charge the Shareholder a fee for this service. The redemption is a taxable
transaction but reinvestment without a sales charge may affect the tax basis
of the Shares reinvested, and the amount of gain or loss resulting from a
redemption may be affected by exercise of the reinstatement privilege if the
Shares redeemed were held for 90 days or less, or if a Shareholder reinvests
in the same fund within 30 days. Reinvestment will be at the next calculated
net asset value after receipt.
SYSTEMATIC WITHDRAWAL PLAN. A Shareholder may establish a Systematic
Withdrawal Plan ("Plan") and receive periodic payments from an account
provided that the net asset value of the Shares held in the account is at
least $5,000. There are no service charges for establishing or maintaining a
Plan. The minimum amount which the Shareholder may withdraw is $50 per
withdrawal transaction although this is merely the minimum amount allowed
under the Plan and should not be mistaken for a recommended amount. Retirement
plans subject to mandatory distribution requirements are not subject to the
$50 minimum. The Plan may be established on a monthly, quarterly, semiannual
or annual basis. If the Shareholder establishes a Plan, any capital gain
distributions and income dividends paid by the Funds to the Shareholder's
account must be reinvested for the Shareholder's account in additional Shares
at net asset value. Payments are then made from the liquidation of Shares at
net asset value on the day of the liquidation (which is generally on or about
the 25th of the month) to meet the specified withdrawals. Payments are
generally received three to five days after the date of liquidation. By
completing the "Special Payment Instructions for Distributions" section of the
Shareholder Application included with this Prospectus, a Shareholder may
direct the selected withdrawals to another of the Franklin Templeton Funds, to
another person, or directly to a checking account. Liquidation of Shares may
reduce or possibly exhaust the Shares in the Shareholder's account, to the
extent withdrawals exceed Shares earned through dividends and distributions,
particularly in the event of a market decline. If the withdrawal amount
exceeds the total Plan balance, the account will be closed and the remaining
balance will be sent to the Shareholder. As with other redemptions, a
liquidation to make a withdrawal payment is a sale for federal income tax
purposes. Because the amount withdrawn under the Plan may be more than the
Shareholder's actual yield or income, part of such a Plan payment may be a
return of the Shareholder's investment.
Maintaining a Plan concurrently with purchases of additional Shares of a
Fund would be disadvantageous because of the sales charge on the additional
purchases. Also, redemptions of Class I Shares and Class II Shares may be
subject to a contingent deferred sales charge if the Shares are redeemed
within 12 months (Class I Shares) or 18 months (Class II Shares) of the
calendar month of the original purchase date. The Shareholder should
ordinarily not make additional investments of less than $5,000 or three times
the annual withdrawals under the Plan during the time such a Plan is in
effect.
With respect to Systematic Withdrawal Plans, the applicable contingent
deferred sales charge is waived for Class I and Class II Share redemptions of
up to 1% monthly of an account's net asset value (12% annually, 6%
semiannually, 3% quarterly). For example, if a Class I account maintained an
annual balance of $1,000,000, only $120,000 could be withdrawn through a once-
yearly Systematic Withdrawal Plan free of charge; any amount over that
$120,000 would be assessed a 1% (or applicable) contingent deferred sales
charge. Likewise, if a Class II account maintained an annual balance of
$10,000, only $1,200 could be withdrawn through a once-yearly Systematic
Withdrawal Plan free of charge.
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A Plan may be terminated on written notice by the Shareholder or a Fund, and
it will terminate automatically if all Shares are liquidated or withdrawn from
the account, or upon a Fund's receipt of notification of the death or
incapacity of the Shareholder. Shareholders may change the amount (but not
below $50) and schedule of withdrawal payments or suspend one such payment by
giving written notice to the Transfer Agent at least seven business days prior
to the end of the month preceding a scheduled payment. Share certificates may
not be issued while a Plan is in effect.
REDEMPTIONS BY TELEPHONE. Shareholders who file a Telephone Redemption
Authorization Agreement (the "Agreement") (a copy of which is included in this
Prospectus) may redeem Shares of the Funds by telephone, subject to the
Restricted Account exception noted under "Telephone Transactions--Restricted
Accounts." The Trust and the Transfer Agent will employ reasonable procedures
to confirm that instructions given by telephone are genuine. Shareholders,
however, bear the risk of loss in certain cases as described under "Telephone
Transactions--Verification Procedures."
For Shareholder accounts with a completed Agreement on file, redemptions of
uncertificated Shares or Shares which have previously been deposited with the
Funds or the Transfer Agent may be made for up to $50,000 per day per Fund
account. A 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 telephone
redemptions in excess of $50,000 must complete an Institutional Telephone
Privileges Agreement which is available from Franklin Templeton Institutional
Services by telephoning 1-800-321-8563.
CONTINGENT DEFERRED SALES CHARGE. In order to recover commissions paid to
securities dealers, Class I investments of $1 million or more, and any Class
II investments, redeemed within the contingency period of 12 months (Class I)
or 18 months (Class II) of the calendar month of their purchase will be
assessed a contingent deferred sales charge, unless one of the exceptions
described below applies. The charge is 1% of the lesser of the net asset value
of the Shares redeemed (exclusive of reinvested dividends and capital gain
distributions) or the net asset value at the time of purchase of such Shares,
and is retained by FTD. The contingent deferred sales charge is waived in
certain instances. See below.
In determining if a contingent deferred sales charge applies, Shares not
subject to a contingent deferred sales charge are deemed to be redeemed first,
in the following order: (i) a calculated number of Shares representing amounts
attributable to capital appreciation of those Shares held less than the
contingency period (12 months in the case of Class I Shares and 18 months in
the case of Class II Shares); (ii) Shares purchased with reinvested dividends
and capital gain distributions; and (iii) other Shares held longer than the
contingency period, and followed by any Shares held less than the contingency
period, on a "first in, first out" basis. For tax purposes, a contingent
deferred sales charge is treated as either a reduction in redemption proceeds
or an adjustment to the cost basis of the Shares redeemed.
The contingent deferred sales charge on each class of Shares is waived, as
applicable, for: exchanges; any account fees; distributions from an individual
retirement plan account due to death or disability, or upon periodic
distributions based on life expectancy; tax-free returns of excess
contributions from employee benefit plans; distributions from employee benefit
plans, including those due to plan termination or plan transfer; redemptions
through a Systematic Withdrawal Plan of up to 1% monthly of an account's net
asst value (3% quarterly, 6% semiannually or 12% annually); redemptions
initiated by the Funds due to a Shareholder's account falling below the
minimum specified account size; and redemptions following the death of the
Shareholder or the beneficial owner.
All investments made during a calendar month, regardless of when during the
month the investment occurred, will age one month on the last day of that
month, and each subsequent month.
Requests for redemptions for a SPECIFIED DOLLAr amount, unless otherwise
specified, will result in additional Shares being redeemed to cover any
applicable contingent deferred sales charge, while requests for redemption of
a SPECIFIC NUMBER of Shares will result in the applicable contingent deferred
sales charge being deducted from the total dollar amount redeemed.
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TELEPHONE TRANSACTIONS
Shareholders of the Funds and their investment representative of record, if
any, may be able to execute various transactions by calling Shareholder
Services at 1-800-632-2301.
All Shareholders will be able to: (i) effect a change in address; (ii)
change a dividend option (see "Restricted Accounts" below); (iii) transfer
Fund Shares in one account to another identically registered account in a
Fund; (iv) request the issuance of certificates (to be sent to the address of
record only); and (v) exchange Fund Shares by telephone as described in this
Prospectus. In addition, Shareholders who complete and file an Agreement as
described under "How to Sell Shares of the Funds--Redemptions by Telephone"
will be able to redeem Shares of the Funds.
VERIFICATION PROCEDURES. The Funds and the Transfer Agent will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. These will include: recording all telephone calls requesting
account activity by telephone, requiring that the caller provide certain
personal and/or account information requested by the telephone service agent
at the time of the call for the purpose of establishing the caller's
identification, and sending a confirmation statement on redemptions to the
address of record each time account activity is initiated by telephone. So
long as the Funds and the Transfer Agent follow instructions communicated by
telephone which were reasonably believed to be genuine at the time of their
receipt, neither they nor their affiliates will be liable for any loss to the
Shareholder caused by an unauthorized transaction. The Funds and the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions in the event such reasonable procedures are not followed.
Shareholders are, of course, under no obligation to apply for or accept
telephone transaction privileges. In any instance where a Fund or the Transfer
Agent is not reasonably satisfied that instructions received by telephone are
genuine, the requested transaction will not be executed, and neither the
Funds, the Transfer Agent, nor their affiliates will be liable for any losses
which may occur because of a delay in implementing a transaction.
RESTRICTED ACCOUNTS. Telephone redemptions and dividend option changes may
not be accepted on Franklin Templeton retirement accounts. To assure
compliance with all applicable regulations, special forms are required for any
distribution, redemption, or dividend payment. While the telephone exchange
privilege is extended to Franklin Templeton IRA and 403(b) retirement
accounts, certain restrictions may apply to other types of retirement plans.
Changes to dividend options must also be made in writing.
To obtain further information regarding distribution or transfer procedures,
including any required forms, retirement account Shareholders may call to
speak to a Retirement Plan Specialist at 1-800-527-2020.
GENERAL. During periods of drastic economic or market changes, it is
possible that the telephone transaction privileges will be difficult to
execute because of heavy telephone volume. In such situations, Shareholders
may wish to contact their registered dealer for assistance, or to send written
instructions to the Trust as detailed elsewhere in this Prospectus.
Neither the Trust nor the Transfer Agent will be liable for any losses
resulting from the inability of a Shareholder to execute a telephone
transaction. The telephone transaction privilege may be modified or
discontinued by the Trust at any time upon 60 days' written notice to
Shareholders.
MANAGEMENT OF THE FUNDS
The Trust is managed by its Board of Trustees and all powers of the Trust
are exercised by or under authority of the Board. Information relating to the
Trustees and Executive Officers is set forth under the heading "Management of
the Trust" in the SAI.
The Board has carefully reviewed the multiclass structure to ensure that no
material conflict exists between the two classes of Shares. Although the Board
does not expect to encounter material conflicts in the future, the Board will
continue to monitor the Funds and will take appropriate action to resolve such
conflicts if any should later arise.
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In developing the multiclass structure, the Funds have retained the
authority to establish additional classes of Shares. It is each 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 Funds is Templeton Global
Advisors Limited, Nassau, Bahamas. The Investment Manager manages the
investment and reinvestment of each Fund's assets. The Investment Manager is
an indirect wholly owned subsidiary of Franklin Resources, Inc. ("Franklin").
Through its subsidiaries, Franklin is engaged in various aspects of the
financial services industry. The Investment Manager and its affiliates serve
as advisers for a wide variety of public investment mutual funds and private
clients in many nations. The Templeton organization has been investing
globally over the past 56 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, Russia, France,
Poland, Italy, India, Vietnam, South America and South Africa.
The Investment Manager uses a disciplined, long-term approach to value-
oriented global and international investing. It has an extensive global
network of investment research sources. Securities are selected for each
Fund's portfolio on the basis of fundamental company-by-company analysis. Many
different selection methods are used for different funds and clients and these
methods are changed and improved by the Investment Manager's research on
superior selection methods.
The Investment Manager performs similar services for other funds and
accounts and there may be times when the actions taken with respect to the
Funds' portfolios will differ from those taken by the Investment Manager on
behalf of other funds and accounts. Neither the Investment Manager and its
affiliates, its officers, directors or employees, nor the officers and
Trustees of the Trust are prohibited from investing in securities held by the
Funds or other funds and accounts which are managed or administered by the
Investment Manager to the extent such transactions comply with the Trust's
Code of Ethics. Please see "Investment Management and Other Services--
Investment Management Agreements" in the SAI for further information on
securities transactions and a summary of the Trust's Code of Ethics.
The Investment Manager does not furnish any other services or facilities for
the Funds, although such expenses are paid by some investment advisers of
other investment companies. As compensation for its services, Greater European
Fund pays the Investment Manager a monthly fee, equal on an annual basis to
0.75% of its average daily net assets during the year. As compensation for its
services, Latin America Fund pays the Investment Manager a monthly fee, equal
on an annual basis to 1.25% of its average daily net assets during the year.
These fees are higher than those paid by most other U.S. investment companies,
primarily because of the additional time and expense required of the
Investment Manager in pursuing the Funds' policies of investing in Greater
European Companies and Latin America issuers. Each Fund also pays its own
operating expenses, including: (1) its pro rata portion of the fees and
expenses of the Trust's disinterested Trustees; (2) interest expenses; (3)
taxes and governmental fees; (4) brokerage commissions and other expenses
incurred in acquiring or disposing of portfolio securities; (5) the expenses
of registering and qualifying its Shares for sale with the SEC and with
various state securities commissions; (6) expenses of its independent public
accountants and legal counsel; (7) insurance premiums; (8) fees and expenses
of the Custodian and Transfer Agent and any related services; (9) expenses of
obtaining quotations of portfolio securities and of pricing Shares; (10) its
pro rata portion of the expenses of maintaining the Trust's legal existence
and of Shareholders' meetings; (11) expenses of preparation and distribution
to existing Shareholders of periodic reports, proxy materials and
prospectuses; (12) payments made pursuant to the Fund's Distribution Plan (see
"Plans of Distribution" below); and (13) fees and expenses of membership in
industry organizations.
The lead portfolio manager for Greater European Fund since its inception is
Dorian B. Foyil, Senior Vice President of the Investment Manager and head of
Templeton's Research Technology Group. Mr. Foyil holds an AA in Business
Administration from Cumberland County College, a BBA in Accounting/Computer
Science from Temple University and an MBA in Finance from the Wharton School
of Business of the University of Pennsylvania. Prior to joining the Templeton
organization, Mr. Foyil was a research
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analyst for four years with UBS Phillips & Drew in London, England. Sean
Farrington has exercised secondary portfolio management responsibilities with
respect to Greater European Fund since its inception. Mr. Farrington holds an
AB in Economics from Harvard University. He is a member of the Investment
Manager's research technology group responsible for the maintenance of the
internal research database.
The lead portfolio manager for Latin America Fund is Jeffrey A. Everett,
Vice President, Portfolio Management/Research, of the Investment Manager. Mr.
Everett holds a BS degree in Finance from Pennsylvania State University. Prior
to joining the Templeton organization in 1989, Mr. Everett was an investment
officer at First Pennsylvania Investment Research, a division of First
Pennsylvania Corporation, where he analyzed equity and convertible securities.
Mr. Everett was also responsible for coordinating research for Centre Square
Investment Group, the pension management subsidiary of First Pennsylvania
Corporation.
Further information concerning the Investment Manager is included under the
heading "Investment Management and Other Services" in the SAI.
BUSINESS MANAGER. Templeton Global Investors, Inc. provides certain
administrative facilities and services for the Funds, including payment of
salaries of officers, preparation and maintenance of books and records,
preparation of tax returns and financial reports, monitoring compliance with
regulatory requirements and monitoring tax-deferred retirement plans. For its
services, each Fund pays the Business Manager a fee equivalent on an annual
basis to 0.15% of the combined average daily net assets of the Funds included
in the Trust (the Funds, Templeton Americas Government Securities Fund,
Templeton Growth and Income Fund and Templeton Global Infrastructure Fund),
reduced to 0.135% of such combined assets in excess of $200 million, to 0.10%
of such assets in excess of $700 million, and to 0.075% of such assets in
excess of $1,200 million.
TRANSFER AGENT. Franklin Templeton Investor Services, Inc. serves as
transfer agent and dividend disbursing agent for the Funds.
CUSTODIAN. The Chase Manhattan Bank, N.A. serves as custodian of the Funds'
assets.
PLANS OF DISTRIBUTION. A separate Plan of Distribution has been approved and
adopted for each class of each Fund ("Class I Plan" and "Class II Plan,"
respectively, or "Plans") pursuant to Rule 12b-1 under the 1940 Act. The Rule
12b-1 fees charged to each class will be based solely on the distribution and
servicing fees attributable to that particular class. Any portion of fees
remaining from either Plan after distribution to securities dealers of up to
the maximum amount permitted under each Plan may be used by the class to
reimburse FTD for routine ongoing promotion and distribution expenses incurred
with respect to such class. Such expenses may include, but are not limited to,
the printing of prospectuses and reports used for sales purposes, expenses, of
preparing and distributing sales literature and related expenses,
advertisements, and other distribution-related expenses, including a prorated
portion of FTD's overhead expenses attributable to the distribution of Fund
Shares, as well as any distribution or service fees paid to securities dealers
or their firms or others who have executed a servicing agreement with the
Funds, FTD or its affiliates.
The maximum amount which a Fund may pay to FTD or others under the Class I
Plan for such distribution expenses is 0.35% per annum of Class I's average
daily net assets, payable on a quarterly basis. All expenses of distribution
and marketing in excess of 0.35% per annum will be borne by FTD, or others who
have incurred them, without reimbursement from the Funds. Under the Class I
Plan, costs and expenses not reimbursed in any one given quarter (including
costs and expenses not reimbursed because they exceed the applicable limit of
the Plan) may be reimbursed in subsequent quarters or years, subject to
applicable law.
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<PAGE>
Under the Class II Plan, the maximum amount which a Fund is permitted to pay
to FTD or others for distribution expenses and related expenses is 0.75% per
annum of Class II's average daily net assets, payable quarterly. All expenses
of distribution, marketing and related expenses over that amount will be borne
by FTD, or others who have incurred them, without reimbursement by the Funds.
In addition, the Class II Plan provides for an additional payment by a Fund of
up to 0.25% per annum of Class II's average daily net assets as a servicing
fee, payable quarterly. This fee will be used to pay securities dealers or
others for, among other things, assisting in establishing and maintaining
customer accounts and records; assisting with purchase and redemption
requests; receiving and answering correspondence; monitoring dividend payments
from the Funds on behalf of the customers; or similar activities related to
furnishing personal services and/or maintaining Shareholder accounts.
During the first year following the purchase of Class II Shares, FTD will
retain 0.75% per annum of Class II's average daily net assets to partially
recoup fees FTD pays to securities dealers. FTD, or its affiliates, may pay,
from its own resources, a commission of up to 1% of the amount invested to
securities dealers who initiate and are responsible for purchases of Class II
Shares.
Both Plans also cover any payments to or by the Funds, the Investment
Manager, FTD, or other parties on behalf of the Funds, the Investment Manager
or FTD, to the extent such payments are deemed to be for the financing of any
activity primarily intended to result in the sale of Shares issued by the
Funds within the context of Rule 12b-1. The payments under the Plans are
included in the maximum operating expenses which may be borne by each class of
the Funds. For more information, including a discussion of the Board's
policies with regard to the amount of each Plan's fees, please see the SAI.
BROKERAGE COMMISSIONS. The Funds' brokerage policies are described under the
heading "Brokerage Allocation" in the SAI. The Funds' brokerage policies
provide that the receipt of research services from a broker and the sale of
Shares by a broker are factors which may be taken into account in allocating
securities transactions, so long as the prices and execution provided by the
broker equal the best available within the scope of the Funds' brokerage
policies.
GENERAL INFORMATION
DESCRIPTION OF SHARES/SHARE CERTIFICATES. The capitalization of the Trust
consists of an unlimited number of Shares of beneficial interest, par value
$0.01 per Share. The Board of Trustees is authorized, in its discretion, to
classify and allocate the unissued Shares of the Trust in an unlimited number
of separate series and may in the future divide existing series into two or
more classes. Each Share entitles the holder to one vote.
Shares for an initial investment, as well as subsequent investments,
including the reinvestment of dividends and capital gain distributions, are
generally credited to an account in the name of an investor on the books of
the Funds, without the issuance of a share certificate. Maintaining Shares in
uncertificated form (also known as "plan balance") minimizes the risk of loss
or theft of a share certificate. No charge is made for the issuance of one
certificate for all or some of the Shares purchased in a single order. A lost,
stolen or destroyed certificate cannot be replaced without obtaining a
sufficient indemnity bond. The cost of such a bond, which is generally borne
by the Shareholder, can be 2% or more of the value of the lost, stolen or
destroyed certificate. A certificate will be issued if requested by the
Shareholder or by the securities dealer.
VOTING RIGHTS. Shares of each class represent proportionate interests in the
assets of each Fund and have the same voting and other rights and preferences
as the other class of each Fund for matters that affect each Fund as a whole.
For matters that only affect a certain class of a Fund's Shares, however, only
Shareholders of that class will be entitled to vote. Therefore, each class of
Shares will vote separately on matters (i) affecting only that class, (ii)
expressly required to be voted on separately by state law, or (iii) required
to be voted on separately by the 1940 Act or the rules adopted thereunder. For
instance, if a change to the Rule 12b-1 plan relating to Class I Shares
requires Shareholder approval, only Shareholders of Class I may vote on
changes to the Rule 12b-1 plan affecting that
31
<PAGE>
class. Similarly, if a change to the Rule 12b-1 plan relating to Class II
Shares requires Shareholder approval, only Shareholders of Class II may vote
on the change to such plan. On the other hand, if there is a proposed change
to the investment objective of a Fund, this affects all Shareholders,
regardless of which class of Shares they hold, and therefore, each Share has
the same voting rights.
MEETINGS OF SHAREHOLDERS. The Trust is not required to hold annual meetings
of Shareholders and may elect not to do so. The Trust will call a special
meeting of Shareholders for the purpose of considering the removal of a person
serving as Trustee if requested in writing to do so by the holders of not less
than 10% of the Trust's outstanding Shares. The Trust is required to assist
Shareholder communications in connection with the calling of Shareholder
meetings to consider removal of a Trustee or Trustees.
DIVIDENDS AND DISTRIBUTIONS. Each Fund intends to pay a dividend at least
annually representing substantially all of its net investment income and any
net realized capital gains. According to the requirements of the Code,
dividends and capital gains will be calculated and distributed in the same
manner for Class I and Class II Shares. The per share amount of any income
dividends will generally differ only to the extent that each class is subject
to different Rule 12b-1 fees. Unless otherwise requested, income dividends and
capital gain distributions paid by a Fund, other than on those Shares whose
owners keep them registered in the name of a broker-dealer, are automatically
reinvested on the payment date in whole or fractional Shares at net asset
value as of the ex-dividend date, unless a Shareholder makes a written or
telephonic request for payments in cash. By completing the "Special Payment
Instructions for Distributions" section of the Shareholder Application, Class
I Shareholders may direct that their dividends and/or capital gain
distributions be reinvested in Class I Shares of a Fund or Class I shares of
any other Franklin Templeton Fund, and Class II Shareholders may direct that
their dividends and/or capital gain distributions be reinvested in either
Class I or Class II Shares of a Fund or any other Franklin Templeton Fund.
Shareholders may also direct the payment of their dividends or capital gain
distributions to another person. The processing date for the reinvestment of
dividends may vary from time to time, and does not affect the amount of the
Shares acquired. Income dividends and capital gain distributions will be paid
in cash on Shares during the time their owners keep them registered in the
name of a broker-dealer, unless the broker-dealer has made arrangements with
the Transfer Agent for reinvestment.
Prior to purchasing Shares of a Fund, the impact of dividends or capital
gain distributions which have been declared but not yet paid should be
carefully considered. Any dividend or capital gain distribution paid shortly
after a purchase by a Shareholder prior to the record date will have the
effect of reducing the per Share net asset value of the Shares by the amount
of the dividend or distribution. All or a portion of such dividend or
distribution, although in effect a return of capital, generally will be
subject to tax.
Checks are forwarded by first-class mail to the address of record. The
proceeds of any such checks which are not accepted by the addressee and
returned to a Fund will be reinvested in the Shareholder's account in whole or
fractional Shares at the net asset value next computed after the check has
been received by the Transfer Agent. Subsequent distributions automatically
will be reinvested at net asset value as of the ex-dividend date in additional
whole or fractional Shares.
FEDERAL TAX INFORMATION. Each Fund intends to elect to be treated and to
qualify each year as a regulated investment company under Subchapter M of the
Code. See the SAI for a summary of requirements that must be satisfied to so
qualify. A regulated investment company generally is not subject to federal
income tax on income and gains distributed in a timely manner to its
shareholders. Each Fund intends to distribute to Shareholders substantially
all of its net investment income and net realized capital gains to
Shareholders, which generally will be taxable income or capital gains in their
hands. Distributions declared in October, November or December to Shareholders
of record on a date in such month and paid during the following January will
be treated as having been received by Shareholders on December 31 in the year
such distributions were declared. The Trust will inform Shareholders each year
of the amount and nature of such income or gains. Sales or other dispositions
of Fund Shares generally will give rise to taxable gain or loss. A more
detailed description of tax consequences to Shareholders is contained in the
SAI under the heading "Tax Status."
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<PAGE>
Each Fund may be required to withhold federal income tax at the rate of 31%
of all taxable distributions (including redemptions) paid to Shareholders who
fail to provide a Fund with their correct taxpayer identification number or to
make required certifications or where a Fund or the Shareholder has been
notified by the Internal Revenue Service that the Shareholder is subject to
backup withholding. Corporate Shareholders and certain other Shareholders
specified in the Code are exempt from backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
Shareholder's federal income tax liability.
INQUIRIES. Shareholders' inquiries will be answered promptly. They should be
addressed to Franklin Templeton Investor Services, Inc., P.O. Box 33030, St.
Petersburg, Florida 33733-8030--telephone 1-800-632-2301. 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. Each Fund may include its total return in
advertisements or reports to Shareholders or prospective investors. Quotations
of average annual total return will be expressed in terms of the average
annual compounded rate of return on a hypothetical investment in a Fund over a
period of 1, 5 and 10 years (or up to the life of the Fund), will reflect the
deduction of the maximum initial sales charge and deduction of a proportional
share of Fund expenses (on an annual basis), and will assume that all
dividends and distributions are reinvested when paid. Total return may be
expressed in terms of the cumulative value of an investment in a Fund at the
end of a defined period of time. For a description of the methods used to
determine total return for the Funds, see "Performance Information" in the
SAI.
STATEMENTS AND REPORTS. Each Fund's fiscal year ends on March 31. Annual
reports (containing financial statements audited by independent auditors and
additional information regarding the Fund's performance) and semiannual
reports (containing unaudited financial statements) are sent to Shareholders
each year. To reduce the volume of mail sent to one household as well as to
reduce Fund expenses, the Transfer Agent will attempt to identify related
Shareholders within a household, and send only one copy of the report.
Additional copies may be obtained, without charge, upon request to the Fund
Information Department--telephone 1-800/DIAL BEN. The Fund also sends to each
Shareholder a confirmation statement after every transaction that affects the
Shareholder's account and a year-end historical confirmation statement.
33
<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
Pension Plan Trust Trust
- -----------------------------------------------------------------------------------------------------------------------------------
. Joint Individual Actual owner of account, or . Corporation, Partnership, Corporation, Partnership, or
if combined funds, the or other organization other organization
first-named individual
- -----------------------------------------------------------------------------------------------------------------------------------
. Unif. Gift/Transfer to Minor Minor . Broker nominee Broker nominee
- -----------------------------------------------------------------------------------------------------------------------------------
. Sole Proprietor Owner of business
- -----------------------------------------------------------------------------------------------------------------------------------
. Legal Guardian Ward, Minor, or Incompetent
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXEMPT RECIPIENTS. Please provide your TIN and check the "Exempt Recipient"
box if you are an exempt recipient. Exempt recipients generally include:
A corporation A real estate investment trust
A financial institution A common trust fund operated by a bank
under section 584(a)
An organization exempt from tax An entity registered at all times
under section 501(a), or an under the Investment Company
individual retirement plan Act of 1940
A registered dealer in securities or
commodities registered in the U.S.
or a U.S. possession
IRS PENALTIES. If you do not supply us with your SSN/TIN, you will be subject
to an IRS $50 penalty unless your failure is due to reasonable cause and not
willful neglect. If you fail to report certain income on your Federal income
tax return, you will be treated as negligent and subject to an IRS 20% penalty
on any underpayment of tax attributable to such negligence, unless there was
reasonable cause for the resulting underpayment and you acted in good faith.
If you falsify information on this form or make any other false statement
resulting in no backup withholding on an account which should be subject to
backup withholding, you may be subject to an IRS $500 penalty and certain
criminal penalties including fines and imprisonment.
SUBSTITUTE W-8 INSTRUCTIONS INFORMATION
EXEMPT FOREIGN PERSON. Check the "Exempt Foreign Person" box if you qualify as
a non-resident alien or foreign entity that is not subject to certain U.S.
information return reporting or to backup withholding rules. Dividends paid to
your account may be subject to withholding of up to 30%. Generally, you are an
"Exempt Foreign Person" if you are not (1) a citizen or resident of the U.S.,
or (2) a U.S. corporation, partnership, estate, or trust. In the case of an
individual, an "Exempt Foreign Person" is one who has been physically present
in the U.S. for less than 31 days during the current calendar year. An
individual who is physically present in the U.S. for at least 31 days during
the current calendar year will still be treated as an "Exempt Foreign Person,"
provided that the total number of days physically present in the current
calendar year and the two preceding calendar years does not equal or exceed
183 days (counting all of the days in the current calendar year, only one-
third of the days in the first preceding calendar year and only one-sixth of
the days in the second preceding calendar year). In addition, lawful permanent
residents or green card holders may not be treated as "Exempt Foreign
Persons." If you are an individual or an entity, you must not now be, or at
this time expect to be, engaged in a U.S. trade or business with respect to
which any gain derived from transactions effected by the Fund/Payer during the
calendar year is effectively connected to the U.S.
PERMANENT ADDRESS. The Shareholder Application must contain your permanent
address if you are an "Exempt Foreign Person." If you are an individual,
provide your permanent address. If you are a partnership or corporation,
provide the address of your principal office. If you are an estate or trust,
provide the address of your permanent residence or the principal office of any
fiduciary.
NOTICE OF CHANGE IN STATUS. If you become a U.S. citizen or resident after you
have provided certification of your foreign status, or if you cease to be an
"Exempt Foreign Person," you must notify the Fund/Payer within 30 days of your
change in status. Reporting will then begin on the account(s) listed, and
backup withholding may also begin unless you certify to the Fund/Payer that
(1) the taxpayer identification number you have given is correct, and (2) the
IRS has not notified you that you are subject to backup withholding because
you failed to report certain interest or dividend income. You may use Form W-
9, "Payer's Request for Taxpayer Identification Number and Certification," to
make these certifications. If an account is no longer active, you do not have
to notify a Fund/Payer or broker of your change in status unless you also have
another account with the same Fund/Payer that is still active. If you receive
interest from more than one Fund/Payer or have dealings with more than one
broker or barter exchange, file a certificate with each. If you have more than
one account with the same Fund/Payer, the Fund/Payer may require you to file a
separate certificate for each account.
WHEN TO FILE. File these certifications with the Fund before a payment is made
to you, unless you have already done this in either of the two preceding
calendar years. Only certifications that are in proper order will be treated
as having been filed with the Fund.
HOW OFTEN YOU MUST FILE. This certificate generally remains in effect for
three calendar years. A Fund/Payer or broker, however, may require that a new
certificate be filed each time a payment is made. On joint accounts for which
each joint owner is a foreign person, each must provide a certification of
foreign status.
34
<PAGE>
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of
a resolution or other certificate of authority to authorize the purchase as
well as sale (redemption) of shares and withdrawals by checks or drafts. You
may use the following form of resolution or you may prefer to use your own. It
is understood that each Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to a Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly
elected ____________ of _________________________ a ___________________________
TITLE CORPORATE NAME TYPE OF ORGANIZATION
organized under the laws of the State of __________ and that the following is a
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
NUMBER
to sign any share assignment on behalf of this Corporation or Association and
to take any other actions as may be necessary to sell or redeem its shares in
the Funds or to sign checks or drafts withdrawing funds from the account; and
FURTHER RESOLVED, that this Corporation or Association shall hold harmless,
indemnify, and defend the Funds, their custodian bank, Franklin Templeton
Distributors, Inc., Franklin Templeton Investor Services, Inc., and their
affiliates, from any claim, loss or liability resulting in whole or in
part, directly or indirectly, from their reliance from time to time upon
any certifications by the secretary or any assistant secretary of this
Corporation or Association as to the names of the individuals occupying
such offices and their acting in reliance upon these resolutions until
actual receipt by them of a certified copy of a resolution of the Board of
Directors of the Corporation or Association modifying or revoking any or
all such resolutions.
The undersigned further certifies that the below named persons, whose
signatures appear opposite their names and office titles, are duly elected
officers of the Corporation or Association. (Attach additional list if
necessary).
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME/TITLE (PLEASE PRINT OR TYPE) SIGNATURE
- -------------------------------------- ---------------------------------------
NAME OF CORPORATION OR ASSOCIATION DATE
Certified from minutes ________________________________________________________
NAME AND TITLE
CORPORATE SEAL (if appropriate)
35
<PAGE>
THE FRANKLIN TEMPLETON TELEPHONE REDEMPTION AUTHORIZATION AGREEMENT
You may use Franklin Templeton's telephone redemption privilege to redeem
uncertificated Franklin Templeton Fund shares for up to $50,000 (or your
Shareholder account balance, whichever is less) per day, per fund account in
accordance with the terms of the Fund's Prospectus.
The telephone redemption privilege is available only to Shareholders who
specifically request it. If you would like to add this redemption privilege to
the other telephone transaction privileges automatically available to Franklin
Templeton Fund shareholders, please sign and return this authorization to
Franklin Templeton Investor Services, Inc. ("Services"), transfer agent and
shareholder servicing agent for the Franklin Templeton Funds.
SHAREHOLDER AUTHORIZATION: I/We request the telephone redemption privilege
under the terms described below and in the prospectus for each investment
company in the Franklin Templeton Group of Funds (a "Franklin Templeton Fund"
or a "Fund"), now opened or opened at a later date, holding shares registered
as follows:
- -------------------------------------- ---------------------------------------
PRINT NAME(S) AS SHOWN IN YOUR ACCOUNT
REGISTRATION ("SHAREHOLDER")
- -------------------------------------- ---------------------------------------
ACCOUNT NUMBER(S)
I/We authorize each Fund and Services to honor and act upon telephone requests
given as provided in this agreement to redeem shares from any
Shareholder account:
- -------------------------------------- ---------------------------------------
SIGNATURE(S) AND DATE
- -------------------------------------- ---------------------------------------
PRINT NAME(S) (AND TITLE/CAPACITY,
IF APPLICABLE)
VERIFICATION PROCEDURES: I/We understand and agree that: (1) each Fund and
Services will employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine and that if these
confirmation procedures are not followed, the Fund or Services may be liable
for any losses due to unauthorized or fraudulent telephone instructions; (2)
the confirmation procedures will include the recording of telephone calls
requesting redemptions, requiring that the caller provide certain personal
and/or account information requested by the telephone service agent at the
time of the call for the purpose of establishing the caller's identification,
and the sending of confirmation statements to the address of record each time
a redemption is initiated by telephone; and (3) so long as the Fund and
Services follow the confirmation procedures in acting on instructions
communicated by telephone which were reasonably believed to be genuine at the
time of receipt, neither they, nor their parent or affiliates, will be liable
for any loss, damages or expenses caused by an unauthorized or fraudulent
redemption request.
JOINTLY OWNED/CO-TRUSTEE ACCOUNTS: Each of us signing this agreement as either
joint owners or co-trustees authorizes each Fund and Services to honor
telephone redemption requests given by ANY ONE of the signers, or our
investment representative of record, if any, ACTING ALONE.
APPOINTMENT OF ATTORNEY-IN-FACT: In order to issue telephone redemption
requests acting alone, each of us individually makes the following
appointment: I hereby appoint the other joint owner(s)/co-trustee(s) as my
agent(s) (attorney[s]-in-fact) with full power and authority to individually
act for me in any lawful way with respect to the issuance of instructions to a
Fund or Services in accordance with the telephone redemption privilege we have
requested by signing this agreement. This appointment shall not be affected by
my subsequent disability or incompetency and shall remain in effect until it
is revoked by either written notice from any one of us delivered to a Fund or
Services by registered mail, return receipt requested or by a Fund or Services
upon receipt of any information that causes a Fund or Services to believe in
good faith that there is or that there may be a dispute among any of us with
respect to the Franklin Templeton Fund account(s) covered by this agreement.
Each of us agrees to notify the Fund or Services immediately upon the death of
any of the signers.
CORPORATE/PARTNERSHIP/TRUST/RETIREMENT ACCOUNTS: The Shareholder and each of
us signing this agreement on behalf of the Shareholder represent and warrant
to each Franklin Templeton Fund and Services that the Shareholder has the
authority to enter into this agreement and that each of us is duly authorized
to execute this agreement on behalf of the Shareholder. The Shareholder agrees
that its election of the telephone redemption privilege means that a Fund or
Services may honor a telephone redemption request given by ANY
officer/partner/member/administrator/or agent of the Shareholder ACTING ALONE.
RESTRICTED ACCOUNTS: Telephone redemptions may not be accepted on Franklin
Templeton Trust Company retirement accounts.
PLEASE RETURN THIS FORM TO:
Franklin Templeton Investor Services, Inc., Attn.: Telephone Redemptions
Dept., 700 Central Avenue, St. Petersburg, Florida 33701-3628.
36
<PAGE>
The Franklin Templeton Group
Literature Request -- Call today for a free descriptive brochure and
prospectus on any of the funds listed below. The prospectus contains more
complete information, including fees, charges and expenses, and should be read
carefully before investing or sending money.
<TABLE>
<S> <C> <C>
TEMPLETON FUNDS Maryland FRANKLIN FUNDS SEEKING
American Trust Massachusetts*** HIGH CURRENT INCOME
Americas Government Securities Fund Michigan*** AGE High Income Fund
Developing Markets Trust Minnesota*** German Government Bond Fund
Foreign Fund Missouri Global Government Income Fund
Global Infrastructure Fund New Jersey Investment Grade Income Fund
Global Opportunities Trust New York* U.S. Government Securities Fund
Greater European Fund North Carolina
Growth Fund Ohio*** FRANKLIN FUNDS SEEKING HIGH CURRENT
Growth and Income Fund Oregon INCOME AND STABILITY OF PRINCIPAL
Income Fund Pennsylvania Adjustable Rate Securities Fund
Japan Fund Tennessee** Adjustable U.S. Government Securities Fund
Latin America Fund Texas Short-Intermediate U.S. Government Securities Fund
Money Fund Virginia
Real Estate Securities Fund Washington** FRANKLIN FUNDS FOR NON-U.S. INVESTORS
Smaller Companies Growth Fund Tax-Advantaged High
World Fund FRANKLIN FUNDS Yield Securities Fund
SEEKING CAPITAL GROWTH Tax-Advantaged International Bond Fund
FRANKLIN FUNDS California Tax-Advantaged U.S. Government Securities Fund
SEEKING TAX-FREE INCOME Growth Fund
Federal Intermediate Term DynaTech Fund FRANKLIN TEMPLETON INTERNATIONAL
Tax-Free Income Fund Equity Fund CURRENCY FUNDS
Federal Tax-Free Income Fund Global Health Care Fund Global Currency Fund
High Yield Tax-Free Gold Fund Hard Currency Fund
Income Fund Growth Fund High Income Currency Fund
Insured Tax-Free Income Fund*** International Equity Fund
Puerto Rico Tax-Free Income Fund Pacific Growth Fund FRANKLIN MONEY MARKET FUNDS
Real Estate Securities Fund California Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC FUNDS Small Cap Growth Fund Federal Money Fund
SEEKING TAX-FREE INCOME IFT U.S. Treasury Money Market Portfolio
Alabama FRANKLIN FUNDS SEEKING Money Fund
Arizona* GROWTH AND INCOME New York Tax-Exempt Money Fund
Arkansas** Balance Sheet Investment Fund Tax-Exempt Money Fund
California* Convertible Securities Fund
Colorado Equity Income Fund FRANKLIN FUND FOR CORPORATIONS
Connecticut Global Utilities Fund Corporate Qualified Dividend Fund
Florida* Income Fund
Georgia Premier Return Fund FRANKLIN TEMPLETON VARIABLE ANNUITIES
Hawaii** Rising Dividends Fund Franklin Valuemark
Indiana Strategic Income Fund Franklin Templeton Valuemark Income
Kentucky Utilities Fund Plus (an immediate annuity)
Louisiana
</TABLE>
Toll-free 1-800-DIAL BEN (1-800-342-5236)
* Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of municipal securities, and a high yield portfolio
(CA).
** The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
*** Portfolio of insured municipal securities.
37
<PAGE>
NOTES
38
<PAGE>
NOTES
39
<PAGE>
- -------------------------
TEMPLETON REGION FUNDS
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800/DIAL BEN
Institutional Services
1-800-321-8563
Dealer Services
1-800-524-4040
Retirement Plan Services
1-800-527-2020
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.
- -------------------------
[RECYCLING LOGO APPEARS HERE]
TLGIT P 03/96
TEMPLETON
REGION
FUNDS
Prospectus
May 8, 1995
as amended
March 21, 1996
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
<PAGE>
[LOGO APPEARS HERE]
Franklin Templeton
Mail to: FRANKLIN TEMPLETON
P.O. Box 33031 St. Petersburg, Florida 33733-8031 (800) 393-3001
PLEASE DO NOT USE THIS FORM FOR ANY RETIREMENT PLAN FOR WHICH FRANKLIN TEMPLETON
TRUST COMPANY SERVES AS CUSTODIAN OR TRUSTEE, OR FOR TEMPLETON MONEY FUND,
TEMPLETON INSTITUTIONAL FUNDS OR TEMPLETON CAPITAL ACCUMULATOR FUND. REQUEST
SEPARATE APPLICATIONS AND/OR PROSPECTUSES.
- --------------------------------------------------------------------------------
SHAREHOLDER APPLICATION OR REVISION [ ] PLEASE CHECK THE BOX IF THIS IS A
REVISION AND SEE SECTION 8
- --------------------------------------------------------------------------------
PLEASE CHECK CLASS I OR CLASS II, if applicable, next to your Fund selection.
Class I and Class II shares have different sales charges and operating expenses,
among other differences, as described in each Fund's prospectus.
DATE __________________
CLASS
I II TEMPLETON
[ ] [ ] $______ AMERICAN TRUST
[ ] ______ AMERICAS GOVERNMENT SECURITIES FUND
[ ] [ ] ______ DEVELOPING MARKETS TRUST
[ ] [ ] ______ FOREIGN FUND
[ ] [ ] ______ GLOBAL INFRASTRUCTURE FUND
CLASS
I II TEMPLETON
[ ] [ ] $______ GLOBAL OPPORTUNITIES TRUST
[ ] [ ] ______ GREATER EUROPEAN FUND
[ ] [ ] ______ GROWTH FUND
[ ] [ ] ______ GROWTH AND INCOME FUND
[ ] [ ] ______ INCOME FUND
CLASS
I II TEMPLETON
[ ] $______ JAPAN FUND
[ ] [ ] ______ LATIN AMERICA FUND
[ ] [ ] ______ REAL ESTATE SECURITIES FUND
[ ] [ ] ______ SMALLER COMPANIES GROWTH FUND
[ ] [ ] ______ WORLD FUND
CLASS
I II
[ ] [ ] OTHER: $______
(except for Class II Money Fund)
________________________________
________________________________
________________________________
- --------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION (PLEASE PRINT)
- --------------------------------------------------------------------------------
[ ] INDIVIDUAL OR JOINT ACCOUNT
- -
___________________________________________________ ____________________________
First Name Middle Initial Last Name Social Security Number (SSN)
- -
___________________________________________________ ____________________________
Joint Owner(s) Social Security Number (SSN)
(Joint ownership means "Joint Tenants With Rights
of Survivorship" unless otherwise specified)
All owners must sign Section 4.
- --------------------------------------------------------------------------------
[ ] GIFT/TRANSFER TO A MINOR
______________________________ As Custodian For _______________________________
Name of Custodian (ONE ONLY) Minor's Name (one only)
____________________ Uniform Gifts/Transfers to Minors Act ____________________
State of Residence Minor's Social
Security Number
Please Note: Custodian's Signature, not Minor's, is required in Section 4.
- --------------------------------------------------------------------------------
[ ] TRUST, CORPORATION, PARTNERSHIP, RETIREMENT PLAN, OR OTHER ENTITY
__________________________________________ ____________________________________
Name Taxpayer Identification Number (TIN)
__________________________________________ ____________________________________
Name of Beneficiary Date of Trust Document
(if to be included in the Registration) (must be completed for registration)
________________________________________________________________________________
Name of Each Trustee
(if to be included in the Registration)
- --------------------------------------------------------------------------------
2 ADDRESS
- --------------------------------------------------------------------------------
_________________________________________ Daytime Phone(_______)_____________
Street Address Area Code
_________________________________________ Evening Phone(_______)_____________
City State Zip Code Area Code
I am a Citizen of: [ ] U.S. or [ ]_________________________
Country of Residence
- --------------------------------------------------------------------------------
3 INITIAL INVESTMENT ($100 MINIMUM INITIAL INVESTMENT)
- --------------------------------------------------------------------------------
Check(s) enclosed for $______________. (Payable to the Fund(s) indicated above.)
- --------------------------------------------------------------------------------
4 SIGNATURE AND TAX CERTIFICATIONS (ALL REGISTERED OWNERS MUST SIGN
APPLICATION)
- --------------------------------------------------------------------------------
See "Important Notice Regarding Taxpayer IRS Certifications" in back of
prospectus. The Fund reserves the right to refuse to open an account without
either a certified Taxpayer Identification Number ("TIN") or a certification of
foreign status. Failure to provide tax certifications in this section may result
in backup withholding on payments relating to your account and/or in your
inability to qualify for treaty withholding rates.
I am(We are) not subject to backup withholding because I(we) have not been
notified by the IRS that I am(we are) subject to backup withholding as a result
of a failure to report all interest or dividends or because the IRS has notified
me(us) that I am(we are) no longer subject to backup withholding. (If you are
currently subject to backup withholding as a result of a failure to report all
interest or dividends, please cross out the preceding statement.)
[ ] The number shown above is my(our) correct TIN, or that of the Minor named in
Section 1.
[ ] AWAITING TIN. I am(We are) waiting for a number to be issued to me(us).
I(We) understand that if I(we) do not provide a TIN to the Fund within 60
days, the Fund is required to commence 31% backup withholding until I(we)
provide a certified TIN.
[ ] EXEMPT RECIPIENT. Individuals cannot be exempt. Check this box only after
reading the instructions to see whether you qualify as an exempt recipient.
(You should still provide a TIN.)
[ ] EXEMPT FOREIGN PERSON. Check this box only if the following statement
applies: "I am(we are) neither a citizen nor a resident of the United
States. I(we) certify to the best of my(our) knowledge and belief, I(we)
qualify as an exempt foreign person and/or entity as described in the
instructions."
Permanent address for
tax purposes:___________________________________________________________________
Street Address City State Country Postal Code
PLEASE NOTE: The IRS only allows one TIN to be listed on an account. On joint
accounts, it is preferred that the primary account owner (or person listed first
on the account) list his/her number as requested above.
CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I(WE) CERTIFY THAT (1) THE
INFORMATION PROVIDED ON THIS APPLICATION IS TRUE, CORRECT AND COMPLETE, (2)
I(WE) HAVE READ THE PROSPECTUS(ES) FOR THE FUND(S) IN WHICH I AM(WE ARE)
INVESTING AND AGREE TO THE TERMS THEREOF, AND (3) I AM(WE ARE) OF LEGAL AGE OR
AN EMANCIPATED MINOR.
I (WE) ACKNOWLEDGE THAT SHARES OF THE FUND(S) ARE NOT INSURED OR GUARANTEED BY
ANY AGENCY OR INSTITUTION AND THAT AN INVESTMENT IN THE SHARES INVOLVES RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
X_____________________________________ X_____________________________________
Signature Signature
X_____________________________________ X_____________________________________
Signature Signature
Please make a photocopy of this application for your records.
- --------------------------------------------------------------------------------
5 BROKER/DEALER USE ONLY (PLEASE PRINT)
- --------------------------------------------------------------------------------
We hereby submit this application for the purchase of shares of the Fund
indicated above in accordance with the terms of our selling agreement with
Franklin Templeton Distributors, Inc. ("FTD"), and with the Prospectus for the
Fund. We agree to notify FTD of any purchases of Class I shares which may be
eligible for reduced or eliminated sales charges.
- --------------------------------------------------------------------------------
WIRE ORDER ONLY: The attached check for $__________ should be applied
against Wire Order
Confirmation Number_____________ Dated________________
For_____________________________ Shares
- --------------------------------------------------------------------------------
Securities Dealer Name__________________________________________________________
Main Office Address_____________________________________________________________
Main Office Telephone Number(_______)___________________________________________
Branch Number___________________________________________________________________
Representative Number___________________________________________________________
Representative Name_____________________________________________________________
Branch Address__________________________________________________________________
Branch Telephone Number(_______)________________________________________________
Authorized Signature, Securities Dealer_________________________________________
Title___________________________________________________________________________
- --------------------------------------------------------------------------------
ACCEPTED: Franklin Templeton Distributors, Inc.
By_______________________________________________
Date_____________________________________________
- --------------------------------------------------------------------------------
PLEASE SEE REVERSE SIDE FOR SHAREHOLDER ACCOUNT PRIVILEGES:
[ ] DISTRIBUTION OPTIONS
[ ] SYSTEMATIC WITHDRAWAL PLAN
[ ] SPECIAL INSTRUCTIONS FOR DISTRIBUTIONS
[ ] AUTOMATIC INVESTMENT PLAN
[ ] TELEPHONE EXCHANGE SERVICE
[ ] CUMULATIVE QUANTITY DISCOUNT
[ ] LETTER OF INTENT
This application must be preceded or accompanied by a prospectus for the
Fund(s) being purchased.
<PAGE>
- --------------------------------------------------------------------------------
6 DISTRIBUTION OPTIONS (CHECK ONE)
- --------------------------------------------------------------------------------
Check one - if no box is checked, all dividends and capital gains will be
reinvested in additional shares of the Fund.
[ ] Reinvest all dividends and capital gains.
[ ] Pay all dividends in cash and reinvest capital gains.
[ ] Pay capital gains in cash and reinvest dividends.
[ ] Pay all dividends and capital gains in cash.
- --------------------------------------------------------------------------------
7 OPTIONAL SHAREHOLDER PRIVILEGES
- --------------------------------------------------------------------------------
A. SPECIAL PAYMENT INSTRUCTIONS FOR DISTRIBUTIONS (Check one box)
[ ] Invest Distributions, as noted in Section 6, or [ ] withdrawals, as noted in
section 7(B), in another Franklin or Templeton Fund. Restrictions may apply
to purchases of shares of a different class. See the prospectus for details.
Fund Name________________________ Existing Account Number ______________________
[ ] Send my Distributions to the person, named below, instead of as registered
and addressed in Sections 1 and 2.
Name______________________________ Street Address______________________________
City________________________________State_______________ Zip Code______________
- --------------------------------------------------------------------------------
B. SYSTEMATIC WITHDRAWAL PLAN
Please withdraw from my Franklin Templeton account $____________($50 minimum)
[ ] Monthly [ ] Quarterly [ ] Semi-Annually or [ ] Annually as set forth
in the Prospectus, starting in _________________________(Month). The net asset
value of the shares held must be at least $5,000 at the time the plan is
established. Additional restrictions may apply to Class II or other shares
subject to contingent deferred sales charge, as described in the prospectus.
Send the withdrawals to: [ ] Address of Record OR [ ] the Franklin Templeton
Fund or person specified in Section 7(A) - Special Payment Instructions for
Distributions.
- --------------------------------------------------------------------------------
C. TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE: If the Fund does not receive specific instructions
- ----------------------------
from the shareholder, either in writing or by telephone, the Telephone Exchange
Privilege (see the prospectus) is automatically extended to each account. The
shareholder should understand, however, that the Fund and Franklin Templeton
Investor Services, Inc. ("FTI") or Franklin Templeton Trust Company and their
agents will not be liable for any loss, injury, damage or expense as a result of
acting upon instructions communicated by telephone reasonably believed to be
genuine. The shareholder agrees to hold the Fund and its agents harmless from
any loss, claims, or liability arising from its or their compliance with such
instructions. The shareholder understands that this option is subject to the
terms and conditions set forth in the prospectus of the fund to be acquired.
[ ] No, I do NOT wish to participate in the Telephone Exchange Privilege or
authorize the Fund or its agents, including FTI or Templeton Funds Trust
Company, to act upon instructions received by telephone to exchange shares
for shares of any other account(s) within the Franklin Templeton Group of
Funds.
TELEPHONE REDEMPTION PRIVILEGE: This is available to shareholders who
- ------------------------------
specifically request it and who complete the Franklin Templeton Telephone
Redemption Authorization Agreement in the back of the Fund's prospectus.
- --------------------------------------------------------------------------------
D. AUTOMATIC INVESTMENT PLAN
IMPORTANT: ATTACH AN UNSIGNED, VOIDED CHECK (FOR CHECKING ACCOUNTS) OR A SAVINGS
ACCOUNT DEPOSIT SLIP HERE, AND COMPLETE THE INFORMATION BELOW.
I(We) would like to establish an Automatic Investment Plan (the "Plan") as
described in the Prospectus. I(We) agree to reimburse FTI and/or FTD for any
expenses or losses that they may incur in connection with my(our) Plan,
including any caused by my(our) bank's failure to act in accordance with my(our)
request. If my(our) bank makes any erroneous payment or fails to make a payment
after shares are purchased on my(our) behalf, any such purchase may be cancelled
and I(we) hereby authorize redemptions and/or deductions from my(our) account
for that purpose.
Debit my (circle one) savings, checking, other _______________ account monthly
for $________________________ ($25 minimum) on or about the [ ] 1st [ ] 5th [ ]
15th or [ ] 20th day starting _______________ (month), to be invested in (name
of Fund) ________________________ Account Number (if known)_____________________
INSTRUCTIONS TO BANK - AUTOMATIC INVESTMENT PLAN AUTHORIZATION
To:_______________________________ ___________________________________________
Name of Your Bank ABA Number
___________________________ _________________ _____________ ______________
Street Address City State Zip Code
I(we) authorize you to charge my(our) Checking/Savings Account and to make
payment to FTD, upon instructions from FTD. I(We) agree that in making payment
for such charges your rights shall be the same as if each were a charge made and
signed personally by me(us). This authority shall remain in effect until you
receive written notice from me(us) changing its terms or revoking it. Until you
actually receive such notice, I(we) agree that you shall be fully protected in
paying any charge under this authority. I(we) further agree that if any such
charge is not made, whether with or with out cause and whether intentionally or
inadvertently, you shall be under no liability whatsoever.
X_______________________________________________________________ ______________
SIGNATURE(S) EXACTLY AS SHOWN ON YOUR BANK RECORDS Date
_______________________________________________ ______________________________
Print Name(s) Account Number
___________________________ _________________ _____________ ______________
Your Street Address City State Zip Code
- --------------------------------------------------------------------------------
E. LETTER OF INTENT (LOI) -- NOT APPLICABLE TO PURCHASES OF CLASS II
[ ] I(We) agree to the terms of the LOI and provisions for reservations of Class
I shares and grant FTD the security interest set forth in the Prospectus.
Although I am (we are) not obligated to do so, it is my(our) intention to
invest over a 13 month period in Class I and/or Class II shares of one or
more Franklin or Templeton Funds (including all money market funds in the
Franklin Templeton Group) an aggregate amount at least equal to that which
is checked below. I understand that reduced sales charges will apply only to
purchases of Class I shares.
[ ] $50,000-99,999 (except for Income Fund
and Americas Government Securities Fund)
[ ] $100,000-249,999
[ ] $250,000-499,999
[ ] $500,000-999,999
[ ] $1,000,000 or more
Purchases of Class I shares under LOI of $1,000,000 or more are made at net
asset value and may be subject to a contingent deferred sales charge as
described in the prospectus.
Purchases made within the last 90 days will be included as part of your LOI.
Please write in your Account Number(s) _____________ _____________ _____________
- --------------------------------------------------------------------------------
F. CUMULATIVE QUANTITY DISCOUNT -- NOT APPLICABLE TO PURCHASES OF CLASS II
Class I shares may be purchased at the offering price applicable to the total of
(a) the dollar amount then being purchased plus (b) the amount equal to the cost
or current value (whichever is higher) of the combined holdings of the
purchaser, his or her spouse, and their children or grandchildren under age 21,
of Class I and/or Class II shares of funds in the Franklin Templeton Group, as
well as other holdings of Franklin Templeton Investments, as that term is
defined in the prospectus. In order for this cumulative quantity discount to be
made available, the shareholder or his or her securities dealer must notify FTI
or FTD of the total holdings in the Franklin Templeton Group each time an order
is placed. I understand that reduced sales charges will apply only to purchases
of Class I shares.
[ ] I(We) own shares of more than one Fund in the Franklin Templeton Group and
qualify for the Cumulative Quantity Discount described above and in the
Prospectus.
My(Our) other Account Number(s) are _____________ _____________ _____________
- --------------------------------------------------------------------------------
8 ACCOUNT REVISION (IF APPLICABLE)
- --------------------------------------------------------------------------------
If you are using this application to revise your Account Registration, or wish
to have Distributions sent to an address other than the address on your existing
Account's Registration, a Signature Guarantee is required. Signatures of all
registered owners must be guaranteed by an "eligible guarantor" as defined in
the "How to Sell Shares of the Fund" section in the Fund's Prospectus. A Notary
Public is not an acceptable guarantor.
X___________________________________________ _________________________________
Signature(s) of Registered Account Owners Account Number(s)
X___________________________________________ _________________________________
X___________________________________________
X___________________________________________ _________________________________
Signature Guarantee Stamp
NOTE: For any change in registration, please send us any outstanding
Certificates by Registered Mail.
- --------------------------------------------------------------------------------
TLGOF APP 12/95
