PROSPECTUS
& APPLICATION
LOGO
TEMPLETON
AMERICAS GOVERNMENT
SECURITIES FUND
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AUGUST 1, 1996
INVESTMENT STRATEGY
GLOBAL INCOME
LOGO
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This prospectus describes the Templeton Americas Government Securities Fund
(the "Fund"). It contains information you should know before investing in
the Fund. Please keep it for future reference.
THE FUND MAY ENGAGE IN VARIOUS INVESTMENT TECHNIQUES (SUCH AS BORROWING
MONEY FOR INVESTMENT PURPOSES AND INVESTING UP TO 15% OF ITS ASSETS IN
ILLIQUID SECURITIES, INCLUDING UP TO 10% OF ITS ASSETS IN RESTRICTED
SECURITIES) WHICH MAY INVOLVE SIGNIFICANT RISKS AND INCREASED FUND EXPENSES.
YOU SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. SUBSTANTIALLY
ALL THE FUND'S ASSETS AT ANY ONE TIME MAY BE INVESTED IN NON-INVESTMENT
GRADE DEBT INSTRUMENTS (I.E., JUNK BONDS) THAT INVOLVE GREATER RISKS,
INCLUDING THE RISK OF DEFAULT, AND THAT ARE PREDOMINANTLY SPECULATIVE. YOU
SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. THE FUND MAY NOT BE
SUITABLE FOR ALL INVESTORS. PLEASE SEE "WHAT ARE THE FUND'S POTENTIAL
RISKS?"
The Trust's SAI, dated August 1, 1996, as may be amended from time to time,
includes more information about the Fund's procedures and policies. It has
been filed with the SEC and is incorporated by reference into this
prospectus. For a free copy or a larger print version of this prospectus,
call 1-800/DIAL BEN or write the Fund at the address shown.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF
THE U.S. GOVERNMENT. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TEMPLETON
AMERICAS GOVERNMENT
SECURITIES FUND
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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 Distributors.
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The Fund is a non-diversified series of the
Templeton Global Investment Trust (the "Trust"),
an open-end management investment company.
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When reading this prospectus, you will see
certain terms in capital letters.
This means the term is explained
in our glossary section.
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<TABLE>
<S> <C>
TEMPLETON TABLE OF CONTENTS
AMERICAS ABOUT THE FUND
GOVERNMENT Expense Summary ...................................... 2
SECURITIES FUND Financial Highlights ................................. 3
August 1, 1996 How Does the Fund Invest Its Assets? ................. 3
What are the Fund's Potential Risks? .................17
Who Manages the Fund? ................................24
How Does the Fund Measure Performance? ...............26
How Is the Trust Organized? ..........................26
How Taxation Affects You and the Fund ................27
ABOUT YOUR ACCOUNT
How Do I Buy Shares? .................................28
May I Exchange Shares for Shares of Another Fund? ....33
How Do I Sell Shares? ................................35
What Distributions Might I Receive From the Fund? ....37
Transaction Procedures and Special Requirements ......38
Services to Help You Manage Your Account .............43
GLOSSARY
700 Central Avenue Useful Terms and Definitions .........................46
St. Petersburg, Florida 33701 APPENDIX .............................................46
1-800/DIAL BEN Corporate Bond Ratings .............................. 49
</TABLE>
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ABOUT THE FUND
EXPENSE SUMMARY
This table is designed to help you understand the costs of investing in the
Fund. It is based on the Fund's historical expenses, after fee reductions and
expense limitations, for the fiscal year ended March 31, 1996. Your actual
expenses may vary.
A. SHAREHOLDER TRANSACTION EXPENSES(+)
<TABLE>
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of Offering Price) 4.25%
Deferred Sales Charge NONE(++)
Exchange Fee (per transaction) $5.00*
</TABLE>
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C> <C>
Management Fees (after fee reduction) 0.00**
Rule 12b-1 Fees 0.35**
Other Expenses (audit, legal, business
management, transfer agent and custodian)
(after expense reimbursement) 0.90%
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Total Fund Operating Expenses (after expense
reimbursement) 1.25**
----
</TABLE>
C. EXAMPLE
Assume the Fund's annual return is 5% and its operating expenses are as
described above. For each $1,000 investment, you would pay the following
projected expenses if you sold your shares after the number of years shown.
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C>
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$55**** $80 $108 $187
</TABLE>
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURNS. ACTUAL EXPENSES AND RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
The Fund pays its operating expenses. The effects of these expenses are
reflected in its Net Asset Value or dividends and are not directly charged
to your account.
(+)If your transaction is processed through your Securities Dealer, you may be
charged a fee by your Securities Dealer for this service.
(++)There is no front-end sales charge if you invest $1 million or more. A
Contingent Deferred Sales Charge of 1% may apply, however, if you sell the
shares within one year. See "How Do I Sell Shares? - Contingent Deferred Sales
Charge" for details.
*$5.00 fee is only for Market Timers. We process all other exchanges without a
fee.
**The Investment Manager and Business Manager have agreed in advance to reduce
their respective fees in order to limit total expenses to an annual rate of
1.25% of the Fund's average daily net assets, through December 31, 1996. If
this fee reduction is insufficient to so limit the Fund's expenses, the
Business Manager has agreed to make certain payments to reduce Fund expenses.
Without these reductions, the Fund's "Other Expenses" would be 4.03% and the
"Total Fund Operating Expenses" would be 4.98%. After December 31, 1996, this
agreement may end at any time upon notice to the Board.
***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 charge permitted under the NASD's rules.
****Assumes a Contingent Deferred Sales Charge will not apply.
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FINANCIAL HIGHLIGHTS
This table summarizes the Fund's financial history. The information has been
audited by McGladrey & Pullen LLP, the Fund's independent auditors. Their audit
report covering each of the most recent years since the Fund's commencement on
June 27, 1994 appears in the Fund's Annual Report to Shareholders for the
fiscal year ended March 31, 1996. The Annual Report to Shareholders also
includes more information about the Fund's performance. For a free copy, please
call Fund Information.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1996 1995(1)
<S> <C> <C>
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PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period $ 9.59 $10.00
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Income from investment operations:
Net investment income .75 .30
Net realized and unrealized gain (loss) .71 (.43)
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Total from investment operations 1.46 (.13)
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DISTRIBUTIONS:
Dividends from net investment income (.69) (.28)
Distributions from net realized gains (.16) --
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Total distributions (.85) (.28)
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Change in net asset value .61 (.41)
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Net asset value, end of period $10.20 $ 9.59
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TOTAL RETURN* 15.49% (1.33)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $3,540 $2,826
Ratio of expenses to average net assets 4.98% 6.49%**
Ratio of expenses, net of reimbursement, to
average net assets 1.25% 1.25%**
Ratio of net investment income to average net
assets 7.47% 5.07%**
Portfolio turnover rate 163.57% --
</TABLE>
(1)For the period June 27, 1994 (commencement of operations) to March 31, 1995.
*Total Return does not reflect sales charge. Not annualized for periods of less
than one year.
**Annualized.
HOW DOES THE FUND INVEST ITS ASSETS?
The Fund's Investment Objective
The primary investment objective of the Fund is a high level of current income.
Total return is a secondary objective. The Fund seeks to achieve its objectives
by investing at least 65% of its total assets in debt securities issued or
guaranteed by governments, government agencies, political subdivisions, and
other government entities ("Government Entities") of countries located in the
Western Hemisphere
Templeton Americas Government Securities Fund -
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(i.e., North, South and Central America and the surrounding waters). The Fund's
investment objective and the investment restrictions set forth under
"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 without shareholder approval. There can be no assurance that the Fund's
investment objectives will be achieved.
The Investment Manager and the Sub-Adviser will actively manage the Fund's
assets in response to market, political and general economic conditions, and
will seek to adjust the Fund's investments based on their perception of which
investments would best enable the Fund to achieve its investment objectives. In
their analysis, the Investment Manager and the Sub-Adviser will consider various
factors, including their views regarding interest and currency exchange rate
changes and credit risks. Such professional investment management may be
attractive to investors, particularly individuals, who lack the time,
information, capability or inclination to effect such an investment strategy
directly.
The Fund's investments in debt obligations of Government Entities will consist
of (i) fixed income or floating rate bonds, notes, bills and debentures issued
or guaranteed by governments, governmental agencies or instrumentalities, or
government owned, controlled or sponsored entities (including central banks
located in the Western Hemisphere), including warrants for any such obligations,
and (ii) debt obligations issued by entities organized and operated for the
purpose of restructuring the investment characteristics of securities issued by
any of the entities described above, including indexed or currency-linked
securities. Such obligations may be issued in either registered or bearer form.
Many of these securities are trading at substantial discounts to their par
value and it is expected that initially a significant portion of the Fund's
assets will be invested in securities purchased at a discount to par value.
Such securities involve special tax considerations which may adversely affect
the Fund. See "What Are the Funds' Potential Risks? - Tax Considerations."
The Fund may invest up to 35% of its total assets in securities of corporations
and financial institutions in countries located in the Western Hemisphere,
including corporate and commercial obligations such as medium-term notes and
commercial paper, which may be indexed to foreign currency exchange rates.
Indexed notes and commercial paper typically provide that the principal amount
is adjusted upwards or downwards (but not below zero) at maturity to reflect
fluctuations in the exchange rate between two currencies during the period the
obligation is outstanding, depending on the terms of the specific security. In
selecting the two currencies, the Investment Manager will consider the
correlation and relative yields of various currencies. The Fund will purchase an
- Templeton Americas Government Securities Fund
4
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indexed obligation using the currency in which it is denominated and, at
maturity, will receive interest and principal payments thereon in that currency.
The amount of principal payable by the issuer at maturity, however, will vary
(i.e., increase or decrease) in response to the change (if any) in the exchange
rate between the two specified currencies during the period from the date the
instrument is issued to its maturity date. The potential for realizing gains as
a result of changes in foreign currency exchange rates may enable the Fund to
hedge the currency in which the obligation is denominated (or to effect cross-
hedges against other currencies) against a decline in the U.S. dollar value of
investments denominated in foreign currencies while generating interest income
on the obligation. However, indexed notes involve the risk of loss (i.e.,
reduced principal payable on the note) in the event that exchange rate
movements are not accurately predicted. Such obligations may be deemed liquid
investments if they can be disposed of promptly in the ordinary course of
business at a value reasonably close to that used in the calculation of the
Fund's net asset value per share; otherwise, they will be deemed illiquid
investments subject to the restrictions set forth in the SAI under "Investment
Restrictions."
The Fund may invest in securities denominated in or indexed to the currency of
one country in the Western Hemisphere although issued by a governmental entity,
corporation or financial institution of another such country. For example, the
Fund may invest in a Mexican peso denominated obligation issued by a U.S.
corporation. Such investments involve credit risks associated with the issuer
and currency risks associated with the currency in which the obligation is
denominated.
The Fund also may invest in participations in, or bonds and notes backed by,
pools of mortgage, credit card, automobile or other types of receivables. These
investments are described more fully below under "Mortgage-Backed and Asset-
Backed Securities." Because of liquidity and valuation concerns relating to
investments in certain derivative mortgage-backed securities, investments in
such securities will be restricted as discussed below under "Derivative
Mortgage-Backed Securities."
The Fund has established no rating criteria for the debt securities in which it
may invest and such securities may not be rated at all for creditworthiness.
Investments in debt securities rated in the medium to lower rating categories of
nationally recognized statistical rating organizations such as S&P and Moody's
or in unrated securities of comparable quality involve special risks which are
described more fully below under "What Are the Fund's Potential Risks?" See the
Appendix for a description of the various bond rating categories.
The Fund may invest a portion of its assets in debt instruments issued by
Western Hemisphere companies engaged in the financial services industry,
Templeton Americas Government Securities Fund -
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<PAGE>
including banks, thrift institutions, insurance companies, securities firms and
holding companies of any of the foregoing. Such investments may include CDs,
time deposits, bankers' acceptances, and other obligations issued by such
entities, as well as repurchase agreements entered into with such entities.
The Fund may also lend its portfolio securities and borrow money for investment
purposes (i.e., "leverage" its portfolio). In addition, the Fund may enter into
transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, and futures contracts and
related options. These are generally referred to as derivative instruments, and
involve special risk factors, which are described below. When deemed
appropriate by the Investment Manager or the Sub-Adviser, the Fund may invest
cash balances in repurchase agreements and other money market investments to
maintain liquidity in an amount to meet expenses or for day-to-day operating
purposes. These investment techniques are described below and under the heading
"How Do the Funds Invest Their Assets?" in the SAI.
When the Investment Manager believes that market conditions warrant, the Fund
may adopt a temporary defensive position and may invest without limit in money
market securities denominated in U.S. dollars or in the currency of any foreign
country. See below under "Temporary Investments."
The Fund does not emphasize short-term trading profits and usually expects to
have an annual portfolio turnover rate generally not exceeding 200%. A high
turnover rate (e.g., a rate in excess of 100%) increases transaction costs and
may increase the amount of the Fund's short-term capital gain, which is taxed as
ordinary income when distributed to shareholders. The U.S. federal tax
requirement that the Fund derive less than 30% of its gross income from the
sale or disposition of securities and certain other assets held for less than
three months may limit the Fund's ability to dispose of its securities. See
"Additional Information on Distributions and Taxes" in the SAI.
Types of Securities the Fund May Invest In
Brady Bonds. The 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, Bulgaria, Costa Rica, the Dominican
- Templeton Americas Government Securities Fund
6
<PAGE>
Republic, Ecuador, Jordan, Mexico, Nigeria, the Philippines, Uruguay, Venezuela,
Bolivia, Niger and Poland (collectively, the "Brady Countries"). In addition,
Brazil has concluded a Brady-like plan. It is expected that other countries will
undertake a Brady Plan debt restructuring in the future, including Peru, Poland
and Panama.
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 rate par
bonds or floating rate discount bonds, are generally collateralized in full as
to principal by U.S. Treasury zero coupon bonds which have the same maturity as
the Brady Bonds. Interest payments on these Brady Bonds generally are
collateralized on a one-year or longer rolling-forward basis by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of interest payments or, in the case of floating rate bonds,
initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest
payments but generally are not collateralized. Brady Bonds are often viewed as
having three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments; (iii)
the uncollateralized interest payments; and (iv) any uncollateralized repayment
of principal at maturity (these uncollateralized amounts constitute the
"residual risk").
Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have principal repayments at
final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and/or interest coupon payments
collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New
York as collateral agent.
Brady Bonds involve various risk factors including residual risk and the history
of defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds. There can be no assurance that Brady Bonds
Templeton Americas Government Securities Fund -
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<PAGE>
in which the 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.
Other Debt Securities of Government Entities. In addition to Brady Bonds, the
Fund may invest in debt obligations of Government Entities, including, but not
limited to, restructured external debt that has not undergone a Brady-style debt
exchange, and internal government debt such as Mexican Treasury Bills known as
Certificados de Tesorera ("CETES"), Argentine Bonos del Tesoro ("BOTE") and
Bonos de Inversion y Crecimiento-Quinta Serie ("BIC V"), and Venezuelan zero
coupon notes.
Structured Investments. Included among the issuers of Western Hemisphere debt
securities in which the Fund 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 (such as Brady Bonds) 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 Fund anticipates investing typically
involve no credit enhancement, their credit risk will generally be equivalent
to that of the underlying instruments.
The Fund is 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 the 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 the Fund's assets that may be used for borrowing activities. See below
under "Borrowing."
Certain issuers of structured investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, the Fund's investment in
- Templeton Americas Government Securities Fund
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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
the SAI under "Investment Restrictions."
Mortgage-Backed and Asset-Backed Securities. The Fund may invest without limit
in mortgage-backed securities issued or guaranteed by Government Entities, and
may invest up to 35% of its total assets in privately issued mortgage-backed and
asset-backed securities. Mortgage-backed securities are securities that
directly or indirectly represent an interest in, or are backed by and payable
from, mortgage loans secured by real property. Asset-backed securities
generally consist of structures similar to mortgage-backed securities, except
that the underlying asset pools are comprised of other types of financial
assets such as credit card, automobile or other types of receivables and
commercial loans. Mortgage-backed and asset-backed securities are issued in
structured financing wherein the sponsor securitizes the underlying mortgage
loans or financial assets in order to liquify the underlying assets or to
achieve certain other financial goals. The special considerations and risks
inherent in investments in mortgage-backed and asset-backed securities are
discussed more fully below.
The mortgage-backed securities in which the Fund may invest will primarily be
guaranteed by the Government National Mortgage Association ("GNMA") or issued
by the Federal National Mortgage Association ("FNMA") or the Federal Home Loan
Mortgage Corporation ("FHLMC"). Certain of the asset-backed securities in which
the Fund will invest may be guaranteed by the Small Business Administration
("SBA") or issued in programs originated by the Resolution Trust Corporation
("RTC"). GNMA, FNMA, FHLMC, SBA and RTC are agencies or instrumentalities of
the U.S.
Certain of the mortgage-backed and asset-backed securities in which the Fund
may invest will be issued by private issuers. Private issuers include
originators of or investors in mortgage loans and receivables such as savings
and loan associations, mortgage bankers, commercial banks, investment banks,
finance companies and special purpose finance subsidiaries of any of the above.
Securities issued by private issuers may be subject to certain types of credit
enhancements issued in respect of those securities. Such credit enhancements
may include insurance policies, bank letters of credit, guarantees by third
parties or protections afforded by the structure of a particular transaction
(e.g., the use of reserve funds, over-collateralization or the issuance of
subordinated securities as protection for more senior securities being
purchased by the Fund). In purchasing securities for the Fund, the Investment
Manager and the Sub-Adviser
Templeton Americas Government Securities Fund -
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<PAGE>
will take into account not only the creditworthiness of the issuer of the
securities but also the creditworthiness of the provider of any external credit
enhancement of the securities.
The Fund may invest in pass-through mortgage-backed securities that represent
ownership interests in a pool of mortgages on single-family or multi-family
residences. Such securities represent interests in pools of residential mortgage
loans originated by U.S. governmental or private lenders and guaranteed, to the
extent provided in such securities, by the U.S. government, one of its agencies
or instrumentalities or by private guarantors. Such securities, which are
ownership interests in the underlying mortgage loans, differ from conventional
debt securities, which provide for periodic payment of interest in fixed amounts
(usually semiannually) and principal payments at maturity or on specified call
dates. Mortgage pass-through securities provide for monthly payments that
"pass-through" the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans, net
of any fees paid to the guarantor of such securities and the servicer of the
underlying mortgage loans. The Fund may also invest in collateralized mortgage
obligations ("CMOs") which are debt obligations collateralized by mortgage
loans or mortgage pass-through securities.
The yield characteristics of mortgage-backed and asset-backed securities differ
from traditional corporate debt securities. Among the major differences are that
interest and principal payments are made more frequently, usually monthly, and
that principal may be prepaid at any time because the underlying mortgage loans
or other assets generally may be prepaid at any time. As a result, if the Fund
purchases such a security at a premium, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity.
Conversely, if the Fund purchases these securities at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
reduce, yield to maturity. The Fund may invest a portion of its assets in
derivative mortgage-backed securities, such as stripped mortgage-backed
securities, which are highly sensitive to changes in prepayment and interest
rates. The Investment Manager and the Sub-Adviser will seek to manage these
risks (and potential benefits) by investing in a variety of such securities and
may seek to hedge such investments with the use of financial futures contracts.
See below under "Futures Contracts."
Prepayments on a pool of mortgage loans are influenced by a variety of
economic, geographic, social and other factors, including changes in mortgagors'
housing needs, job transfers, unemployment, mortgagors' net equity in the
mortgaged properties and servicing decisions. Generally, however, prepayments
- Templeton Americas Government Securities Fund
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on fixed rate mortgage loans will increase during a period of falling interest
rates and decrease during a period of rising interest rates. Accordingly,
amounts available for reinvestment by the Fund are likely to be greater during
a period of declining interest rates and, as a result, likely to be reinvested
at lower interest rates than during a period of rising interest rates. Although
asset-backed securities generally are less likely to experience substantial
prepayments than are mortgage-backed securities, certain of the factors that
affect the rate of prepayments on mortgage-backed securities also affect the
rate of prepayments on asset-backed securities. However, during any particular
period, the predominant factors affecting prepayment rates on mortgage-backed
and asset-backed securities may be different. Mortgage-backed and asset-backed
securities may decrease in value as a result of increases in interest rates and
may benefit less than other fixed income securities from declining interest
rates because of the risk of prepayment.
The Fund's yield will also be affected by the yields on instruments in which the
Fund is able to reinvest the proceeds of payments and prepayments. Accelerated
prepayments on securities purchased by the Fund at a premium also impose a risk
of loss of principal because the premium may not have been fully amortized at
the time the principal is repaid in full.
Derivative Mortgage-Backed Securities. The Fund may invest up to 25% of its
total assets in various derivative mortgage-backed securities, which are
synthetic securities designed to be highly sensitive to certain types of
interest rate and principal prepayment scenarios. Derivative instruments
primarily consist of some form of stripped mortgage-backed securities ("SMBS")
that commonly involve different classes of securities that receive
disproportionate amounts of the interest and principal distributions on a pool
of mortgage assets.
SMBSs are typically issued by the same types of issuers as are mortgage-backed
securities. The structure of SMBSs, however, is different. A common variety of
SMBS involves a class (the principal-only or PO class) that receives some of the
interest and most of the principal from the underlying assets, while the other
class (the interest-only or IO class) receives most of the interest and the
remainder of the principal. In the most extreme case, the IO class receives only
interest, while the PO class receives only principal. The yield to maturity on
an IO class is extremely sensitive to the rate of principal payments (including
prepayments) on the related underlying assets, and a rapid rate of principal
payments in excess of that considered in pricing the securities will have a
material adverse effect on an IO security's yield to maturity. If the underlying
mortgage assets experience greater than anticipated payments of principal, the
Fund may fail to recoup fully its initial investment in IOs. In addition, there
are certain types of IOs which represent the interest portion of a particular
class as
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opposed to the interest portion of the entire pool. The sensitivity of these
types of IOs to interest rate fluctuations may be increased because of the
characteristics of the principal portion to which they relate. The impact of IOs
on the Fund's portfolio may be offset to some degree by investments in
mortgage-backed securities and inverse floaters (floating rate securities the
interest rate of which is adjusted up or down inversely to changes in a
specified index). As interest rates fall, presenting a greater risk of
unanticipated prepayments of principal, the negative effect on the Fund because
of its holdings of IOs should be diminished somewhat because of the increased
yield on the inverse floating rate CMOs or the increased appreciation on the
fixed rate securities. Under certain interest rate scenarios, the Fund may
decide to retain investments in IOs or inverse floaters yielding less than
prevailing interest rates in order to avoid capital losses on the sale of such
investments.
The Fund may also combine IOs and IO-related derivative mortgage products with
LIBOR-based inverse floaters (LIBOR being the London interbank offered rate). A
LIBOR-based inverse floater is a floating rate security the interest rate of
which is adjusted up or down inversely to changes in LIBOR; as LIBOR decreases,
the interest rate paid by the inverse floater would increase, and vice versa.
Depending on the amount of leverage built into the inverse floater, the yield
could vary in excess of the change in LIBOR because of the leverage built into
the inverse floater formula. The yield on an inverse floater varies inversely
with interest rates because as LIBOR decreases, the interest payable on the
inverse floater increases. The converse is true, of course, when LIBOR
increases. When an inverse floater is combined with an IO or IO-type derivative
product, the result is a synthetic security that tends to provide a somewhat
less volatile yield over a wide range of interest rate and prepayment rate
scenarios.
New types of mortgage-backed and asset-backed securities, derivative securities
and hedging instruments are developed and marketed from time to time.
Consistent with its investment objectives, policies and restrictions, the Fund
may, upon disclosure to shareholders, invest in such new types of securities and
instruments that the Investment Manager and/or the Sub-Adviser believe may
assist the Fund in achieving its investment objectives.
The staff of the SEC has taken the position (which has been adopted as an
investment policy of the Fund) that the determination of whether a particular
U.S. government issued IO or PO that is backed by fixed-rate mortgages is
liquid may be made by the Investment Manager or the Sub-Adviser under
guidelines and standards established by the Trust's Board. Such a security may
be deemed liquid if it can be disposed of promptly in the ordinary course of
business at a value reasonably close to that used in the calculation of the
Fund's net asset value per share. The SEC's staff also has taken the position
that all
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other IOs and POs are illiquid securities which are subject to the Fund's
limitation on investments in illiquid securities, as set forth in the SAI under
"Investment Restrictions."
Other Investment Policies of the Fund
The Fund is authorized to use the various securities and investment techniques
described below. Although these strategies are regularly used by some investment
companies and other institutional investors in various markets, some of these
strategies cannot at the present time be used to a significant extent by the
Fund in some of the markets in which the Fund will invest and may not be
available for extensive use in the future.
Temporary Investments. For temporary defensive purposes, the Fund may invest up
to 100% of its total assets in the following money market securities,
denominated in U.S. dollars or in the currency of any foreign country, issued by
entities organized in the U.S. 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 CDs, time deposits and bankers' acceptances) of banks;
and repurchase agreements with banks and broker-dealers with respect to such
securities.
Borrowing. The Fund may borrow up to one-third of the value of its total assets
from banks to increase its holdings of portfolio securities. Under the 1940 Act,
the Fund is required to maintain continuous asset coverage of 300% with respect
to such borrowings and to sell (within three days) sufficient portfolio holdings
to restore such coverage if it should decline to less than 300% due to market
fluctuations or otherwise, even if such liquidations of the Fund's holdings may
be disadvantageous from an investment standpoint. Leveraging by means of
borrowing may exaggerate the effect of any increase or decrease in the value of
portfolio securities on the Fund's net asset value, and money borrowed will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.
Loans of Portfolio Securities. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of the Fund's total
assets to generate income for the purpose of offsetting operating expenses. Such
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loans must be secured by collateral (consisting of any combination of cash, U.S.
government securities or irrevocable letters of credit) in an amount at least
equal (on a daily marked-to-market basis) to the current market value of the
securities loaned. The Fund may terminate the loans at any time and obtain the
return of the securities loaned within five business days. The Fund will
continue to receive any interest or dividends paid on the loaned securities and
will continue to retain any voting rights with respect to the securities. In
the event that the borrower defaults on its obligation to return borrowed
securities, because of insolvency or otherwise, the Fund could experience
delays and costs in gaining access to the collateral and could suffer a loss to
the extent that the value of the collateral falls below the market value of the
borrowed securities.
Options on Securities or Indices. The Fund may write (i.e., sell) covered put
and call options and purchase put and call options on securities or securities
indices that are traded on U.S. and foreign exchanges or in the over-the-counter
markets. An option on a security is a contract that permits the purchaser of the
option, in return for the premium paid, the right to buy a specified security
(in the case of a call option) or to sell a specified security (in the case of
a put option) from or to the writer of the option at a designated price during
the term of the option. An option on a securities index permits the purchaser
of the option, in return for the premium paid, the right to receive from the
seller cash equal to the difference between the closing price of the index and
the exercise price of the option. The Fund may write a call or put option only
if the option is "covered." This means that so long as the Fund is obligated as
the writer of a call option, it will own the underlying securities subject to
the call, or hold a call at the same or lower exercise price, for the same
exercise period, and on the same securities as the written call. A put is
covered if the Fund maintains liquid assets with a value equal to the exercise
price in a segregated account, or holds a put on the same underlying securities
at an equal or greater exercise price. The value of the underlying securities
on which options may be written at any one time will not exceed 15% of the
total assets of the Fund. The Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of its total assets at
the time of purchase.
Forward Foreign Currency Contracts and Options on Foreign Currencies. The Fund
will normally conduct its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward contracts to purchase or sell
foreign currencies. The Fund will generally not enter into a forward contract
with a term of greater than one year. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a future date which
is
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individually negotiated and privately traded by currency traders and their
customers.
The Fund will generally enter into forward contracts only under two
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in"
the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed
to settle the transaction. Second, when the Investment Manager believes that
the currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to sell
or buy the former foreign currency (or another currency which acts as a proxy
for that currency) approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging." The Fund has
no specific limitation on the percentage of assets it may commit to forward
contracts, subject to its stated investment objectives and policies, except
that the Fund will not enter into a forward contract if the amount of assets
set aside to cover forward contracts would impede portfolio management or the
Fund's ability to meet redemption requests. Although forward contracts will be
used primarily to protect the Fund from adverse currency movements, they also
involve the risk that anticipated currency movements will not be accurately
predicted.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines in
the U.S. dollar value of foreign currency denominated portfolio securities and
against increases in the U.S. dollar cost of such securities to be acquired. As
in the case of other kinds of options, however, the writing of an option on a
foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and the Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of rate movements
adverse to the Fund's position, it may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign currencies to be written or
purchased by the Fund are traded on U.S. and foreign exchanges or over-the-
counter.
Futures Contracts. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a specified
debt security at a set price on a future date. An index futures contract is an
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agreement to take or make delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the end of the contract
period. A futures contract on a foreign currency is an agreement to buy or sell
a specified amount of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. In addition, when the Fund enters into a futures contract, it will
segregate assets or "cover" its position in accordance with the 1940 Act. See
"How Do the Funds Invest Their Assets? - Futures Contracts." in the SAI.
Repurchase Agreements. For temporary defensive purposes and for cash management
purposes, the Fund may enter into repurchase agreements with U.S. banks and
broker-dealers. Under a repurchase agreement, the Fund acquires a security from
a U.S. bank or a registered broker-dealer and simultaneously agrees to resell
the security back to the bank or broker-dealer at a specified time and price.
The repurchase price is in excess of the original purchase price paid by the
Fund by an amount which reflects an agreed-upon rate of return and which is not
tied to any coupon rate on the underlying security. Under the 1940 Act,
repurchase agreements are considered to be loans collateralized by the
underlying security and therefore will be fully collateralized. However, if the
bank or broker-dealer should default on its obligation to repurchase the
underlying security, the Fund may experience a delay or difficulties in
exercising its rights to realize upon the security and might incur a loss if
the value of the security declines, as well as incur disposition costs in
liquidating the security.
Illiquid and Restricted Securities. The Fund may invest up to 15% of its total
assets in illiquid securities, for which there is a limited trading market and
for which a low trading volume of a particular security may result in abrupt and
erratic price movements. The Fund may be unable to dispose of its holdings in
illiquid securities at then-current market prices and may have to dispose of
such securities over extended periods of time. The Fund may also invest in
securities that are sold (i) in private placement transactions between their
issuers and their purchasers and that are neither listed on an exchange nor
traded over-the-counter, or (ii) in transactions between qualified
institutional buyers pursuant to Rule 144A under the 1933 Act. 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
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from the sales could, due to illiquidity, be less than those originally paid by
the Fund or less than their fair value. In addition, issuers whose securities
are not publicly traded may not be subject to the disclosure and other investor
protection requirements that may be applicable if their securities were publicly
traded. If any privately placed or Rule 144A securities held by the Fund are
required to be registered under the securities laws of one or more jurisdictions
before being resold, the Fund may be required to bear the expenses of
registration. The Fund will limit its investment in restricted securities 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 to be liquid, are considered to be illiquid and are
subject to the Fund's limitation on investment in illiquid securities.
Investment Companies. The Fund may invest in other investment companies, other
than those for which the Investment Manager or its affiliates serve as
investment adviser or sponsor, which invest principally in securities in which
the Fund is authorized to invest. Under the 1940 Act, the Fund may invest a
maximum of 10% of its total assets in the securities of other investment
companies and not more than 5% of its 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 the Fund invests in other investment companies, the
Fund's shareholders will incur certain duplicative fees and expenses, including
investment advisory fees. The Fund's investment in certain investment companies
will result in special U.S. federal income tax consequences described under
"Additional Information on Distributions and Taxes" in the SAI.
WHAT ARE THE FUND'S POTENTIAL RISKS?
You should understand that all investments involve risk and there can be no
guarantee against loss resulting from an investment in the Fund, nor can there
be any assurance that the Fund's investment objectives will be attained. As with
any investment in securities, the value of, and income from, an investment in
the Fund can decrease as well as increase, depending on a variety of factors,
which may affect the values and income generated by the Fund's portfolio
securities, including general economic conditions and market factors. In
addition to the factors which affect the value of individual securities, a
shareholder may anticipate that the value of the shares of the Fund will
fluctuate with movements in the broader equity and bond markets. Changes in the
prevailing rates of interest in any of the countries in which the Fund is
invested will likely affect the value of the Fund's holdings and thus the value
of the shares of the Fund.
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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 impact the price of the
shares of the Fund. History reflects both increases and decreases in 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. The Fund is not intended as a
complete investment program.
Foreign Currency Exchange. Since the Fund is 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 portfolio 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
the Fund's yield on assets denominated in currencies other than the U.S. dollar.
Sovereign Debt. The debt obligations ("sovereign debt") issued or guaranteed by
Latin American governmental entities in which the Fund may invest involve great
risk and are deemed to be the equivalent in terms of quality to high risk, low
rated securities (i.e., junk bonds, as discussed below) and are subject to many
of the same risks as such securities. Similarly, the Fund may have difficulty
disposing of certain sovereign debt obligations because there may be a thin
trading market for such securities.
Certain Latin American countries are among the largest debtors to commercial
banks and foreign governments. The issuer or governmental authority that
controls the repayment of sovereign debt may not be willing or able to repay the
principal and/or pay interest when due in accordance with the terms of such
obligations. A Government Entity's willingness or ability to repay principal and
pay interest due in a timely manner may be affected by, among other factors, its
cash flow situation, and, in the case of a government debtor, the extent of its
foreign reserves, the availability of sufficient foreign exchange on the date a
payment is due, the relative size of the debt service burden to the economy as a
whole, the Government Entity's dependence on expected disbursements from third
parties, the Government Entity's policy toward the International Monetary Fund
and the political constraints to which a Government Entity may be subject.
Government Entities may default on their sovereign debt and may also be
dependent on expected disbursements from foreign governments, multilateral
agencies and others abroad to reduce principal and interest arrearages on their
debt. The commitment on the part of these governments, agencies and others to
make such disbursements may be conditioned on a debtor's implementation of
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economic reforms or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve such levels of
economic performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the government
debtor, which may further impair such debtor's ability or willingness to timely
service its debts. Holders of sovereign debt (including the Fund) may be
requested to participate in the rescheduling of such debt and to extend further
loans to Government Entities.
As a result of the foregoing, a government obligor may default on its
obligations. If such an event occurs, the Fund may have limited legal recourse
against the issuer and guarantor. Remedies must, in some cases, be pursued in
the courts of the defaulting party itself, and the ability of the holder of
foreign government debt securities to obtain recourse may be subject to the
political climate in the relevant country. In addition, no assurance can be
given that the holders of commercial bank debt will not contest payments to the
holders of other foreign government debt obligations in the event of default
under their commercial bank loan agreements.
Government obligors in developing and emerging market countries are among the
world's largest debtors to commercial banks, other governments, international
financial organizations and other financial institutions. The issuers of the
government debt securities in which the Fund expects to invest have in the past
experienced substantial difficulties in servicing their external debt
obligations, which led to defaults on certain obligations and the restructuring
of certain indebtedness. Restructuring arrangements have included, among other
things, reducing and rescheduling interest and principal payments by
negotiating new or amended credit agreements or converting outstanding
principal and unpaid interest to Brady Bonds, and obtaining new credit to
finance interest payments. Holders of certain foreign government debt
securities may be requested to participate in the restructuring of such
obligations and to extend further loans to their issuers. There can be no
assurance that the Brady Bonds and other foreign government debt securities in
which the Fund may invest will not be subject to similar restructuring
arrangements or to requests for new credit which may adversely affect the
Fund's holdings. Furthermore, certain participants in the secondary market for
such debt may be directly involved in negotiating the terms of these
arrangements and may therefore have access to information not available to
other market participants.
Foreign Investments. The Fund has the right to purchase securities in any
foreign country, developed or developing. You 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
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investments. There is the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in foreign nations (including,
for example, withholding taxes on interest and dividends) or other taxes imposed
with respect to investments in foreign nations, foreign exchange controls (which
may include suspension of the ability to transfer currency from a given
country), foreign investment controls on daily stock market movements,
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 U.S. 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 U.S. companies. Further, the Fund may encounter
difficulties or be unable to vote proxies, exercise shareholder rights, pursue
legal remedies, and obtain judgments in foreign courts. Commission rates in
foreign countries, which are sometimes fixed rather than subject to negotiation
as in the U.S., are likely to be higher. Foreign securities markets also have
different clearance and settlement procedures, and in certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when assets of the Fund
are uninvested and no return is earned thereon. The inability of the Fund to
make intended security purchases due to settlement problems could cause the
Fund to miss attractive investment opportunities. Inability to dispose of
portfolio securities due to settlement problems could result either in losses
to the Fund due to subsequent declines in value of the portfolio security or,
if the Fund has entered into a contract to sell the security, could result in
possible liability to the purchaser. In many foreign countries there is less
government supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the U.S. There is an increased
risk, therefore, of uninsured loss due to lost, stolen, or counterfeit stock
certificates. In addition, the foreign securities markets of many of the
countries in which the Fund may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the U.S. As an open-end
investment company, the Fund is limited in the extent to which it may invest in
illiquid securities. See "Investment Restrictions" 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 limitation also may be imposed by the
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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 Fund has established no rating criteria for the
debt securities in which it may invest, and such securities may not be rated at
all for creditworthiness. Although they may offer higher yields than do higher
rated securities, high-risk, low rated debt securities (commonly referred to as
"junk bonds") and unrated debt securities generally involve greater volatility
of price and risk of principal and income, including the possibility of default
by, or bankruptcy of, the issuers of the securities. In addition, the markets
in which low rated and unrated debt securities are traded are more limited than
those in which higher rated securities are traded. The existence of limited
markets for particular securities may diminish the Fund's ability to sell the
securities at fair value either to meet redemption requests or to respond to a
specific economic event such as a deterioration in the creditworthiness of the
issuer. Reduced secondary market liquidity for certain low rated or unrated
debt securities also may make it more difficult for the Fund to obtain accurate
market quotations for purposes of valuing the Fund's portfolio. Market
quotations are generally available on many low rated or unrated securities only
from a limited number of dealers and may not necessarily represent firm bids of
such dealers or prices for actual sales.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of low rated debt securities,
especially in a thinly traded market. Analysis of the creditworthiness of
issuers of low rated debt securities may be more complex than for issuers of
higher rated securities, and the ability of the Fund to achieve its investment
objective may, to the extent of investment in low rated debt securities, be
more dependent upon
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such creditworthiness analysis than would be the case if the Fund were investing
in higher rated securities.
Low rated debt securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of low rated debt securities have been found to be less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection
of an economic downturn or of a period of rising interest rates, for example,
could cause a decline in low rated debt securities prices because the advent of
a recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If the issuer of low
rated debt securities defaults, the Fund may incur additional expenses seeking
recovery.
Tax Considerations. The Fund may accrue and report interest income on debt
securities, such as zero coupon bonds, pay-in-kind securities or debt securities
issued or acquired at a discount, even though it receives no cash interest until
the security's maturity or payment date. In order to qualify for beneficial tax
treatment afforded regulated investment companies, and to generally be relieved
of federal tax liabilities, the Fund must distribute all of its net income and
gains to shareholders (see "How Taxation Affects You and the Fund") generally
on an annual basis. The Fund may have to dispose of portfolio securities under
disadvantageous circumstances to generate cash or leverage itself by borrowing
cash in order to satisfy the distribution requirement.
If, as a result of exchange controls or other foreign laws or restrictions
regarding repatriation of capital, the Fund were unable to distribute an amount
equal to substantially all of its investment company taxable income (as
determined for U.S. tax purposes) within applicable time periods, the Fund
would not qualify for the favorable federal income tax treatment afforded
regulated investment companies, or, even if it did so qualify, it might become
liable for federal taxes on undistributed income. In addition, the ability of
the Fund to obtain timely and accurate information relating to its investments
is a significant factor in complying with the requirements applicable to
regulated investment companies and in making tax-related computations. Thus, if
the Fund were unable to obtain accurate information on a timely basis, it might
be unable to qualify as a regulated investment company or its tax computations
might be subject to revisions (which could result in the imposition of taxes,
interest and penalties). See "Additional Information on Distribution and Taxes"
in the SAI.
Leverage. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset value, and money borrowed will be subject to interest and other costs
(which
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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 will significantly increase
the Fund's investment risk.
Futures Contracts and Related Options. Successful use of futures contracts and
related options is subject to special risk considerations. A liquid secondary
market for any futures or options contract may not be available when a futures
or options position is sought to be closed. In addition, there may be an
imperfect correlation between movements in the securities or foreign currency
on which the futures or options contract is based and movements in the
securities or currency in the Fund's portfolio. Successful use of futures or
options contracts is further dependent on the Investment Manager's ability to
correctly predict movements in the securities or foreign currency markets, and
no assurance can be given that its judgment will be correct. Successful use of
options on securities or indices is subject to similar risk considerations. In
addition, by writing covered call options, the Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price.
Non-Diversified Status. The Fund is a "non-diversified" investment company,
which means the Fund is not limited in the proportion of its assets that may be
invested in the securities of a single issuer. However, the Fund intends to
conduct its operations so as to qualify as a "regulated investment company" for
purposes of the Code, which generally will relieve the Fund of any liability for
federal income tax to the extent its earnings are distributed to shareholders.
See "How Taxation Affects You and the Fund." To so qualify, among other
requirements, the Fund will limit its investments so that, in general, at the
close of each quarter of the taxable year, (i) not more than 25% of the market
value of the Fund's total assets will be invested in the securities of a single
issuer, and (ii) with respect to 50% of the market value of its total assets,
not more than 5% of the market value of its total assets will be invested in
the securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities of a single issuer. The Fund's investments in
U.S. government securities and other regulated investment companies are not
subject to these limitations. Because the Fund, as a non-diversified investment
company, may invest in a smaller number of individual issuers than a
diversified investment company, and may be more susceptible to any single
economic, political or regulatory occurrence, an investment in the Fund may
present greater risk to an investor than an investment in a diversified company.
There are further risk factors, including risks associated with mortgage-backed
securities (particularly derivative mortgage-backed securities) and illiquid and
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<PAGE>
restricted securities, which are described under "How Does the Fund Invest Its
Assets - Types of Securities the Fund May Invest In" in this prospectus, and
possible losses through the holding of securities in domestic and foreign
custodian banks and depositories, described under "What Are the Fund's
Potential Risks?" in the SAI.
WHO MANAGES THE FUND?
The Board. The Board oversees the management of the Fund and elects its
officers. The officers are responsible for the Fund's day-to-day operations.
Investment Manager. The Investment Manager is wholly owned by Resources, a
publicly owned company engaged in the financial services industry through its
subsidiaries. Charles B. Johnson and Rupert H. Johnson, Jr. are the principal
shareholders of Resources. The Investment Manager and its affiliates serve as
advisers for a wide variety of public investment mutual funds and private
clients throughout the world, with total assets under management of over $143
billion. The Templeton organization has been investing globally since 1940. The
Investment Manager and its affiliates have offices in Argentina, Australia,
Bahamas, Canada, France, Germany, Hong Kong, India, Italy, Luxembourg, Poland,
Russia, Scotland, Singapore, South Africa, U.S., and Vietnam.
The Investment Manager has entered into a sub-advisory agreement with the
Sub-Adviser, pursuant to which the Sub-Adviser provides the Investment Manager
with investment advisory assistance and portfolio management advice with regard
to the Fund's investments in securities of U.S. issuers. Under the sub-advisory
agreement, the Investment Manager pays the Sub-Adviser a monthly fee at an
annual rate of 0.25% of the Fund's average daily net assets. The Sub-Adviser is
also wholly owned by Resources.
Portfolio Management. The portfolio management responsibilities for the Fund
since May 1996 are performed by a team consisting of Alexander C. Calvo, Thomas
J. Dickson and Cynthia A. New. Mr. Calvo is currently an analyst for a division
of the Investment Manager. He holds a BA in political science from Binghamton
University and an MA in international affairs from The Fletcher School of Law
and Diplomacy at Tufts University. He also has completed coursework toward a
Ph.D. in economics at Boston University. Prior to joining the Templeton
organization in 1995, Mr. Calvo was an account executive with
Fleishman-Hillard, where he served as a consultant to firms investing in Latin
America; and previously was a research analyst with Zeta Investments.
Mr. Dickson is currently a portfolio manager for several Franklin Templeton
mutual funds. He holds a BS in managerial economics from the University of
California at Davis. Prior to joining the Templeton organization in 1994,
- Templeton Americas Government Securities Fund
24
<PAGE>
Mr. Dickson worked as a fixed-income analyst and trader for Franklin Advisors,
Inc. Mr. Dickson's current research responsibilities include Denmark, Sweden,
Greece and Korea, as well as non-dollar money market and currency analysis.
Ms. New is currently an analyst for a division of the Investment Manager. She
holds a BS in accounting from the University of Florida and an MBA from the
University of Central Florida. Ms. New is also a certified public accountant and
prior to joining the Templeton organization in 1993, she was an auditor with the
accounting firm of Deloitte and Touche. She is currently responsible for
sovereign and corporate credit analysis for emerging market securities and bonds
from high yield European countries. Ms. New maintains emerging markets research
responsibilities for Africa, developing Europe and the Middle East.
Services Provided by the Investment Manager and Business Manager. The
Investment Manager manages the Fund's assets and makes its investment
decisions. The Fund's Business Manager provides certain administrative
facilities and services for the Fund. Please see "Investment Advisory and Other
Services" and "Miscellaneous Information" in the SAI for information on
securities transactions and a summary of the Trust's Code of Ethics.
Investment Management and Business Management Fees. For the fiscal year ended
March 31, 1996, the Fund paid no (0.00%) investment management or business
management fees. The Investment and Business Managers voluntarily agreed to
reduce their fees in order to limit total expenses of the Fund. Without this
voluntary agreement, investment management fees would be 0.60% of the Fund's
average daily net assets and business management fees would be 0.15% of the
Fund's average daily net assets. After December 31, 1996, this agreement may
end at any time upon notice to the Board.
Expenses. For the fiscal year ended March 31, 1996, the "Total Fund Operating
Expenses" were 1.25% of the Fund's average daily net assets. Without the
Investment and Business Managers' voluntary agreement to limit total expenses,
"Total Fund Operating Expenses" would be 4.98%.
Portfolio Transactions. The Investment Manager tries to obtain the best
execution on all transactions. If the Investment Manager believes more than one
broker or dealer can provide the best execution, it may consider research and
related services and the sale of Fund shares when selecting a broker or dealer.
Please see "How Do the Funds Buy Securities For Their Portfolios?" in the SAI
for more information.
Templeton Americas Government Securities Fund -
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<PAGE>
The Fund's Rule 12b-1 Plan
The Fund has a distribution plan or "Rule 12b-1 Plan" under which it may
reimburse Distributors or others for activities primarily intended to sell
shares of the Fund. These expenses may include, among others, distribution or
service fees paid to Securities Dealers or others who have executed a servicing
agreement with the Trust, Distributors or its affiliates, printing prospectuses
and reports used for sales purposes, preparing and distributing sales
literature and advertisements, and a prorated portion of Distributors' overhead
expenses.
Payments by the Fund under the plan may not exceed 0.35% per year of the Fund's
average daily net assets. Of this amount, the Fund may reimburse up to 0.25% to
Distributors or others and may reimburse an additional 0.10% to Distributors
for distribution expenses. Under the plan, costs and expenses not reimbursed in
any quarter (including costs and expenses not reimbursed because they exceed
the applicable limit of the plan) may be reimbursed in subsequent quarters or
years. Distributors has informed the Fund that there are no costs or expenses
that are reimbursable in future quarters or years.
HOW DOES THE FUND MEASURE PERFORMANCE?
From time to time, the Fund advertises its performance. The more commonly used
measures of performance are total return, current yield and current
distribution rate. Performance figures are usually calculated using the maximum
sales charge, but certain figures may not include the sales charge.
Total return is the change in value of an investment over a given period. It
assumes any dividends and capital gains are reinvested. Current yield shows the
income per share earned by the Fund. The current distribution rate shows the
dividends or distributions paid to shareholders by the Fund. This rate is
usually computed by annualizing the dividends paid per share during a certain
period and dividing that amount by the current Offering Price. Unlike current
yield, the current distribution rate may include income distributions from
sources other than dividends and interest received by the Fund.
The Fund's investment results will vary. Performance figures are always based on
past performance and do not indicate future results. For a more detailed
description of how the Fund calculates its performance figures, please see "How
Do the Funds Measure Performance?" in the SAI.
HOW IS THE TRUST ORGANIZED?
The Trust was organized as a business trust under the laws of Delaware on
December 21, 1993, and is registered with the SEC under the 1940 Act. Shares of
each series of the Trust have equal and exclusive rights to dividends and
- Templeton Americas Government Securities Fund
26
<PAGE>
distributions declared by that series and the net assets of the series in the
event of liquidation or dissolution. Shares of the Fund are considered Class I
shares for redemption, exchange and other purposes. In the future, additional
series and classes of shares may be offered.
The Fund has noncumulative voting rights. This gives holders of more than 50%
of the shares voting the ability to elect all of the members of the Board. If
this happens, holders of the remaining shares voting will not be able to elect
anyone to the Board.
The Trust does not intend to hold annual shareholder meetings. It may hold a
special meeting of a series, however, for matters requiring shareholder approval
under the 1940 Act. The Trust will call a special meeting of shareholders for
the purpose of considering the removal of a person serving as Trustee if
requested to do so in writing by the holders of not less than 10% of the
Trust's outstanding shares. The 1940 Act requires that we help you communicate
with other shareholders in connection with electing or removing members of the
Board.
HOW TAXATION AFFECTS YOU AND THE FUND
The following discussion reflects some of the tax considerations that affect
mutual funds and their shareholders. For more information on tax matters
relating to the Fund and its shareholders, see "Additional Information on
Distributions and Taxes" in the SAI.
The Fund intends to elect to be treated and to qualify each year as a regulated
investment company under Subchapter M of the Code. A regulated investment
company generally is not subject to federal income tax on income and gains
distributed in a timely manner to its shareholders. The Fund intends to
distribute to shareholders substantially all of its net investment income and
realized capital gains, which generally will be taxable income or capital gains
in their hands. Distributions declared in October, November or December to
shareholders of record on a date in such month and paid during the following
January will be treated as having been received by shareholders on December 31
in the year such distributions were declared. The Fund will inform shareholders
each year of the amount and nature of such income or gains, Sales or other
dispositions of Fund shares generally will give rise to taxable gain or loss.
Templeton Americas Government Securities Fund -
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<PAGE>
ABOUT YOUR ACCOUNT
HOW DO I BUY SHARES?
Opening Your Account
To open your account, contact your investment representative or complete and
sign the enclosed shareholder application and return it to the Fund with your
check.
<TABLE>
<CAPTION>
MINIMUM
INVESTMENTS*
<S> <C>
- --------------------------------------
To Open Your Account... $100
To Add to Your
Account.............. $ 25
</TABLE>
*We may waive these minimums for retirement plans. We may also refuse any order
to buy shares.
Sales Charge Reductions and Waivers
If you qualify to buy shares under one of the sales charge reduction or waiver
categories described below, please include a written statement with each
purchase order explaining which privilege applies. If you don't include this
statement, we cannot guarantee that you will receive the sales charge reduction
or waiver.
Quantity Discounts. The sales charge you pay depends on the dollar amount you
invest, as shown in the table below.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
AS A PERCENTAGE OF AMOUNT PAID
--------------------- TO DEALER AS A
AMOUNT OF PURCHASE OFFERING NET AMOUNT PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
Under $100,000..................... 4.25% 4.44% 4.00%
$100,000 but less than $250,000.... 3.50% 3.63% 3.25%
$250,000 but less than $500,000.... 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000....................... 2.15% 2.20% 2.00%
$1,000,000 or more*................ None None None
</TABLE>
*If you invest $1 million or more, a Contingent Deferred Sales Charge may be
imposed on an early redemption. Please see "How Do I Sell Shares? - Contingent
Deferred Sales Charge." Please also see "Other Payments to Securities Dealers"
below for a discussion of payments Distributors may make out of its own
resources to Securities Dealers for certain purchases.
Cumulative Quantity Discounts. To determine if you may pay a reduced sales
charge, the amount of your current purchase is added to the cost or current
value, whichever is higher, of your Class I and Class II shares in other
Franklin Templeton Funds, as well as those of your spouse, children under the
age of 21 and grandchildren under the age of 21. If you are the sole owner of a
company,
- Templeton Americas Government Securities Fund
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<PAGE>
you may also add any company accounts, including retirement plan accounts.
Companies with one or more retirement plans may add together the total plan
assets invested in the Franklin Templeton Funds to determine the sales charge
that applies.
Letter of Intent. You may buy shares at a reduced sales charge by completing the
Letter of Intent section of the shareholder application. A Letter of Intent is a
commitment by you to invest a specified dollar amount during a 13 month period.
The amount you agree to invest determines the sales charge you pay.
BY COMPLETING THE LETTER OF INTENT SECTION OF THE SHAREHOLDER APPLICATION, YOU
ACKNOWLEDGE AND AGREE TO THE FOLLOWING:
- - You authorize Distributors to reserve 5% of your total intended purchase in
Fund shares registered in your name until you fulfill your Letter.
- - You give Distributors a security interest in the reserved shares and appoint
Distributors as attorney-in-fact.
- - Distributors may sell any or all of the reserved shares to cover any
additional sales charge if you do not fulfill the terms of the Letter.
- - Although you may exchange your shares, you may not sell reserved shares until
you complete the Letter or pay the higher sales charge.
Your periodic statements will include the reserved shares in the total shares
you own. We will pay or reinvest dividend and capital gain distributions on the
reserved shares as you direct. Our policy of reserving shares does not apply to
certain retirement plans.
If you would like more information about the Letter of Intent privilege, please
see "How Do I Buy, Sell and Exchange Shares? - Letter of Intent" in the SAI or
call Shareholder Services.
Group Purchases. If you are a member of a qualified group, you may buy Fund
shares at a reduced sales charge that applies to the group as a whole. The sales
charge is based on the combined dollar value of the group members' existing
investments, plus the amount of the current purchase.
A qualified group is one that:
- - Was formed at least six months ago,
- - Has a purpose other than buying Fund shares at a discount,
- - Has more than 10 members,
- - Can arrange for meetings between our representatives and group members,
Templeton Americas Government Securities Fund -
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<PAGE>
- - Agrees to include sales and other Franklin Templeton Fund materials in
publications and mailings to its members at reduced or no cost to
Distributors,
- - Agrees to arrange for payroll deduction or other bulk transmission of
investments to the Fund, and
- - Meets other uniform criteria that allow Distributors to achieve cost savings
in distributing shares.
Sales Charge Waivers. The Fund's sales charges (front-end and contingent
deferred) will not apply to certain purchases. For waiver categories 1, 2 or 3
below: (i) the distributions or payments must be reinvested within 365 days of
their payment date, and (ii) Class II distributions may be reinvested in either
Class I or Class II shares. Class I distributions may only be reinvested in
Class I shares.
The Fund's sales charges will not apply if you are buying shares with money
from the following sources:
1. Dividend and capital gain distributions from any Franklin Templeton Fund
or a REIT sponsored or advised by Franklin Properties, Inc.
2. Distributions from an existing retirement plan invested in the Franklin
Templeton Funds.
3. Annuity payments received under either an annuity option or from death
benefit proceeds, only if the annuity contract offers as an investment
option the Franklin Valuemark Funds, Templeton Variable Annuity Fund, the
Templeton Variable Products Series Fund, or the Franklin Government
Securities Trust. You should contact your tax advisor for information on
any tax consequences that may apply.
4. Redemptions from any Franklin Templeton Fund if you:
- Originally paid a sales charge on the shares,
- Reinvest the money within 365 days of the redemption date, and
- Reinvest the money in the same class of shares.
An exchange is not considered a redemption for this privilege. The Contingent
Deferred Sales Charge will not be waived if the shares reinvested were subject
to a Contingent Deferred Sales Charge when sold. We will credit your account in
shares, at the current value, in proportion to the amount reinvested for any
Contingent Deferred Sales Charge paid in connection with the earlier
redemption, but a new Contingency Period will begin.
- Templeton Americas Government Securities Fund
30
<PAGE>
If you immediately placed your redemption proceeds in a Franklin Bank CD, you
may reinvest them as described above. The proceeds must be reinvested within
365 days from the date the CD matures, including any rollover.
5. Redemptions from other mutual funds
If you sold shares of a fund that is not a Franklin Templeton Fund within
the past 60 days, you may invest the proceeds without any sales charge if
(a) the investment objectives were similar to the Fund's, and (b) your
shares in that fund were subject to any front-end or contingent deferred
sales charges at the time of purchase. You must provide a copy of the
statement showing your redemption.
The Fund's sales charges will also not apply to purchases by:
6. Trust companies and bank trust departments agreeing to invest in Franklin
Templeton Funds over a 13 month period at least $1 million of assets held
in a fiduciary, agency, advisory, custodial or similar capacity and over
which the trust companies and bank trust departments or other plan
fiduciaries or participants, in the case of certain retirement plans, have
full or shared investment discretion. We will accept orders for these
accounts 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 the order.
7. Group annuity separate accounts offered to retirement plans.
8. Retirement plans that (i) are sponsored by an employer with at least 100
employees, (ii) have plan assets of $1 million or more, or (iii) agree to
invest at least $500,000 in the Franklin Templeton Funds over a 13 month
period. Retirement plans that are not Qualified Retirement Plans or SEPS,
such as 403(b) or 457 plans, must also meet the requirements described
under "Group Purchases" above.
9. An Eligible Governmental Authority. Please consult your legal and
investment advisors to determine if an investment in the Fund is
permissible and suitable for you and the effect, if any, of payments by the
Fund on arbitrage rebate calculations.
10. Broker-dealers who have entered into a supplemental agreement with
Distributors for clients who are participating in comprehensive fee
programs. These programs, sometimes known as wrap fee programs, are
sponsored by the broker-dealer and either advised by the broker-dealer or
by another registered investment advisor affiliated with that broker.
Templeton Americas Government Securities Fund -
31
<PAGE>
11. Registered Securities Dealers and their affiliates, for their investment
accounts only
12. Current employees of Securities Dealers and their affiliates and their
family members, as allowed by the internal policies of their employer
13. Officers, trustees, directors and full-time employees of the Franklin
Templeton Funds or the Franklin Templeton Group, and their family members,
consistent with our then-current policies
14. Investment companies exchanging shares or selling assets pursuant to a
merger, acquisition or exchange offer
15. Accounts managed by the Franklin Templeton Group
16. Certain unit investment trusts and their holders reinvesting distributions
from the trusts
Other Payments to Securities Dealers
The payments below apply to Securities Dealers who initiate and are responsible
for certain purchases made without a sales charge. A Securities Dealer may only
receive one of the following payments for each qualifying purchase. The
payments described below are paid by Distributors or one of its affiliates, at
its own expense, and not by the Fund or its shareholders.
1. Securities Dealers will receive up to 0.75% of the purchase price for
purchases of $1 million or more.
2. Securities Dealers may receive up to 1% of the purchase price for purchases
made under waiver category 8 above.
3. Securities Dealers may, in the sole discretion of Distributors, receive up to
0.25% of the purchase price for purchases made under waiver categories 6 and
9 above.
PLEASE SEE "HOW DO I BUY, SELL AND EXCHANGE SHARES - OTHER PAYMENTS TO
SECURITIES DEALERS" IN THE SAI FOR ANY BREAKPOINTS THAT MAY APPLY.
Securities Dealers may receive additional compensation from Distributors or an
affiliated company in connection with selling shares of the Franklin Templeton
Funds. Compensation may include financial assistance for conferences,
shareholder services, automation, sales or training programs, or promotional
activities. Registered representatives and their families may be paid for
travel expenses, including lodging, in connection with business meetings or
seminars. In some cases, this compensation may only be available to Securities
Dealers whose representatives have sold or are expected to sell significant
amounts of shares.
- Templeton Americas Government Securities Fund
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<PAGE>
Securities Dealers may not use sales of the Fund's shares to qualify for this
compensation if prohibited by the laws of any state or self-regulatory agency,
such as the NASD.
MAY I EXCHANGE SHARES FOR SHARES OF ANOTHER FUND?
We offer a wide variety of funds. If you would like, you can move your
investment from your Fund account to an existing or new account in another
Franklin Templeton Fund (an "exchange"). Because it is technically a sale and a
purchase of shares, an exchange is a taxable transaction.
Before making an exchange, please read the prospectus of the fund you are
interested in. This will help you learn about the fund and its rules and
requirements for exchanges. For example, some Franklin Templeton Funds do not
accept exchanges and others may have different investment minimums.
<TABLE>
<CAPTION>
METHOD STEPS TO FOLLOW
<S> <C>
- ----------------------------------------------------------------------
BY MAIL 1. Send us written instructions signed by all
account owners
2. Include any outstanding share certificates
for the shares you're exchanging
- ----------------------------------------------------------------------
BY PHONE Call Shareholder Services or TeleFACTS(R)
If you do not want the ability to exchange by
phone to apply to your account, please let us
know.
- ----------------------------------------------------------------------
THROUGH YOUR DEALER Call your investment representative
- ----------------------------------------------------------------------
</TABLE>
Please refer to "Transaction Procedures and Special Requirements" for other
important information on how to exchange shares.
Will Sales Charges Apply to My Exchange?
You generally will not pay a front-end sales charge on exchanges. If you have
held your shares less than six months, however, you will pay the percentage
difference between the sales charge you previously paid and the applicable sales
charge of the new fund. If you have never paid a sales charge on your shares
because, for example, they have always been held in a money fund, you will pay
the Fund's applicable sales charge no matter how long you have held your
shares. These charges may not apply if you qualify to buy shares without a sales
charge.
Contingent Deferred Sales Charge. We will not impose a Contingent Deferred
Sales Charge when you exchange shares. Any shares subject to a Contingent
Deferred Sales Charge at the time of exchange, however, will remain so in the
Templeton Americas Government Securities Fund -
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<PAGE>
new fund. See the discussion on Contingent Deferred Sales Charges below and
under "How Do I Sell Shares?"
Contingent Deferred Sales Charge. For accounts with shares subject to a
Contingent Deferred Sales Charge, shares are exchanged into the new fund in the
order they were purchased. If you exchange shares into one of our money funds,
the time your shares are held in that fund will not count towards the
completion of any Contingency Period. For more information about the Contingent
Deferred Sales Charge, please see that section under "How Do I Sell Shares?"
Exchange Restrictions
Please be aware that the following restrictions apply to exchanges:
- - You may only exchange shares within the SAME CLASS.
- - The accounts must be identically registered. You may exchange shares from a
Fund account requiring two or more signatures into an identically registered
money fund account requiring only one signature for all transactions. Please
notify us in writing if you do not want this option to be available on your
account(s). Additional procedures may apply. Please see "Transaction
Procedures and Special Requirements."
- - Trust Company IRA or 403(b) retirement plan accounts may exchange shares as
described above. Restrictions may apply to other types of retirement plans.
Please contact our Retirement Plans Department for information on exchanges
within these plans.
- - The fund you are exchanging into must be eligible for sale in your state.
- - We may modify or discontinue our exchange policy if we give you 60 days'
written notice.
- - Your exchange may be restricted or refused if you: (i) request an exchange out
of the Fund within two weeks of an earlier exchange request, (ii) exchange
shares out of the Fund more than twice in a calendar quarter, or (iii)
exchange shares equal to at least $5 million, or more than 1% of the Fund's
net assets. Shares under common ownership or control are combined for these
limits. If you exchange shares as described in this paragraph, you will be
considered a Market Timer. Each exchange by a Market Timer, if accepted, will
be charged $5.00. Some of our funds do not allow investments by Market Timers.
Because excessive trading can hurt Fund performance and shareholders, we may
refuse any exchange purchase if (i) we believe the Fund would be harmed or
- Templeton Americas Government Securities Fund
34
<PAGE>
unable to invest effectively, or (ii) the Fund receives or anticipates
simultaneous orders that may significantly affect the Fund.
HOW DO I SELL SHARES?
You may sell (redeem) your shares at any time.
<TABLE>
<CAPTION>
METHOD STEPS TO FOLLOW
<S> <C>
- ----------------------------------------------------------------------
BY MAIL 1. Send us written instructions signed by all
account owners
2. Include any outstanding share certificates
for the shares you are selling.
3. Provide a signature guarantee if required
4. Corporate, partnership and trust accounts
may need to send additional documents.
Accounts under court jurisdiction may have
additional requirements.
- ----------------------------------------------------------------------
BY PHONE Call Shareholder Services
(Only available if you have completed and sent to us the telephone
redemption agreement included with this prospectus)
Telephone requests will be accepted:
- If the request is $50,000 or less.
Institutional accounts may exceed $50,000 by
completing a separate agreement. Call
Institutional Services to receive a copy.
- If there are no share certificates issued
for the shares you want to sell or you have
already returned them to the Fund.
- Unless you are selling shares in a Trust
Company retirement plan account
- Unless the address on your account was
changed by phone within the last 30 days
- ----------------------------------------------------------------------
THROUGH YOUR DEALER Call your investment representative
- ----------------------------------------------------------------------
</TABLE>
We will send your redemption check within seven days after we receive your
request in proper form. If you sell your shares by phone, the check may only be
made payable to all registered owners on the account and sent to the address of
record. We are not able to receive or pay out cash in the form of currency.
If you sell shares you just purchased with a check or draft, we may delay
sending you the proceeds for up to 15 days or more to allow the check or draft
to clear. A certified or cashier's check may clear in less time.
Templeton Americas Government Securities Fund -
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<PAGE>
Under unusual circumstances, we may suspend redemptions or postpone payment for
more than seven days as permitted by federal securities law.
Please refer to "Transaction Procedures and Special Requirements" for other
important information on how to sell shares.
Trust Company Retirement Plan Accounts
To comply with IRS regulations, you need to complete additional forms before
selling shares in a Trust Company retirement plan account. Tax penalties
generally apply to any distribution from these plans to a participant under age
59 1/2, unless the distribution meets an exception stated in the Code. To obtain
the necessary forms, please call our Retirement Plans Department.
Contingent Deferred Sales Charge
If you did not pay a front-end sales charge because you invested $1 million or
more, a Contingent Deferred Sales Charge may apply if you sell all or a part of
your investment within the Contingency Period. The charge is 1% of the value of
the shares sold or the Net Asset Value at the time of purchase, whichever is
less. Distributors keeps the charge to recover payments made to Securities
Dealers.
We will first redeem shares not subject to the charge in the following order:
1) A calculated number of shares equal to the capital appreciation on shares
held less than the Contingency Period,
2) Shares purchased with reinvested dividends and capital gain distributions,
and
3) Shares held longer than the Contingency Period.
We then redeem shares subject to the charge in the order they were purchased.
Unless otherwise specified, when you request to sell a stated DOLLAR AMOUNT, we
will redeem additional shares to cover any Contingent Deferred Sales Charge. For
requests to sell a stated NUMBER OF SHARES, we will deduct the amount of the
Contingent Deferred Sales Charge, if any, from the sale proceeds.
Waivers. We waive the Contingent Deferred Sales Charge for:
- - Exchanges
- - Account fees
- - Sales of shares purchased pursuant to a sales charge waiver
- - Redemptions by the Fund when an account falls below the minimum required
account size
- Templeton Americas Government Securities Fund
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<PAGE>
- - Redemptions following the death of the shareholder or beneficial owner
- - Redemptions through a systematic withdrawal plan set up before February 1,
1995
- - Redemptions through a systematic withdrawal plan set up after February 1,
1995, up to 1% a month of an account's Net Asset Value (3% quarterly, 6%
semiannually or 12% annually). For example, if you maintain an annual balance
of $1 million, you can withdraw up to $120,000 annually through a systematic
withdrawal plan free of charge.
- - Distributions from individual retirement plan accounts 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 termination
or plan transfer.
WHAT DISTRIBUTIONS MIGHT I RECEIVE FROM THE FUND?
The Fund intends normally to pay a monthly dividend representing substantially
all of its net investment income and to distribute at least annually any net
realized capital gains. Dividend payments are not guaranteed, are subject to the
Board's discretion and may vary with each payment. THE FUND DOES NOT PAY
"INTEREST" OR GUARANTEE ANY FIXED RATE OF RETURN ON AN INVESTMENT IN ITS SHARES.
If you buy shares shortly before the record date, please keep in mind that any
distribution will lower the value of the Fund's shares by the amount of the
distribution.
Distribution Options
You may receive your distributions from the Fund in any of these ways:
1. Buy additional shares of the Fund - You may buy additional shares of the Fund
(without a sales charge or imposition of a Contingent Deferred Sales Charge) by
reinvesting capital gain distributions, dividend distributions, or both. This
is a convenient way to accumulate additional shares and maintain or increase
your earnings base.
2. Buy shares of other Franklin Templeton Funds - You may direct your
distributions to buy the same class of shares of another Franklin Templeton
Fund (without a sales charge or imposition of a Contingent Deferred Sales
Charge). Many shareholders find this a convenient way to diversify their
investments.
Templeton Americas Government Securities Fund -
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<PAGE>
3. Receive distributions in cash - You may receive dividends, or both dividend
and capital gain distributions in cash. If you have the money sent to another
person or to a checking account, you may need a signature guarantee.
TO SELECT ONE OF THESE OPTIONS, PLEASE COMPLETE THE SHAREHOLDER APPLICATION
INCLUDED WITH THIS PROSPECTUS OR TELL YOUR INVESTMENT REPRESENTATIVE WHICH
OPTION YOU PREFER. IF YOU DO NOT SELECT AN OPTION, WE WILL AUTOMATICALLY
REINVEST DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS IN THE FUND. For Trust Company
retirement plans, special forms are required to receive distributions in cash.
You may change your distribution option at any time by notifying us by mail or
phone. Please allow at least seven days prior to the record date for us to
process the new option.
TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
How and When Shares Are Priced
The Fund is open for business each day the NYSE is open. We determine the Net
Asset Value per share as of the scheduled close of the NYSE, generally 4:00
p.m. Eastern time. You can find the prior day's closing Net Asset Value and
Offering Price of the Fund in many newspapers.
To calculate Net Asset Value per share, the Fund's assets are valued and
totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. The Fund's assets are valued as
described under "How Are Fund Shares Valued?" in the SAI.
The Price We Use When You Buy or Sell Shares
You buy shares at the Offering Price, unless you qualify to buy shares at a
reduced sales charge or with no sales charge. The Offering Price is based on the
Net Asset Value per share and includes the maximum sales charge. We calculate
it to two decimal places using standard rounding criteria. You sell shares at
Net Asset Value.
We will use the Net Asset Value next calculated after we receive your
transaction request in proper form. If you buy or sell shares through your
Securities Dealer, however, we will use the Net Asset Value next calculated
after your Securities Dealer receives your request, which is promptly
transmitted to the Fund. Your redemption proceeds will not earn interest
between the time we receive the order from your dealer and the time we receive
any required documents.
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<PAGE>
Proper Form
An order to buy shares is in proper form when we receive your signed
shareholder application and check. Written requests to sell or exchange shares
are in proper form when we receive written instructions signed by all registered
owners, with a signature guarantee if necessary. We must also receive any
outstanding share certificates for those shares.
Written Instructions
Written instructions must be signed by all registered owners. To avoid any delay
in processing your transaction, they should include:
- - Your name,
- - The Fund's name,
- - A description of the request,
- - For exchanges, the name of the fund you're exchanging into,
- - Your account number,
- - The dollar amount or number of shares, and
- - A telephone number where we may reach you during the day, or in the evening
if preferred.
Signature Guarantees
For our mutual protection, we require a signature guarantee in the following
situations:
1) You wish to sell over $50,000 worth of shares,
2) You want the proceeds to be paid to someone other than the registered owners,
3) The proceeds are not being sent to the address of record, preauthorized bank
account, or preauthorized brokerage firm account,
4) We receive instructions from an agent, not the registered owners,
5) We believe a signature guarantee would protect us against potential claims
based on the instructions received.
A signature guarantee verifies the authenticity of your signature and may be
obtained from certain banks, brokers or other eligible guarantors. YOU SHOULD
VERIFY THAT THE INSTITUTION IS AN ELIGIBLE GUARANTOR PRIOR TO SIGNING. A
NOTARIZED SIGNATURE IS NOT SUFFICIENT.
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<PAGE>
Share Certificates
We will credit your shares to your Fund account. We do not issue share
certificates unless you specifically request them. This eliminates the costly
problem of replacing lost, stolen or destroyed certificates. If a certificate
is lost, stolen or destroyed, you may have to pay an insurance premium of up to
2% of the value of the certificate to replace it.
Any outstanding share certificates must be returned to the Fund if you want to
sell or exchange those shares or if you would like to start a systematic
withdrawal plan. The certificates should be properly endorsed. You can do this
either by signing the back of the certificate or by completing a share
assignment form. For your protection, you may prefer to complete a share
assignment form. In this case, you should send the certificate and assignment
form in separate envelopes.
Telephone Transactions
You may initiate many transactions by phone. Please refer to the sections of
this prospectus that discuss the transaction you would like to make or call
Shareholder Services.
We may only be liable for losses resulting from unauthorized telephone
transactions if we do not follow reasonable procedures designed to verify the
identity of the caller. When you call, we will request personal or other
identifying information, and will also record calls. For your protection, we may
delay a transaction or not implement one if we are not reasonably satisfied that
telephone instructions are genuine. If this occurs, we will not be liable for
any loss.
If our lines are busy or you are otherwise unable to reach us by phone, you may
wish to ask your investment representative for assistance or send written
instructions to us, as described elsewhere in this prospectus. If you are
unable to execute a transaction by telephone, we will not be liable for any
loss.
Trust Company Retirement Plan Accounts. You may not sell shares or change
distribution options on Trust Company retirement plans by phone. While you may
exchange shares of Trust Company IRA and 403(b) retirement accounts by phone,
certain restrictions may be imposed on other retirement plans.
To obtain any required forms or more information about distribution or transfer
procedures, please call our Retirement Plans Department.
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<PAGE>
Account Registrations and Required Documents
When you open an account, you need to tell us how you want your shares
registered. How you register your account will affect your ownership rights and
ability to make certain transactions. If you have questions about how to
register your account, you should consult your investment representative or
legal advisor. Please keep the following information in mind when registering
your account.
Joint Ownership. If you open an account with two or more owners, we register
the account as "joint tenants with rights of survivorship" unless you tell us
otherwise. An account registered as "joint tenants with rights of survivorship"
is shown as "Jt Ten" on your account statement. For any account with two or
more owners, all owners must sign instructions to process transactions and
changes to the account. Even if the law in your state says otherwise, you will
not be able to change owners on the account unless all owners agree in writing.
If you would like another person or owner to sign for you, please send us a
current power of attorney.
Gifts and Transfers to Minors. You may set up a custodial account for a minor
under your state's Uniform Gifts/Transfers to Minors Act. Other than this form
of registration, a minor may not be named as an account owner.
Trusts. If you register your account as a trust, you should have a valid written
trust document to avoid future disputes or possible court action over who owns
the account.
Required Documents. For corporate, partnership and trust accounts, please send
us the following documents when you open your account. This will help avoid
delays in processing your transactions while we verify who may sign on the
account.
<TABLE>
<CAPTION>
TYPE OF ACCOUNT DOCUMENTS REQUIRED
<S> <C>
- -----------------------------------------------------------------------
CORPORATION Corporate Resolution
- -----------------------------------------------------------------------
PARTNERSHIP 1. The pages from the partnership agreement that
identify the general partners, or
2. A certification for a partnership agreement
- -----------------------------------------------------------------------
TRUST 1. The pages from the trust document that
identify the trustees, or
2. A certification for trust
- -----------------------------------------------------------------------
</TABLE>
Street or Nominee Accounts. If you have Fund shares held in a "street" or
"nominee" name account with your Securities Dealer, you may transfer the shares
to the street or nominee name account of another Securities Dealer. Both
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<PAGE>
dealers must have an agreement with Distributors or we will not process the
transfer. Contact your Securities Dealer to initiate the transfer. We will
process the transfer after we receive authorization in proper form from your
delivering Securities Dealer. Accounts may be transferred electronically
through the NSCC. For accounts registered in street or nominee name, we may
take instructions directly from the Securities Dealer or your nominee.
Electronic Instructions. If there is a Securities Dealer or other
representative of record on your account, we are authorized to use and execute
electronic instructions. We can accept electronic instructions directly from
your dealer or representative without further inquiry. Electronic instructions
may be processed through the services of the NSCC, which currently include the
NSCC's "Networking," "Fund/SERV," and "ACATS" systems, or through Franklin/
Templeton's PCTrades II(TM) System.
Tax Identification Number
For tax reasons, we must have your correct Social Security or tax identification
number on a signed shareholder application or applicable tax form. Federal law
requires us to withhold 31% of your taxable distributions and sale proceeds if
(i) you have not furnished a certified correct taxpayer identification number,
(ii) you have not certified that withholding does not apply, (iii) the IRS or a
Securities Dealer notifies the Fund that the number you gave us is incorrect, or
(iv) you are subject to backup withholding.
We may refuse to open an account if you fail to provide the required tax
identification number and certifications. We may also close your account if the
IRS notifies us that your tax identification number is incorrect. If you
complete an "awaiting TIN" certification, we must receive a correct tax
identification number within 60 days of your initial purchase to keep your
account open.
Keeping Your Account Open
Due to the relatively high cost of maintaining a small account, we may close
your account if the value of your shares is less than $50. We will only do this
if the value of your account fell below this amount because you voluntarily sold
your shares and your account has been inactive (except for the reinvestment of
distributions) for at least six months. Before we close your account, we will
notify you and give you 30 days to increase the value of your account to $100.
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<PAGE>
SERVICES TO HELP YOU MANAGE YOUR ACCOUNT
Automatic Investment Plan
Our automatic investment plan offers a convenient way to invest in the Fund.
Under the plan, you can have money transferred automatically from your checking
account to the Fund each month to buy additional shares. If you are interested
in this program, please refer to the automatic investment plan application
included with this prospectus or contact your investment representative. The
market value of the Fund's shares may fluctuate and a systematic investment
plan such as this will not assure a profit or protect against a loss. You may
discontinue the program at any time by notifying Investor Services by mail or
phone.
Systematic Withdrawal Plan
Our systematic withdrawal plan allows you to sell your shares and receive
regular payments from your account on a monthly, quarterly, semiannual or annual
basis. The value of your account must be at least $5,000 and the minimum
payment amount for each withdrawal must be at least $50. For retirement plans
subject to mandatory distribution requirements, the $50 minimum will not apply.
If you would like to establish a systematic withdrawal plan, please complete the
systematic withdrawal plan section of the shareholder application included with
this prospectus and indicate how you would like to receive your payments. You
may choose to direct your payments to buy the same class of shares of another
Franklin Templeton Fund or have the money sent directly to you, to another
person, or to a checking account.
You will generally receive your payment by the fifth business day of the month
in which a payment is scheduled. When you sell your shares under a systematic
withdrawal plan, it is a taxable transaction.
Because of the Fund's front-end sales charge, you may not want to set up a
systematic withdrawal plan if you plan to buy shares on a regular basis. Shares
sold under the plan may also be subject to a Contingent Deferred Sales Charge.
Please see "Contingent Deferred Sales Charge" under "How Do I Sell Shares?"
You may discontinue a systematic withdrawal plan, change the amount and
schedule of withdrawal payments, or suspend one payment by notifying us in
writing at least seven business days before the end of the month preceding a
scheduled payment. Please see "How Do I Buy, Sell and Exchange Shares? -
Systematic Withdrawal Plan" in the SAI for more information.
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<PAGE>
TeleFACTS(R)
From a touch-tone phone, you may call our TeleFACTS system (day or night) at
1-800/247-1753 to:
- - obtain information about your account;
- - obtain price and performance information about any Franklin Templeton Fund;
- - exchange shares between identically registered Franklin accounts; and
- - request duplicate statements and deposit slips for Franklin accounts.
You will need the Fund's code number to use TeleFACTS. The Fund's code is 416.
Statements and Reports to Shareholders
We will send you the following statements and reports on a regular basis:
- - Confirmation and account statements reflecting transactions in your account,
including additional purchases and dividend reinvestments. PLEASE VERIFY THE
ACCURACY OF YOUR STATEMENTS WHEN YOU RECEIVE THEM.
- - Financial reports of the Fund will be sent every six months. To reduce Fund
expenses, we attempt to identify related shareholders within a household and
send only one copy of a report. Call Fund Information if you would like an
additional free copy of the Fund's financial reports or an interim quarterly
report.
Institutional Accounts
Additional methods of buying, selling or exchanging shares of the Fund may be
available to institutional accounts. For further information, call Institutional
Services.
Availability of These Services
The services above are available to most shareholders. If, however, your shares
are held by a financial institution, in a street name account, or networked
through the NSCC, the Fund may not be able to offer these services directly to
you. Please contact your investment representative.
What If I Have Questions About My Account?
If you have any questions about your account, you may write to Investor
Services, P.O. Box 33030, St. Petersburg, FL 33733-8030. The Fund and
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<PAGE>
Distributors are also located at this address. You may also contact us by phone
at one of the numbers listed below.
<TABLE>
<CAPTION>
HOURS OF OPERATION (EASTERN
TIME)
DEPARTMENT NAME TELEPHONE NO. (MONDAY THROUGH FRIDAY)
<S> <C> <C>
- ------------------------------------------------------------------------
Shareholder Services 1-800/632-2301 8:30 a.m. to 8:00 p.m.
Dealer Services 1-800/524-4040 8:30 a.m. to 8:00 p.m.
Fund Information 1-800/DIAL BEN 8:30 a.m. to 11:00 p.m.
9:30 a.m. to 5:30 p.m.
(1-800/342-5236) (Saturday)
Retirement Plans 1-800/527-2020 8:30 a.m. to 8:00 p.m.
Institutional Services 1-800/321-8563 9:00 a.m. to 8:00 p.m.
TDD (hearing impaired) 1-800/851-0637 8:30 a.m. to 8:00 p.m.
</TABLE>
Your phone call may be monitored or recorded to ensure we provide you with high
quality service. You will hear a regular beeping tone if your call is being
recorded.
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<PAGE>
GLOSSARY
USEFUL TERMS AND DEFINITIONS
1933 Act - Securities Act of 1933, as amended
1940 Act - Investment Company Act of 1940, as amended
Board - The Board of Trustees of the Trust
Business Manager - Templeton Global Investors, Inc.
CD - Certificate of deposit
Class I and Class II - Certain funds in the Franklin Templeton Funds offer two
classes of shares, designated "Class I" and "Class II." The two classes have
proportionate interests in the same portfolio of investment securities. They
differ, however, primarily in their sales charge structures and Rule 12b-1
plans. Because the Fund's sales charge structure and Rule 12b-1 plan are
similar to those of Class I shares, shares of the Fund are considered Class I
shares for redemption, exchange and other purposes.
Code - Internal Revenue Code of 1986, as amended
Contingency Period - The 12 month period during which a Contingent Deferred
Sales Charge may apply. Regardless of when during the month you purchased
shares, they will age one month on the last day of that month and each
following month.
Contingent Deferred Sales Charge (CDSC) - A sales charge of 1% that may apply
if you sell your shares within one year.
Distributors - Franklin/Templeton Distributors, Inc., the Fund's principal
underwriter. The SAI lists the officers and Board members who are affiliated
with Distributors. See "Officers and Trustees."
Eligible Governmental Authority - Any state or local government or any
instrumentality, department, authority or agency thereof that has determined
the Fund is a legally permissible investment and that can only buy shares of
the Fund without paying sales charges.
Franklin Funds - The mutual funds in the Franklin Group of Funds(R) except
Franklin Valuemark Funds and the Franklin Government Securities Trust
Franklin Templeton Funds - The Franklin Funds and the Templeton Funds
Franklin Templeton Group - Franklin Resources, Inc., a publicly owned holding
company, and its various subsidiaries
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<PAGE>
Investment Manager - Templeton Investment Counsel, Inc., acting through its
Templeton Global Bond Managers division, Broward Financial Centre, Fort
Lauderdale, FL 33394-3091
Investor Services - Franklin/Templeton Investor Services, Inc., the Fund's
shareholder servicing and transfer agent
IRS - Internal Revenue Service
Letter - Letter of Intent
Market Timer(s) - Market Timers generally include market timing or allocation
services, accounts administered so as to buy, sell or exchange shares based on
predetermined market indicators, or any person or group whose transactions seem
to follow a timing pattern.
Moody's - Moody's Investors Service, Inc.
NASD - National Association of Securities Dealers, Inc.
Net Asset Value (NAV) - The value of a mutual fund is determined by deducting
the fund's liabilities from the total assets of the portfolio. The net asset
value per share is determined by dividing the net asset value of the fund by
the number of shares outstanding.
NSCC - National Securities Clearing Corporation
NYSE - New York Stock Exchange
Offering Price - The public offering price is based on the Net Asset Value per
share and includes the front-end sales charge. The maximum front-end sales
charge is 4.25%.
Qualified Retirement Plan(s) - An employer sponsored pension or profit-sharing
plan that qualifies under section 401 of the Code. Examples include 401(k),
money purchase pension, profit sharing and defined benefit plans.
REIT - Real Estate Investment Trust
Resources - Franklin Resources, Inc.
SAI - Statement of Additional Information
S&P - Standard & Poor's Corporation
SEC - U.S. Securities and Exchange Commission
Securities Dealer - A financial institution that, either directly or through
affiliates, has an agreement with Distributors to handle customer orders and
accounts with
Templeton Americas Government Securities Fund -
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<PAGE>
the Fund. This reference is for convenience only and does not indicate a legal
conclusion of capacity.
SEP - An employer sponsored simplified employee pension plan established under
section 408(k) of the Code
Sub-Adviser - Franklin Advisers, Inc., 777 Mariners Island Boulevard, San Mateo,
California 94403-7777
TeleFACTS (R) - Franklin Templeton's automated customer servicing system
Templeton Funds - The U.S. registered mutual funds in the Templeton Group of
Funds except Templeton Capital Accumulator Fund, Inc., Templeton Variable
Annuity Fund, and Templeton Variable Products Series Fund
Trust Company - Franklin Templeton Trust Company. Trust Company is an affiliate
of Distributors and both are wholly owned subsidiaries of Resources.
U.S. - United States
We/Our/Us - Unless the context indicates a different meaning, these terms refer
to the Fund and/or Investor Services, Distributors, or another wholly owned
subsidiary of Resources.
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<PAGE>
APPENDIX
CORPORATE BOND RATINGS
Moody's
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large, fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make the long-term risks appear
somewhat larger.
A - Bonds rated A possess many favorable investment attributes and are
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered medium grade obligations. They are neither
highly protected nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba - Bonds rated Ba are judged to have predominantly speculative elements and
their future cannot be considered well assured. Often the protection of interest
and principal payments is very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
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<PAGE>
Ca - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C - Bonds rated C are the lowest rated class of bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond ratings. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; modifier 2 indicates a mid-range ranking; and modifier 3 indicates
that the issue ranks in the lower end of its generic rating category.
S&P
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong and, in the majority of instances,
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB, B, CCC, CC - Bonds rated BB, B, CCC and CC 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 obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C - Bonds rated C are typically subordinated debt to senior debt that is
assigned an actual or implied CCC- rating. The C rating may also reflect the
filing of a bankruptcy petition under circumstances where debt service payments
are continuing. The C1 rating is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.
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<PAGE>
INSTRUCTIONS AND IMPORTANT NOTICE
SUBSTITUTE W-9 INSTRUCTIONS INFORMATION
General. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
Obtaining a Number. If you do not have a Social Security Number/Taxpayer
Identification Number or you do not know your 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 EMPLOYER ID # OF
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
- -Individual Individual -Trust, Estate, or Trust, Estate, or
Pension Plan Trust Pension Plan Trust
- -------------------------------------------------------------------------------
- -Joint Individual Owner who will -Corporation, Corporation,
be paying tax Partnership, or Partnership, or
or first- other organization other organization
named
individual
- -------------------------------------------------------------------------------
- -Unif. Gift/ Minor -Broker nominee Broker nominee
Transfer to Minor
- -------------------------------------------------------------------------------
- -Sole Proprietor Owner of
business
- -------------------------------------------------------------------------------
- -Legal Guardian Ward, Minor,
or Incompetent
- -------------------------------------------------------------------------------
</TABLE>
Exempt Recipients. Please provide your TIN and check the "Exempt Recipient" box
if you are an exempt recipient. Exempt recipients include:
A corporation
A financial institution
An organization exempt from tax under section 501(a), or an individual
retirement plan
A registered dealer in securities or commodities registered in the U.S. or a
U.S. possession
A real estate investment trust
A common trust fund operated by a bank under section 584(a)
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<PAGE>
An exempt charitable remainder trust or a non-exempt trust described in section
4947(a)(1)
An entity registered at all times under the Investment Company Act of 1940
IRS Penalties. If you do not supply us with your SSN/TIN, you will be subject to
an IRS $50 penalty unless your failure is due to reasonable cause and not
willful neglect. If you fail to report certain income on your federal income
tax return, you will be treated as negligent and subject to an IRS 20% penalty
on any underpayment of tax attributable to such negligence, unless there was
reasonable cause for the resulting underpayment and you acted in good faith. If
you falsify information on this form or make any other false statement
resulting in no backup withholding on an account which should be subject to
backup withholding, you may be subject to an IRS $500 penalty and certain
criminal penalties including fines and imprisonment.
SUBSTITUTE W-8 INSTRUCTIONS INFORMATION
Exempt Foreign Person. Check the "Exempt Foreign Person" box if you qualify as
a non-resident alien or foreign entity that is not subject to certain U.S.
information return reporting or to backup withholding rules. Dividends paid to
your account may be subject to withholding of up to 30%. You are an "Exempt
Foreign Person" if you are not (1) a citizen or resident of the U.S., or (2) a
U.S. corporation, partnership, estate, or trust. In the case of an individual,
an "Exempt Foreign Person" is one who has been physically present in the U.S.
for less than 31 days during the current calendar year. An individual who is
physically present in the U.S. for at least 31 days during the current calendar
year will still be treated as an "Exempt Foreign Person," provided that the
total number of days physically present in the current calendar year and the two
preceding calendar years does not exceed 183 days (counting all of the days in
the current calendar year, only one-third of the days in the first preceding
calendar year and only one-sixth of the days in the second preceding calendar
year). In addition, lawful permanent residents or green card holders may not be
treated as "Exempt Foreign Persons." If you are an individual or an entity, you
must not now be, or at this time expect to be, engaged in a U.S. trade or
business with respect to which any gain derived from transactions effected by
the Fund/Payer during the calendar year is effectively connected to the U.S.
(or your transactions are exempt from U.S. taxes under a tax treaty).
Permanent Address. The Shareholder Application must contain your permanent
address if you are an "Exempt Foreign Person." If you are an individual, provide
your permanent address. If you are a partnership or corporation, provide the
address of your principal office. If you are an estate or trust, provide the
address of your permanent residence or the principal office of any fiduciary.
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<PAGE>
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
Internal Revenue Service has not notified you that you are subject to backup
withholding because you failed to report certain interest or dividend income.
You may use Form W-9, "Payer's Request for Taxpayer Identification Number and
Certification," to make these certifications. If an account is no longer active,
you do not have to notify a Fund/Payer or broker of your change in status
unless you also have another account with the same Fund/Payer that is still
active. If you receive interest from more than one Fund/Payer or have dealings
with more than one broker or barter exchange, file a certificate with each. If
you have more than one account with the same Fund/Payer, the Fund/Payer may
require you to file a separate certificate for each account.
When to File. File these certifications with the Fund before a payment is made
to you, unless you have already done this in either of the two preceding
calendar years.
How Often You Must File. This certificate generally remains in effect for three
calendar years. A Fund/Payer or broker, however, may require that a new
certificate be filed each time a payment is made. On joint accounts for which
each joint owner is a foreign person, each must provide a certification of
foreign status.
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<PAGE>
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of a
resolution or other certificate of authority to authorize the purchase as well
as sale (redemption) of shares and withdrawals by checks or drafts. You may use
the following form of resolution or you may prefer to use your own. It is
understood that the Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly elected
Title Corporate Name
a _______________________________ of _______________________________________
Type of Organization
organized under the laws of the State of ___________________ and that the
State
following is a true and correct copy of a resolution adopted by the Board of
Directors at a meeting duly called and held on __________________________
Date
RESOLVED, that the______________________________________________________
Officers' Titles
of this 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 or Templeton Family of Funds (collectively, the
"Funds") and to deposit such funds of this Corporation or Association in
this account as they deem necessary or desirable; that the persons
authorized below may endorse checks and other instruments for deposit to
said account or accounts; and
FURTHER RESOLVED, that any of the following __________ officers are
number
authorized to sign any share assignment on behalf of this Corporation or
Association and to take any other actions as may be necessary to sell or
redeem its shares in the Funds or to sign checks or drafts withdrawing
funds from the account; and
FURTHER RESOLVED, that this Corporation or Association shall hold
harmless, indemnify, and defend the Funds, their custodian bank, Franklin
Templeton Distributors, Inc., Franklin Templeton Investor Services, Inc.,
and their affiliates, from any claim, loss or liability resulting in whole
or in part, directly or indirectly, from their reliance from time to time
upon any
Templeton Americas Government Securities Fund -
55
<PAGE>
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)
- Templeton Americas Government Securities Fund
56
<PAGE>
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 Funds' 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 now automatically available to
Franklin Templeton Fund shareholders, please sign and return this authorization
to Franklin/Templeton Investor Services, Inc. ("Investor 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
Franklin Templeton (a "Franklin Templeton Fund" or a "Fund"), now open or
opened at a later date, holding shares registered as follows:
- --------------------------------------------------------------------------------
Print name(s) as shown in registration (called "Shareholder")
- --------------------------------------------------------------------------------
Account number(s)
I/We authorize each Fund and Investor Services to honor and act upon telephone
requests, given as provided in this agreement, to redeem shares from any
Shareholder account.
- -------------------------------------
- -------------------------------------
Signature(s) of all registered owners and date
- -------------------------------------
- -------------------------------------
Printed name (and title/capacity, if applicable)
Verification Procedures: I/We understand and agree that: (1) each Fund and
Investor 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 Investor 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
Templeton Americas Government Securities Fund -
57
<PAGE>
initiated by telephone; and (3) as long as the Fund and Investor 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 authorize each Fund and Investor 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
Investor 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
Investor Services by registered mail, return receipt requested, or by a Fund or
Investor Services upon receipt of any information that causes a Fund or
Investor 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 Investor
Services immediately upon the death of any of the undersigned.
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 Investor Services that the Shareholder has the
authority to enter into this agreement and that each of us are 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
Investor Services may honor a telephone redemption request given by ANY officer/
partner/member/administrator or agent of Shareholder ACTING ALONE.
Restricted Accounts: Telephone redemptions and dividend option changes may not
be accepted on Franklin Templeton Trust Company retirement accounts.
PLEASE RETURN THIS FORM TO:
Franklin/Templeton Investor Services, Inc.
P.O. Box 33030
St. Petersburg, FL 33733-8030
- Templeton Americas Government Securities Fund
58
<PAGE>
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Templeton Americas Government Securities Fund -
59
<PAGE>
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- Templeton Americas Government Securities Fund
60
<PAGE>
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Templeton Americas Government Securities Fund -
61
<PAGE>
FRANKLIN TEMPLETON GROUP OF FUNDS
LITERATURE REQUEST Call 1-800/DIAL BEN (1-800/342-5236) 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.
INTERNATIONAL GROWTH
Franklin Global Health Care Fund
Franklin International Equity Fund
Franklin Templeton Japan Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Global Infrastructure Fund
Templeton Global
Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller
Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
INTERNATIONAL GROWTH
AND INCOME
Franklin Global Utilities Fund
Franklin Templeton German
Government Bond Fund
Franklin Templeton
Global Currency Fund
Templeton Global Bond Fund
Templeton Growth and Income Fund
INTERNATIONAL INCOME
Franklin Global Government
Income Fund
Franklin Templeton Hard
Currency Fund
Franklin Templeton High
Income Currency Fund
Templeton Americas
Government Securities Fund
GROWTH
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap Growth Fund
GROWTH AND INCOME
Franklin Balance Sheet
Investment Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Premier Return Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Templeton American Trust, Inc.
INCOME
Franklin Adjustable Rate
Securities Fund
Franklin Adjustable U.S.
Government Securities Fund
Franklin AGE High Income Fund
Franklin Investment
Grade Income Fund
Franklin Short-Intermediate U.S.
Government Securities Fund
Franklin U.S. Government
Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FOR NON-U.S. INVESTORS:
Franklin Tax-Advantaged
High Yield Securities Fund
Franklin Tax-Advantaged
International Bond Fund
Franklin Tax-Advantaged U.S.
Government Securities Fund
FOR CORPORATIONS:
Franklin Corporate Qualified
Dividend Fund
FRANKLIN FUNDS SEEKING
TAX-FREE INCOME
Federal Intermediate-Term
Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free Income Fund
Tax-Exempt Money Fund
FRANKLIN STATE-SPECIFIC FUNDS
SEEKING TAX-FREE INCOME
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan*
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee**
Texas
Virginia
Washington**
VARIABLE ANNUITIES
Franklin Valuemark(SM)
Franklin Templeton Valuemark
Income Plus (an immediate annuity)
*Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and/or a high yield
portfolio (CA) and a money market portfolio (CA and NY).
**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.
TL416 P 08/96
TEMPLETON P.O. Box 33031
FUNDS St. Petersburg, Florida
33733-8031
1-800-393-3001
LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
FRANKLIN TEMPLETON
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.
- --------------------------------------------------------------------------------
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 __________________
<TABLE>
<CAPTION>
CLASS CLASS
I II TEMPLETON I II TEMPLETON
<S> <C> <C> <C>
[_] [_]$______ AMERICAN TRUST [_] [_] ______ GLOBAL INFRASTRUCTURE FUND
[_] ______ AMERICAS GOVERNMENT SECURITIES FUND [_] [_]$______ GLOBAL OPPORTUNITIES TRUST
[_] [_] ______ DEVELOPING MARKETS TRUST [_] [_] ______ GLOBAL REAL ESTATE FUND
[_] [_] ______ FOREIGN FUND [_] [_] ______ GLOBAL SMALL COMPANIES FUND
[_] [_] ______ GLOBAL BOND FUND
<CAPTION>
CLASS CLASS
I II TEMPLETON I II
<S> <C> <C>
[_] $______ GROWTH FUND [_] [_] OTHER:$___________
[_] [_] ______ GROWTH AND INCOME FUND (Except for Class II Money Fund)
[_] [_] ______ JAPAN FUND _______________________________
[_] [_] ______ LATIN AMERICA FUND _______________________________
[_] [_] ______ WORLD FUND _______________________________
</TABLE>
- --------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION (PLEASE PRINT)
- --------------------------------------------------------------------------------
[_] INDIVIDUAL OR JOINT ACCOUNT
_ _
__________________________________________________ ____________________________
First name Middle initial Last name Social Security number (SSN)
_ _
__________________________________________________ ____________________________
Joint nwner(s) (Joint ownership means "noint Social Security number (SSN)
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 (minor's or custodian's 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 (if to be included in Date of trust dDocument (must be
the registration) completed for registration)
________________________________________________________________________________
Name of each trustee (if to be included in the registration)
- --------------------------------------------------------------------------------
2 ADDRESS
- --------------------------------------------------------------------------------
_____________________________________ Daytime Telephone (___)________________
Street address (P.O. Box, acceptable Area Code
if street address is given)
_
_____________________________________ Evening Telephone (___)________________
City State Zip code Area Code
I am a citizen of: [_] U.S. or [_]______________________________
- --------------------------------------------------------------------------------
3 INITIAL INVESTMENT ($100 minimum initial investment)
- --------------------------------------------------------------------------------
Enclosed is a check payable to the Fund indicated abover for $______________ .
- --------------------------------------------------------------------------------
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"), Social Security number
("SSN") 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 not subject to backup withholding because I have not been notified by the
IRS that I am subject to backup withholding as a result of a failure to report
all interest or dividends or because the IRS has notified me that I am 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 correct TIN or SSN, or that of the Minor named
in Section 1.
[_] AWAITING TIN. I am waiting for a number to be issued to me. I understand
that if I do not provide a TIN to the Fund within 60 days, the Fund is
required to commence 31% backup withholding until I provide a certified TIN.
[_] EXEMPT RECIPIENT. Individuals cannot be exempt. Check this box only after
reading the instructions, found in the back of the Fund's prospectus, 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 neither a citizen nor a resident of the United States. I
certify to the best of my knowledge and belief, I qualify as an exempt
foreign person and/or entity as described in the instructions, found in the
back of the Fund's prospectus."
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
- ---------------------------------------- ---------------------------------------
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 Franklin Templeton
shares of the Fund indicated above in accordance with Dealer
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 #________ Representative # ________ 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.
This application must be preceded or accompanied by a prospectus for
the Fund(s) being purchased.
- --------------------------------------------------------------------------------
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 [_] Pay all dividends in cash
and capital gains. and reinvest capital gains.
[_] Pay capital gains in cash [_] Pay all dividends and
and reinvest dividends. capital gains in cash.
- --------------------------------------------------------------------------------
7 OPTIONAL SHAREHOLDER PRIVILEGES
- --------------------------------------------------------------------------------
A. SPECIAL PAYMENT INSTRUCTIONS FOR DISTRIBUTIONS (Check one box)
[_] Invest Distributions, as noted in Section 6, or 1 withdrawals, as noted
in Section 7B, 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___________________
OR
[_] Send my distributions, as noted in Section 6, 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 7A - 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 without cause and whether intentionally or
inadvertently, you shall be under no liability whatsoever.
X_________________________________________________ ___________________________
Signature(s) EXACTLY as shown on your bank records Date
______________________________________ _______________________________________
Print Name(s) Account Number
______________________________ _________________ ____________ ______________
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.
<TABLE>
<S> <C> <C>
[_]$50,000-99,999 (except for Global Bond Fund [_]$100,000-249,999 [_]$250,000-499,999
[_]$500,000-999,999 [_]$1,000,0000 or more
and Americas Government Securities Fund)
</TABLE>
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 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 (Section 7B), a signature guarantee is required.
Signatures of all registered owners must be guaranteed by an "eligible
guarantor institution" 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 APP8/96
