Registration No. 33-73244
As filed with the Securities and Exchange Commission on July 22, 1996
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 9
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11
(Check appropriate box or boxes)
TEMPELTON GLOBAL INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
700 CENTRAL AVENUE, P.O. BOX 33030, ST. PETERSBURG, FLORIDA 33733-8030
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (813) 823-8712
John K. Carter
700 Central Avenue
P.O. Box 33030
ST. PETERSBURG, FLORIDA 33733-8030
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485
X on AUGUST 1, 1996 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(1) of Rule 485
on pursuant to paragraph (a)(1) of Rule 485
75 days after filing pursuant to paragraph (a)(2) of Rule 485
on pursuant to paragraph (a)(2) of Rule 485
this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
- -------------------------------------------------------------------------------
The Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and filed its Rule 24f-2 Notice for the fiscal
year ended March 31, 1996 on
May 29, 1996.
<PAGE>
TEMPLETON GLOBAL INVESTMENT TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART A
N-1A LOCATION IN
ITEM NO. ITEM REGISTRATION STATEMENT
1 Cover page Cover Page
2 Synopsis Expense Summary
3 Condensed Financial "Financial Highlights";
Information "How Do the Funds Measure
Performance?"
4 General Description "How Is the Trust Organized?";
of Registrant "How Do the Funds Invest Their
Assets?"; "What Are the Funds'
Potential Risks?"
5 Management of the Fund "Who Manages the Funds?"
5A Management's Discussion Contained in Registrant's Annual
of Fund Performance Report to Shareholders
6 Capital Stock and Other "How Are the Funds Organized?";
"Services Securities to Help You
Manage Your Account"; "What
Distributions Might I Received From
the Funds?"; "How Taxation Affects
You And the Funds?"
7 Purchase of Securities "How Do I Buy Shares?"; "May I
Being Offered Exchange Shares for Shares of
Another Fund?"; "Transaction
Procedures and
Special Requirements"; "Services to
Help You Manage Your Account"; "Who
Manages the Funds?" "Useful Terms
and Definitions"
8 Redemption or Repurchase "May I Exchange Shares for Shares of
Another Fund?"; "How Do I Sell
Shares?"; "Transaction Procedures
and Special Requirements"? "Services
to Help You Manage Your Account"
9 Pending Legal Procedures Not Applicable
<PAGE>
TEMPLETON GLOBAL INVESTMENT TRUST
CROSS-REFERENCE SHEET
FORM N-1A
PART B
N-1A LOCATION IN
ITEM NO. ITEM REGISTRATION STATEMENT
10 Cover Page Cover Page
11 Table of Contents Table of Contents
12 General Information and Not Applicable
History
13 Investment Objectives and "How Do the Funds Invest Their
Policies Assets?"; "Investment Restrictions";
"What Are the Funds' Potential
Risks?"
14 Management of the "Officers and Trustees"; "Investment
Registrant Advisory and Other Services"
15 Control Persons and "Officers and Trustees"; "Investment
Principal Holders of Advisory and Other Services";
Securities "Miscellaneous Information?"
16 Investment Advisory and "Investment Advisory and Other
Other Services Services"; "The Funds' Underwriter"
17 Brokerage Allocation and "How Do the Funds Buy Securities
Other Practices For Their Portfolio?"
18 Capital Stock and Other "Miscellaneous Information"; "See
Securities Prospectus "How Is The Trust
Organized?"
19 Purchase, Redemption and "How Do I Buy, Sell and Exchange
Pricing of Securities Shares?"; "How Are Fund Shares
Being Offered Valued?"; "Financial Statements"
20 Tax Status "Additional Information on
Distributions and Taxes"
21 Underwriters "The Funds' Underwriter"
22 Calculation of Performance "How Do the Funds Measure
Data Performance?"
23 Financial Statements Financial Statements
============================================================================
PROSPECTUS
& APPLICATION
LOGO
TEMPLETON
GROWTH AND
INCOME FUND
-----------------------------------------------
AUGUST 1, 1996
INVESTMENT STRATEGY
GLOBAL GROWTH AND INCOME
LOGO
- --------------------------------------------------------------------------------
This prospectus describes the Templeton Growth and Income Fund (the "Fund").
It contains information you should know before investing in the Fund. Please
keep it for future reference.
THE FUND MAY BORROW MONEY FOR INVESTMENT PURPOSES, WHICH MAY INVOLVE
GREATER RISK AND ADDITIONAL COSTS TO THE FUND. IN ADDITION, THE FUND MAY
INVEST UP TO 15% OF ITS ASSETS IN ILLIQUID SECURITIES, INCLUDING UP TO 10%
OF ITS ASSETS IN RESTRICTED SECURITIES, WHICH MAY INVOLVE GREATER RISK AND
INCREASED FUND EXPENSES.
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.
TEMPLETON
GROWTH AND INCOME FUND
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.
----------------------------------------------------------
The Fund is a diversified series of the Templeton
Global Investment Trust (the "Trust"),
an open-end management investment company.
----------------------------------------------------------
When reading this prospectus, you will see
certain terms in capital letters.
This means the term is explained
in our glossary section.
<TABLE>
<S> <C>
TEMPLETON GROWTH TABLE OF CONTENTS
AND INCOME FUND ABOUT THE FUND
- ----------------------- Expense Summary ..........................2
August 1, 1996 Financial Highlights .....................3
How Does the Fund Invest Its Assets? .....4
What are the Fund's Potential Risks? ....11
Who Manages the Fund? ...................15
How Does the Fund Measure Performance?...17
How Is the Trust Organized? .............18
How Taxation Affects You and the Fund ...18
ABOUT YOUR ACCOUNT
How Do I Buy Shares? ....................19
May I Exchange Shares for Shares of
Another Fund? ...........................25
How Do I Sell Shares? ...................28
What Distributions Might I Receive From
the Fund? ...............................30
Transaction Procedures and Special
Requirements ............................31
Services to Help You Manage Your
700 Central Avenue Account .................................36
St. Petersburg, Florida GLOSSARY
33701 Useful Terms and Definitions ............39
1-800/DIAL BEN
</TABLE>
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 historical expenses of each class, after fee
reductions and expense limitations, for the fiscal year ended March 31, 1996.
The Class II expenses are annualized. Your actual expenses may vary.
A. SHAREHOLDER TRANSACTION EXPENSES(+)
<TABLE>
<CAPTION>
Class I Class II
----------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% 1.00%(+)
Deferred Sales Charge(+++) NONE 1.00%
Exchange Fee (per transaction) $5.00* $5.00*
</TABLE>
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C>
Management Fees (after fee reduction) 0.00 %** 0.00**
Rule 12b-1 Fees 0.35 %*** 1.00**
Other Expenses (audit, legal, business
management, transfer agent and
custodian) (after expense
reimbursement) 0.90% 0.90%
----------------------
Total Fund Operating Expenses (after
expense reimbursement) 1.25%** 1.90%**
----------------------
</TABLE>
C. EXAMPLE
Assume the annual return for each class is 5% and 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> <C>
-------------------------------------------------------------------
Class I $69**** $95 $122 $200
Class II $39 $69 $112 $230
</TABLE>
For the same Class II investment, you would pay projected expenses of $29
if you did not sell your shares at the end of the first year. Your projected
expenses for the remaining periods would be the same.
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 the Net Asset Value or dividends of each class 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.
(++)Although Class II has a lower front-end sales charge than Class I, its Rule
12b-1 fees are higher. Over time you may pay more for Class II shares. Please
see "How Do I Buy Shares? - Deciding Which Class to Buy."
- Templeton Growth and Income Fund
2
(+++)A Contingent Deferred Sales Charge of 1% may apply to Class I purchases of
$1 million or more if you sell the shares within one year and any Class II
purchase if you sell the shares within 18 months. There is no front-end sales
charge if you invest $1 million or more in Class I shares. 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% and 1.90% of average daily net assets of Class I and Class II shares,
respectively, 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 1.61% for Class I and 1.56% for Class II, and the
"Total Fund Operating Expenses" would be 2.71% for Class I and 3.31% for Class
II. After December 31, 1996, this agreement may end at any time upon notice to
the Board.
***The Class II fees are annualized. The actual 12b-1 fees for the eleven month
period ended March 31, 1996 were 0.98%. 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.
FINANCIAL HIGHLIGHTS
These tables summarize the Fund's financial history. The information has been
audited by McGladrey & Pullen LLP, the Fund's independent auditors. Their audit
report covering the three years since the Fund's commencement on March 14, 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>
CLASS I SHARES
YEAR ENDED MARCH 31 1996 1995 1994(1)
<S> <C> <C> <C>
- ------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period $ 10.05 $10.01 $10.00
------- ------- -------
Income from investment operations:
Net investment income .29 .16 .009
Net realized and unrealized gain (loss) 1.54 (.02) .001
------- ------- -------
Total from investment operations 1.83 .14 .01
------- ------- -------
Distributions:
Dividends from net investment income (.29) (.10) --
Distributions from net realized gains (.20) -- --
------- ------- -------
Total distributions (.49) (.10) --
------- ------- -------
Change in net asset value 1.34 (.04) .01
------- ------- -------
Net asset value, end of period $ 11.39 $10.05 $10.01
======= ======= =======
TOTAL RETURN* 18.78% 1.43% 0.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $11,732 $5,953 $ 100
Ratio of expenses to average net assets 2.71% 6.11% 32.15%**
Ratio of expenses, net of reimbursement,
to average net assets 1.25% 1.25% 1.25%**
Ratio of net investment income to average
net assets 2.98% 2.51% 1.89%**
Portfolio turnover rate 10.21% 19.33% --
Average commission rate paid (per share) $ .0250
</TABLE>
(1)For the period March 14, 1994 (commencement of operations) to March 31, 1994.
*Total Return does not reflect sales commissions. Not annualized for periods of
less than one year.
**Annualized.
Templeton Growth and Income Fund -
3
<TABLE>
<CAPTION>
CLASS II SHARES
YEAR ENDED MARCH 31 1996(1)
<S> <C>
- -------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period $10.19
------
Income from investment operations:
Net investment income .22
Net realized and unrealized gain 1.41
------
Total from investment operations 1.63
------
Distributions:
Dividends from net investment income (.29)
Distributions from net realized gains (.20)
------
Total distributions (.49)
------
Change in net asset value 1.14
------
Net asset value, end of period $11.33
======
TOTAL RETURN* 16.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $2,205
Ratio of expenses to average net assets 3.31%**
Ratio of expenses, net of reimbursement, to average
net assets 1.90%**
Ratio of net investment income to average net assets 1.59%**
Portfolio turnover rate 10.21%
Average commission rate paid (per share) $ .0250
</TABLE>
(1)For the period May 1, 1995 (commencement of sales) to March 31, 1996.
*Total Return does not reflect sales commissions or the contengent deferred
sales charge. Not annualized for periods less than one year.
**Annualized.
HOW DOES THE FUND INVEST ITS ASSETS?
The Fund's Investment Objective
The Fund's investment objective is high total return, comprising a combination
of income and capital appreciation. The Fund seeks to achieve its objective
through a flexible policy of investing primarily in equity and debt securities
of domestic and foreign companies. The Fund's investment objective and the
investment restrictions set forth under "Investment 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 objective will be achieved.
The Fund will invest primarily in equity and debt securities, as defined below,
of domestic and foreign companies. As used in this prospectus, "equity
securities" refers to common stock, preferred stock, securities convertible
into or exchangeable for such securities, warrants or rights to subscribe to or
purchase
- Templeton Growth and Income Fund
4
such securities, and sponsored or unsponsored American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") and Global Depositary Receipts
("GDRs") (collectively, "depositary receipts"). The Investment Manager will
select equity investments for the Fund on the basis of fundamental
company-by-company analysis (rather than broader analyses of specific industries
or sectors of the economy). Although the Investment Manager will consider
historical value measures, such as price/earnings ratios, operating profit
margins and liquidation values, the primary factor in selecting equity
securities will be the company's current price relative to its long-term
earnings potential, as determined by the Investment Manager.
As used in this prospectus, "debt securities" refers to bonds, notes,
debentures, commercial paper, time deposits, bankers' acceptances, and may
include structured investments, which are rated in any rating category by
Moody's or S&P or which are unrated by any rating agency. Such securities may
include high-risk, lower quality debt securities, commonly referred to as "junk
bonds." See "What Are the Fund's Potential Risks?" As an operating policy,
which may be changed by the Board, the Fund will not invest more than 5% of its
total assets in debt securities rated lower than Baa by Moody's or BBB by S&P.
Debt securities are subject to certain market and credit risks. See "How Do the
Funds Invest Their Assets? - Debt Securities." in the SAI for descriptions of
debt securities rated BBB by S&P and Baa by Moody's.
Securities considered for purchase by the Fund may be listed or unlisted, and
may be issued by companies in various industries, with various levels of market
capitalization. Under normal circumstances, the Fund will invest at least 65% of
its total assets in issuers domiciled in at least three different nations (one
of which may be the U.S.). The percentage of the Fund's assets to be invested in
equity and debt securities will vary from time to time, based on the Investment
Manager's assessment of the relative total return potential of various
investment vehicles.
The Fund may also lend its portfolio securities and borrow money for investment
purposes (i.e., "leverage" its portfolio). In addition, the Fund may enter into
transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, and futures contracts and
related options. These are generally referred to as derivative instruments and
involve special risk factors, which are described below. When deemed
appropriate by the Investment Manager, the Fund may invest cash balances in
repurchase agreements and other money market investments to maintain liquidity
in an amount to meet expenses or for day-to-day operating purposes. These
investment techniques are described below and under the heading "How Do the
Funds Invest Their Assets?" in the SAI.
Templeton Growth and Income Fund -
5
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 "Types of Securities the Fund May Invest In."
The Fund does not emphasize short-term trading profits and usually expects to
have an annual portfolio turnover rate generally not exceeding 50% for the
equity portion of its portfolio. The Investment Manager may engage in short-
term trading in the fixed income portion of the Fund's portfolio when it
believes it is consistent with the Fund's investment objective. Also, a
security may be sold and another of comparable quality simultaneously purchased
to take advantage of what the Investment Manager believes to be a temporary
disparity in the normal yield relationship between the two securities. As a
result of the Fund's investment policies, under certain market conditions, the
portfolio turnover rate for the fixed income portion of its portfolio may be
higher than that of other investment companies, and may be as high as 300%. A
higher turnover rate 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 held for less than three months may limit the Fund's ability to
dispose of its securities. Accordingly, the Investment Manager carefully weighs
the anticipated benefits of short-term investment against these consequences.
Types of Securities the Fund May Invest In
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;
- Templeton Growth and Income Fund
6
obligations (including certificates of deposit, time deposits and bankers'
acceptances) of banks; and repurchase agreements with banks and broker-dealers
with respect to such securities.
Borrowing. The Fund may borrow up to one-third of the value of its total assets
from banks to increase its holdings of portfolio securities. Under the 1940 Act,
the Fund is required to maintain continuous asset coverage of 300% with respect
to such borrowings and to sell (within three days) sufficient portfolio holdings
to restore such coverage if it should decline to less than 300% due to market
fluctuations or otherwise, even if such liquidations of the Fund's holdings may
be disadvantageous from an investment standpoint. Leveraging by means of
borrowing may exaggerate the effect of any increase or decrease in the value of
portfolio securities on the Fund's net asset value, and money borrowed will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.
Loans of Portfolio Securities. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of the Fund's total
assets to generate income for the purpose of offsetting operating expenses. Such
loans must be secured by collateral (consisting of any combination of cash, U.S.
government securities or irrevocable letters of credit) in an amount at least
equal (on a daily marked-to-market basis) to the current market value of the
securities loaned. The Fund may terminate the loans at any time and obtain the
return of the securities loaned within five business days. The Fund will
continue to receive any interest or dividends paid on the loaned securities and
will continue to retain any voting rights with respect to the securities. In
the event that the borrower defaults on its obligation to return borrowed
securities, because of insolvency or otherwise, the Fund could experience
delays and costs in gaining access to the collateral and could suffer a loss to
the extent that the value of the collateral falls below the market value of the
borrowed securities.
Options on Securities or Indices. The Fund may write (i.e., sell) covered put
and call options and purchase put and call options on securities or securities
indices that are traded on 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
Templeton Growth and Income Fund -
7
is "covered." This means that so long as the Fund is obligated as the writer of
a call option, it will own the underlying securities subject to the call, or
hold a call at the same or lower exercise price, for the same exercise period,
and on the same securities as the written call. A put is covered if the Fund
maintains liquid assets with a value equal to the exercise price in a
segregated account, or holds a put on the same underlying securities at an
equal or greater exercise price. The value of the underlying securities on
which options may be written at any one time will not exceed 15% of the total
assets of the Fund. The Fund will not purchase put or call options if the
aggregate premium paid for such options would exceed 5% of its total assets at
the time of purchase.
Forward Foreign Currency Contracts and Options on Foreign Currencies. The Fund
will normally conduct its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward contracts to purchase or sell
foreign currencies. The Fund will generally not enter into a forward contract
with a term of greater than one year. A forward contract is an obligation to
purchase or sell a specific currency for an agreed price at a future date which
is individually negotiated and privately traded by currency traders and their
customers.
The Fund will generally enter into forward contracts only under two
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in"
the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed
to settle the transaction. Second, when the Investment Manager believes that
the currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to sell
or buy the former foreign currency (or another currency which acts as a proxy
for that currency) approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. This second
investment practice is generally referred to as "cross-hedging." The Fund has
no specific limitation on the percentage of assets it may commit to forward
contracts, subject to its stated investment objective and policies, except that
the Fund will not enter into a forward contract if the amount of assets set
aside to cover forward contracts would impede portfolio management or the
Fund's ability to meet redemption requests. Although forward contracts will be
used primarily to protect the Fund from adverse currency movements, they also
involve the risk that anticipated currency movements will not be accurately
predicted.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines in
- Templeton Growth and Income Fund
8
the U.S. dollar value of foreign currency-denominated portfolio securities and
against increases in the U.S. dollar cost of such securities to be acquired. As
in the case of other kinds of options, however, the writing of an option on a
foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and the Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of rate movements
adverse to the Fund's position, it may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign currencies to be written or
purchased by the Fund are traded on U.S. and foreign exchanges or over-the-
counter.
Futures Contracts. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a specified
debt security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the end of the contract
period. A futures contract on a foreign currency is an agreement to buy or sell
a specified amount of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. In addition, when the Fund enters into a futures contract, it will
segregate assets or "cover" its position in accordance with the 1940 Act. See
"How Do the Funds Invest Their Assets? - Futures Contracts." in the SAI. With
respect to positions in futures and related options that do not constitute "bona
fide hedging" positions, the Fund will not enter into a futures contract or
related option contract if, immediately thereafter, the aggregate initial margin
deposits relating to such positions plus premiums paid by it for open futures
option positions, less the amount by which any such options are "in-the-money,"
would exceed 5% of the Fund's total assets.
</R?
Repurchase Agreements. For temporary defensive purposes and for cash management
purposes, the Fund may, without limit, enter into repurchase agreements with
U.S. banks and broker-dealers. Under a repurchase agreement, the Fund acquires
a security from a U.S. bank or a registered broker-dealer and simultaneously
agrees to resell the security back to the bank or broker-dealer at
Templeton Growth and Income Fund -
9
a specified time and price. The repurchase price is in excess of the original
purchase price paid by the Fund by an amount which reflects an agreed-upon rate
of return and which is not tied to any coupon rate on the underlying security.
Under the 1940 Act, repurchase agreements are considered to be loans
collateralized by the underlying security and therefore will be fully
collateralized. However, if the bank or broker-dealer should default on its
obligation to repurchase the underlying security, the Fund may experience a
delay or difficulties in exercising its rights to realize upon the security and
might incur a loss if the value of the security declines, as well as incur
disposition costs in liquidating the security.
Depositary Receipts. ADRs are depositary receipts typically used by a U.S. bank
or trust company which evidence ownership of underlying securities issued by a
foreign corporation. EDRs and GDRs are typically issued by foreign banks or
trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
foreign or a U.S. corporation. Generally, depositary receipts in registered form
are designed for use in the U.S. securities market and depositary receipts in
bearer form are designed for use in securities markets outside the U.S.
Depositary receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Depositary receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of depositary receipts. In unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the depositary receipts.
Depositary receipts also involve the risks of other investments in foreign
securities, as discussed below. For purposes of the Fund's investment policies,
the Fund's investments in depositary receipts will be deemed to be investments
in the underlying securities.
Illiquid and Restricted Securities. The Fund may invest up to 15% of its total
assets in illiquid securities, for which there is a limited trading market and
for which a low trading volume of a particular security may result in abrupt and
erratic price movements. The Fund may be unable to dispose of its holdings in
illiquid securities at then-current market prices and may have to dispose of
such securities over extended periods of time. The Fund may also invest in
securities that are sold (i) in private placement transactions between their
issuers and their
- Templeton Growth and Income Fund
10
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 from the sales could, due to illiquidity, be
less than those originally paid by the Fund or less than their fair value. In
addition, issuers whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements that may be
applicable if their securities were publicly traded. If any privately placed or
Rule 144A securities held by the Fund are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Fund may
be required to bear the expenses of registration. The Fund will limit its
investment in restricted securities to 10% of its total assets, except that Rule
144A securities determined by the Board to be liquid are not subject to this
limitation.
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 objective will be attained. As with
any investment in securities, the value of, and income from, an investment in
the Fund can decrease as well as increase, depending on a variety of factors
which may affect the values and income generated by the Fund's portfolio
securities, including general economic conditions and market factors. In
addition to the factors which affect the value of individual securities, a
shareholder may anticipate that the value of the shares of the Fund will
fluctuate with movements in the broader equity and bond markets. A decline in
the stock market of any country in which the Fund is invested in equity
securities may also be reflected in declines in the price of shares of the
Fund. Changes in the prevailing rates of interest in any of the countries in
which the Fund is invested in fixed income securities will likely affect the
value of such holdings and thus the value of Fund shares. Increased rates of
interest, which frequently accompany inflation and/or a growing economy are
likely to have a negative effect on the value of Fund shares. In addition,
changes in currency valuations will affect the price of shares of the Fund.
History reflects both decreases and increases in stock markets and interest
rates in individual countries and throughout the world, and in currency
valuations, and these may reoccur unpredictably in the future. Additionally,
investment decisions made by the Investment Manager will not always be
Templeton Growth and Income Fund -
11
profitable or prove to have been correct. The Fund is not intended as a complete
investment program.
The Fund has the right to purchase securities in any foreign country, developed
or developing. Investors should consider carefully the substantial risks
involved in investing in securities issued by companies and governments of
foreign nations, which are in addition to the usual risks inherent in domestic
investments. There is the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in foreign nations (including,
for example, withholding taxes on interest and dividends) or other taxes
imposed with respect to investments in foreign nations, foreign exchange
controls (which may include suspension of the ability to transfer currency from
a given country), foreign investment controls on daily stock market movements,
default in foreign government securities, political or social instability, or
diplomatic developments which could affect investment in securities of issuers
in foreign nations. Some countries may withhold portions of interest and
dividends at the source. In addition, in many countries there is less publicly
available information about issuers than is available in reports about
companies in the 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.
The Fund may encounter difficulties or be unable to vote proxies, exercise
shareholder rights, pursue legal remedies, and obtain judgments in foreign
courts.
Brokerage commissions, custodial services and other costs relating to investment
in foreign countries are generally more expensive than in the U.S. 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
- Templeton Growth and Income Fund
12
smaller, less liquid, and subject to greater price volatility than those in the
U.S. The Fund may invest in Eastern European countries, which involves special
risks. As an open-end investment company, the Fund is limited in the extent to
which it may invest in illiquid securities. See "What Are the Funds' Potential
Risks?" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
Further, the economies of developing countries generally are heavily dependent
upon international trade and, accordingly, have been and may continue to be
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been and may
continue to be adversely affected by economic conditions in the countries with
which they trade.
The Fund usually effects currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign exchange market. However, some
price spread on currency exchange transactions (to cover service charges) will
be incurred when the Fund converts assets from one currency to another.
As a non-fundamental policy, the Fund will limit its investment in Russian
securities to 5% of its total assets. Russian securities involve additional
significant risks, including political and social uncertainty (for example,
regional conflicts and risk of war), currency exchange rate volatility,
pervasiveness of corruption and crime in the Russian economic system, delays in
settling portfolio transactions and risk of loss arising out of Russia's system
of share registration and custody. For more information on these risks and
other risks associated with Russian securities, please see "What Are the Funds'
Potential Risks?" in the SAI.
The Fund is authorized to invest in debt securities rated in any category by S&P
or Moody's and securities which are unrated by any rating agency. See "How Do
the Funds Invest Their Assets? - Debt Securities." in the SAI. As an operating
policy, which may be changed by the Board without shareholder approval, the
Templeton Growth and Income Fund -
13
Fund will not invest more than 5% of its total assets in debt securities rated
lower than BBB by S&P or Baa by Moody's. The Board may consider a change in
this operating policy if, in its judgment, economic conditions change such that
a higher level of investment in high-risk, lower quality debt securities would
be consistent with the interests of the Fund and its shareholders. High-risk,
lower quality debt securities, commonly referred to as "junk bonds," are
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligation and may be in default. Unrated debt securities are not necessarily of
lower quality than rated securities, but they may not be attractive to as many
buyers. Regardless of rating levels, all debt securities considered for purchase
(whether rated or unrated) will be carefully analyzed by the Investment Manager
to insure, to the extent possible, that the planned investment is sound. The
Fund may, from time to time, invest up to 5% of its total assets in defaulted
debt securities if, in the opinion of the Investment Manager, the issuer may
resume interest payments in the near future.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value, and
money borrowed will be subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining minimum average balances) which
may or may not exceed the income received from the securities purchased with
borrowed funds.
Successful use of futures contracts and related options is subject to special
risk considerations. A liquid secondary market for any futures or options
contract may not be available when a futures or options position is sought to
be closed. In addition, there may be an imperfect correlation between movements
in the securities or foreign currency on which the futures or options contract
is based and movements in the securities or currency in the Fund's portfolio.
Successful use of futures or options contracts is further dependent on the
Investment Manager's ability to correctly predict movements in the securities
or foreign currency markets, and no assurance can be given that its judgment
will be correct. Successful use of options on securities or stock indices is
subject to similar risk considerations. In addition, by writing covered call
options, the Fund gives up the opportunity, while the option is in effect, to
profit from any price increase in the underlying security above the option
exercise price.
There are further risk factors, including possible losses through the holding of
securities in domestic and foreign custodian banks and depositories, described
elsewhere in this prospectus and in the SAI.
- Templeton Growth and Income Fund
14
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. The
Board also monitors the Fund to ensure no material conflicts exist between the
two classes of shares. While none is expected, the Board will act appropriately
to resolve any material conflict that may arise.
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.
Portfolio Management. The lead portfolio manager of the Fund since its
inception is Dorian B. Foyil. Mr. Foyil is senior vice president of the
Investment Manager. He holds a BBA in accounting and computer science from
Temple University and an MBA in finance from the Wharton School of Business at
the University of Pennsylvania. He is currently on the board of directors and
serves as chairman of the Bahamas Society of Financial Analysts. Before joining
the Templeton organization, he was an investment research analyst for four years
with UBS Phillips & Drew in London, England. As a portfolio manager and
research analyst with Templeton, Mr. Foyil's research responsibilities include
the technology, life insurance, aerospace and defense industries. He is also
responsible for research coverage of Eastern Europe.
Mark G. Holowesko exercises secondary portfolio management responsibilities for
the Fund. Mr. Holowesko is president of the Investment Manager. He holds a BA
from the College of Holy Cross and an MBA from Babson College. He is a
Chartered Financial Analyst, Chartered Investment Counselor, director and
founding member of the International Society of Financial Analysts. Prior to
joining the Templeton organization, Mr. Holowesko worked with Roy West Trust
Corporation (Bahamas) Limited as an investment administrator. His duties at Roy
West included managing trust and individual accounts, as well as research of
worldwide equity markets. Mr. Holowesko is responsible for coordinating equity
research worldwide for the Investment Manager and managing several mutual funds.
Templeton Growth and Income Fund -
15
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 0.75% 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% and 1.90% of average daily net assets of Class I shares
and Class II shares, respectively. Without the Investment and Business Managers'
voluntary agreement to limit total expenses, "Total Fund Operating Expenses"
would be 2.71% for Class I and 3.31% for Class II.
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.
The Rule 12b-1 Plans
Each class has a distribution plan or "Rule 12b-1 Plan" under which it may pay
or reimburse Distributors or others for activities primarily intended to sell
shares of the class. 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 Class I plan may not exceed 0.35% per year of
Class I's average daily net assets. Of this amount, the Fund may reimburse up to
- Templeton Growth and Income Fund
16
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 costs and expenses of
Class I shares that may be reimbursable in future quarters or years were
$805,014 (5.8% of net assets) at March 31, 1996.
Under the Class II plan, the Fund may pay Distributors up to 1% per year of
Class II's average daily net assets to pay Distributors or others for providing
distribution and related services and bearing certain Class II expenses. All
distribution expenses over this amount will be borne by those who have incurred
them. During the first year after a purchase of Class II shares, Distributors
may keep this portion of the Rule 12b-1 fees associated with the Class II
purchase.
The Fund may also pay a servicing fee of up to 0.25% per year of Class II's
average daily net assets under the Class II plan. This fee may be used to pay
Securities Dealers or others for, among other things, helping to establish and
maintain customer accounts and records, helping with requests to buy and sell
shares, receiving and answering correspondence, monitoring dividend payments
from the Fund on behalf of customers, and similar servicing and account
maintenance activities.
The Rule 12b-1 fees charged to each class are based only on the fees
attributable to that particular class. For more information, please see "The
Funds' Underwriter" in the SAI.
HOW DOES THE FUND MEASURE PERFORMANCE?
From time to time, each class of the Fund advertises its performance. The more
commonly used measure of performance is total return. 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.
The investment results of each class 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.
Templeton Growth and Income Fund -
17
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. The Fund
began offering two classes of shares on May 1, 1995: Templeton Growth and
Income Fund - Class I and Templeton Growth and Income Fund - Class II. All
shares purchased before that time are considered Class I shares. Additional
classes of shares may be offered in the future.
Shares of each class represent proportionate interests in the assets of the Fund
and have the same voting and other rights and preferences as the other class of
the Fund for matters that affect the Fund as a whole. For matters that only
affect one class, however, only shareholders of that class may vote. Each class
will vote separately on matters (1) affecting only that class, (2) expressly
required to be voted on separately by state business trust law, or (3) required
to be voted on separately by the 1940 Act. Shares of each class of a series
have the same voting and other rights and preferences as the other classes and
series of the Trust for matters that affect the Trust as a whole. In the
future, additional series may be offered.
The Trust 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 Board member if requested in writing
to do so by shareholders holding at least 10% of the 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
- Templeton Growth and Income Fund
18
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.
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. PLEASE INDICATE WHICH CLASS OF SHARES YOU WANT TO BUY. IF YOU DO NOT
SPECIFY A CLASS, YOUR PURCHASE WILL BE AUTOMATICALLY INVESTED IN CLASS I SHARES.
<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.
Deciding Which Class to Buy
You should consider a number of factors when deciding which class of shares to
buy. IF YOU PLAN TO BUY $1 MILLION OR MORE IN A SINGLE PAYMENT OR YOU QUALIFY
TO BUY CLASS I SHARES WITHOUT A SALES CHARGE, YOU MAY NOT BUY CLASS II SHARES.
Generally, you should consider buying Class I shares if:
- - you expect to invest in the Fund over the long term;
- - you qualify to buy Class I shares at a reduced sales charge; or
- - you plan to buy $1 million or more over time.
You should consider Class II shares if:
- - you expect to invest less than $50,000 in the Franklin Templeton Funds; and
- - you plan to sell a substantial number of your shares within approximately six
years or less of your investment.
Templeton Growth and Income Fund -
19
Class I shares are generally more attractive for long-term investors because of
Class II's higher Rule 12b-1 fees. These may accumulate over time to outweigh
the lower Class II front-end sales charge and result in lower income dividends
for Class II shareholders. If you qualify to buy Class I shares at a reduced
sales charge based upon the size of your purchase or through our Letter of
Intent or cumulative quantity discount programs, but plan to hold your shares
less than approximately six years, you should evaluate whether it is more
economical for you to buy Class I or Class II shares.
For purchases of $1 million or more, it is considered more beneficial for you to
buy Class I shares since there is no front-end sales charge, even though these
purchases may be subject to a Contingent Deferred Sales Charge. Any purchase of
$1 million or more is therefore automatically invested in Class I shares. You
may accumulate more than $1 million in Class II shares through purchases over
time, but if you plan to do this you should determine whether it would be more
beneficial for you to buy Class I shares through a Letter of Intent.
Please consider all of these factors before deciding which class of shares to
buy. There are no conversion features attached to either class of shares.
Purchase Price of Fund Shares
For Class I shares, the sales charge you pay depends on the dollar amount you
invest, as shown in the table below. The sales charge for Class II shares is 1%
and, unlike Class I, does not vary based on the size of your purchase.
<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>
- -------------------------------------------------------------------------------
CLASS I
Less than $50,000................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000...... 4.50% 4.71% 3.75%
$100,000 but less than $250,000..... 3.50% 3.63% 2.80%
$250,000 but less than $500,000..... 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000... 2.00% 2.04% 1.60%
$1,000,000 or more*................. none none none
CLASS II
Under $1,000,000*................... 1.00% 1.01% 1.00%
</TABLE>
*A Contingent Deferred Sales Charge of 1% may apply to Class I purchases of $1
million or more and any Class II purchase. 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. Purchases
of Class II shares are limited to purchases below $1 million. Please see
"Deciding Which Class to Buy."
- Templeton Growth and Income Fund
20
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.
Cumulative Quantity Discounts - Class I Only. To determine if you may pay a
reduced sales charge, the amount of your current Class I 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, 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 - Class I Only. You may buy Class I 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 on Class I shares.
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
Class I 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.
Templeton Growth and Income Fund -
21
Group Purchases - Class I Only. If you are a member of a qualified group, you
may buy Class I shares at the 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,
- - 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 Class I shares with
money from the following sources or Class II shares with money from the sources
in waiver categories 1 or 4:
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.
- Templeton Growth and Income Fund
22
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 invested for any
Contingent Deferred Sales Charge paid in connection with the earlier
redemption, but a new Contingency Period will begin.
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 Class I 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 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,
Templeton Growth and Income Fund -
23
such as 403(b) or 457 plans, must also meet the requirements described
under "Group Purchases - Class I Only" above. However, any Qualified or
non-Qualified Retirement Plan account which was a shareholder in the Fund
on or before February 1, 1995, and which does not meet the other
requirements of this section, may purchase shares subject to a sales charge
of 4% of the Offering Price, 3.2% of which will be retained by Securities
Dealers.
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.
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 Class II purchases and certain Class I 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.
- Templeton Growth and Income Fund
24
1. Securities Dealers may receive up to 1% of the purchase price for Class II
purchases. During the first year after the purchase, Distributors may keep a
part of the Rule 12b-1 fees associated with that purchase.
2. Securities Dealers will receive up to 1% of the purchase price for Class I
purchases of $1 million or more.
3. Securities Dealers may, in the sole discretion of Distributors, receive up to
1% of the purchase price for Class I purchases made under waiver category 8
above.
4. Securities Dealers may receive up to 0.25% of the purchase price for Class I
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. 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.
If you own Class I shares, you may exchange into any of our money funds except
Franklin Templeton Money Fund II ("Money Fund II"). Money Fund II is the only
money fund exchange option available to Class II shareholders. Unlike our other
money funds, shares of Money Fund II may not be purchased directly and no
drafts (checks) may be written on Money Fund II accounts.
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. Some
Franklin Templeton Funds do not offer Class II shares.
Templeton Growth and Income Fund -
25
<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.
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 new fund. See the discussion on
Contingent Deferred Sales Charges below and under "How Do I Sell Shares?"
Contingent Deferred Sales Charge - Class I. For accounts with Class I shares
subject to a Contingent Deferred Sales Charge, shares are exchanged into the
new fund in the order they were purchased. If you exchange Class I 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.
Contingent Deferred Sales Charge - Class II. For accounts with Class II shares
subject to a Contingent Deferred Sales Charge, shares are exchanged into the
new fund proportionately based on the amount of shares subject to a Contingent
Deferred Sales Charge and the length of time the shares have been held. For
example, suppose you own $1,000 in shares that have never been subject to a
CDSC, such as shares from the reinvestment of dividends and capital gains
("free shares"), $2,000 in shares that are no longer subject to a CDSC because
you have held them for longer than 18 months ("matured shares"), and $3,000
- Templeton Growth and Income Fund
26
in shares that are still subject to a CDSC ("CDSC liable shares"). If you
exchange $3,000 into a new fund, $500 will be exchanged from free shares,
$1,000 from matured shares, and $1,500 from CDSC liable shares.
Likewise, CDSC liable shares purchased at different times will be exchanged into
a new fund proportionately. For example, assume you purchased $1,000 in shares
3 months ago, 6 months ago, and 9 months ago. If you exchange $1,500 into a new
fund, $500 will be exchanged from shares purchased at each of these three
different times.
While Class II shares are exchanged proportionately, they are redeemed in the
order purchased. In some cases, this means exchanged shares may be CDSC liable
even though they would not be subject to a Contingent Deferred Sales Charge if
they were sold. We believe the proportional method of exchanging Class II
shares more closely reflects the expectations of Class II shareholders if
shares are sold during the Contingency Period. The tax consequences of a sale or
exchange are determined by the Code and not by the method used by the Fund to
transfer shares.
If you exchange your Class II shares for shares of Money Fund II, the time your
shares are held in that fund will count towards the completion of any
Contingency Period.
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
Templeton Growth and Income Fund -
27
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
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>
- Templeton Growth and Income Fund
28
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.
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
A Contingent Deferred Sales Charge may apply to Class I purchases of $1 million
or more if you sell all or a portion of the shares within one year and any Class
II purchase if you sell the shares within 18 months. 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.
Templeton Growth and Income Fund -
29
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
- - 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 in Class I shares, you can withdraw up to $120,000 annually
through a systematic withdrawal plan free of charge. Likewise, if you
maintain an annual balance of $10,000 in Class II shares, $1,200 may be
withdrawn annually 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?
Dividends and capital gains are calculated and distributed the same way for each
class. The amount of any income dividends per share will differ, however,
generally due to the difference in the Rule 12b-1 fees of each class.
The Fund intends to pay a dividend at least annually representing substantially
all of its net investment income and 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.
- Templeton Growth and Income Fund
30
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 same
class of the Fund (without a sales charge or imposition of a Contingent Deferred
Sales Charge) by reinvesting capital gain distributions, dividend
distributions, or both. If you own Class II shares, you may also reinvest your
distributions in Class I shares of the Fund. 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). If you own Class II shares, you may also direct your distributions to
buy Class I shares of another Franklin Templeton Fund. Many shareholders find
this a convenient way to diversify their investments.
3. Receive distributions in cash - You may receive dividends and/or 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 OF 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 SAME CLASS OF 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 of each class 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 for each class in many newspapers.
The Net Asset Value of all outstanding shares of each class is calculated on a
pro rata basis. It is based on each class' proportionate participation in the
Fund, determined by the value of the shares of each class. Each class, however,
bears the Rule 12b-1 fees payable under its Rule 12b-1 plan. To calculate Net
Asset Value per share of each class, the assets of each class are valued and
totaled,
Templeton Growth and Income Fund -
31
liabilities are subtracted, and the balance, called net assets, is divided by
the number of shares of the class 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 of the class you wish to purchase, unless
you qualify to buy shares at a reduced sales charge or with no sales charge. The
Offering Price of each class is based on the Net Asset Value per share of the
class 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.
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,
- - The class of shares,
- - 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.
- Templeton Growth and Income Fund
32
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.
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
Templeton Growth and Income Fund -
33
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.
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.
- Templeton Growth and Income Fund
34
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
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.
Templeton Growth and Income Fund -
35
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.
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 account 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.
- Templeton Growth and Income Fund
36
You will generally receive your payment by the last 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 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.
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 code number for each class to use TeleFACTS. The code numbers
for Class I and Class II are 414 and 514.
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.
Templeton Growth and Income Fund -
37
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 at P.O. Box 33030, St. Petersburg, FL 33733-8030. The Fund and
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.
11:30 a.m. to 8:00 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.
- Templeton Growth and Income Fund
38
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 - The Fund offers two classes of shares, designated "Class
I" and "Class II." The two classes have proportionate interests in the Fund's
portfolio. They differ, however, primarily in their sales charge structures and
12b-1 plans.
Code - Internal Revenue Code of 1986, as amended
Contingency Period - For Class I shares, the 12 month period during which a
Contingent Deferred Sales Charge may apply. For Class II shares, the
contingency period is 18 months. 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 the Contingency Period.
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
Investment Manager - Templeton Global Advisors Limited, P.O. Box N-7759, Lyford
Cay, Nassau, Bahamas.
Templeton Growth and Income Fund -
39
Investor Services - Franklin/Templeton Investor Services, Inc., the Fund's
transfer agent and shareholder servicing 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 of the class and includes the front-end sales charge. The maximum front-
end sales charge is 5.75% for Class I and 1% for Class II.
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 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
- Templeton Growth and Income Fund
40
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.
Templeton Growth and Income Fund -
41
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-named other organization other organization
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)
- Templeton Growth and Income Fund
42
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.
Templeton Growth and Income Fund -
43
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.
- Templeton Growth and Income Fund
44
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 following is a true and correct copy
State
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 Growth and Income Fund -
45
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 Growth and Income Fund
46
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 Growth and Income Fund -
47
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 Growth and Income Fund
48
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Templeton Growth and Income Fund -
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- Templeton Growth and Income Fund
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Templeton Growth and Income Fund -
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52
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Templeton Growth and Income Fund -
53
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.
TL414 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 [_] [_] ______ GREATER EUROPEAN 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>
[_]$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
PROSPECTUS
& APPLICATION
[GLOBE LOGO]
TEMPLETON
GLOBAL
INFRASTRUCTURE FUND
-----------------------------------------------
AUGUST 1, 1996
INVESTMENT STRATEGY
GLOBAL GROWTH
[FRANKLIN TEMPLETON LOGO]
- --------------------------------------------------------------------------------
This prospectus describes the Templeton Global Infrastructure Fund (the
"Fund"). It contains information you should know before investing in the
Fund. Please keep it for future reference.
THE FUND MAY BORROW MONEY FOR INVESTMENT PURPOSES, WHICH MAY INVOLVE
GREATER RISK AND ADDITIONAL COSTS TO THE FUND. IN ADDITION, THE FUND MAY
INVEST UP TO 15% OF ITS ASSETS IN ILLIQUID SECURITIES, INCLUDING UP TO 10%
OF ITS ASSETS IN RESTRICTED SECURITIES, WHICH MAY INVOLVE GREATER RISK AND
INCREASED FUND EXPENSES. SEE "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.
TEMPLETON
GLOBAL INFRASTRUCTURE FUND
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.
----------------------------------------------------------
The Fund is a diversified series of the Templeton
Global Investment Trust (the "Trust"),
an open-end management investment company.
----------------------------------------------------------
When reading this prospectus, you will see
certain terms in capital letters.
This means the term is explained
in our glossary section.
<TABLE>
<S> <C>
TEMPLETON GLOBAL TABLE OF CONTENTS
INFRASTRUCTURE FUND ABOUT THE FUND
- --------------------------- Expense Summary ........................................ 2
August 1, 1996 Financial Highlights ................................... 3
How Does the Fund Invest Its Assets? ................... 4
What are the Fund's Potential Risks? ...................12
Who Manages the Fund? ..................................15
How Does the Fund Measure Performance? .................18
How Is the Trust Organized? ............................18
How Taxation Affects You and the Fund ..................19
ABOUT YOUR ACCOUNT
How Do I Buy Shares? ...................................20
May I Exchange Shares for Shares of Another Fund? ......26
How Do I Sell Shares? ..................................29
What Distributions Might I Receive From the Fund? ......31
Transaction Procedures and Special Requirements ........32
700 Central Avenue Services to Help You Manage Your Account ...............37
St. Petersburg, Florida 33701 GLOSSARY
1-800/DIAL BEN Useful Terms and Definitions ...........................40
</TABLE>
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 historical expenses of each class for the fiscal year
ended March 31, 1996. The Class II expenses are annualized. Your actual expenses
may vary.
A. SHAREHOLDER TRANSACTION EXPENSES(+)
<TABLE>
<CAPTION>
Class I Class II
--------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% 1.00% (++)
Deferred Sales Charge(+++) NONE 1.00%
Exchange Fee (per transaction) $5.00* $5.00*
</TABLE>
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C>
Management Fees 0.75% 0.75%
Rule 12b-1 Fees 0.35%** 1.00%**
Other Expenses (audit, legal, business
management, transfer agent and custodian) 1.22% 1.22%
-----------------------
Total Fund Operating Expenses 2.32% 2.97%
=======================
</TABLE>
C. EXAMPLE
Assume the annual return for each class is 5% and 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> <C>
----------------------------------------------------------------------------
Class I.... $80*** $126 $174 $308
Class II... $50 $101 $165 $336
</TABLE>
For the same Class II investment, you would pay projected expenses of $40
if you did not sell your shares at the end of the first year. Your projected
expenses for the remaining periods would be the same.
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 the Net Asset Value or dividends of each class 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.
(++)Although Class II has a lower front-end sales charge than Class I, its Rule
12b-1 fees are higher. Over time you may pay more for Class II shares. Please
see "How Do I Buy Shares? - Deciding Which Class to Buy."
(+++)A Contingent Deferred Sales Charge of 1% may apply to Class I purchases of
$1 million or more if you sell the shares within one year and any Class II
purchase if you sell the shares within 18 months. There is no front-end sales
charge if you invest $1 million or more in Class I shares. See "How Do I Sell
Shares? - Contingent Deferred Sales Charge" for details.
- Templeton Global Infrastructure Fund
2
*$5.00 fee is only for Market Timers. We process all other exchanges without a
fee.
**The Class II fees are annualized. The actual 12b-1 fees for the eleven month
period ended March 31, 1996 were 0.97%. 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.
FINANCIAL HIGHLIGHTS
These tables summarize 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 March 14, 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>
CLASS I SHARES
YEAR ENDED MARCH 31 1996 1995 1994(1)
<S> <C> <C> <C>
- ------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period $ 9.43 $ 10.01 $10.00
------ ------ ------
Income from investment operations:
Net investment income .04 .07 .009
Net realized and unrealized gain
(loss) 1.03 (.61) .001
------ ------ ------
Total from investment operations 1.07 (.54) .01
------ ------ ------
Distributions:
Dividends from net investment income (.05) (.04) --
Distributions from net realized gains (.41) -- --
------ ------ ------
Total distributions (.46) (.04) --
------ ------ ------
Change in net asset value .61 (.58) .01
------ ------ ------
Net asset value, end of period $ 10.04 $ 9.43 $10.01
====== ====== ======
TOTAL RETURN* 11.79% (5.41)% 0.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $21,590 $18,717 $ 101
Ratio of expenses to average net assets 2.37% 3.25% 32.02%**
Ratio of expenses, net of
reimbursement, to average net assets 2.32% 1.25% 1.25%**
Ratio of net investment income to
average net assets .40% 1.38% 1.89%**
Portfolio turnover rate 38.22% 3.21% --
Average commission rate paid (per share) $ .0083
</TABLE>
(1)For the period March 14, 1994 (commencement of operations) to March 31, 1994.
*Total Return does not reflect sales commissions. Not annualized for periods of
less than one year.
**Annualized.
Templeton Global Infrastructure Fund -
3
<TABLE>
<CAPTION>
CLASS II SHARES
YEAR ENDED MARCH 31 1996(1)
<S> <C>
- -------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period $ 9.73
------
Income from investment operations:
Net investment loss (.02)
Net realized and unrealized gain .73
------
Total from investment operations .71
------
Distributions:
Dividends from net investment income (.04)
Distributions from net realized gains (.41)
------
Total distributions (.45)
------
Change in net asset value .26
------
Net asset value, end of period $ 9.99
------
TOTAL RETURN* 7.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $1,379
Ratio of expenses to average net assets 2.97%**
Ratio of net investment loss to average net assets (.88)%**
Portfolio turnover rate 38.22%
Average commission rate paid (per share) $.0083
</TABLE>
(1)For the period May 1, 1995 (commencement of sales) to March 31, 1996.
*Total Return does not reflect sales commissions or the contingent deferred
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 Fund's investment objective of the Fund is long-term capital growth, which
it seeks to achieve through investing at least 65% of its total assets in
securities of domestic and foreign companies that are principally engaged in or
related to the development, operation or rehabilitation of the physical and
social infrastructures of various nations throughout the world. The Fund's
investment objective is a fundamental policy of the Fund and may not be changed
without shareholder approval. Of course, there is no assurance that the Fund's
objective will be achieved. All other investment policies and practices
described in this Prospectus are not fundamental and may be changed by the Board
without shareholder approval.
The Fund's investment objective is based on the belief that the development of
the physical and social infrastructures of world economies is essential for
- Templeton Global Infrastructure Fund
4
economic growth and must be undertaken by all countries to achieve and maintain
competitive industrial bases. A company is "principally engaged in or related
to the development, operation or rehabilitation of physical and social
infrastructures of various nations throughout the world" if at least 50% of its
assets (marked-to-market), gross income or net profits are attributable to
activities related to the following industries, among others: communications;
production of building materials; power generation; public utilities;
distribution of goods and services; toll road operation and development;
manufacturing of steel and other metals; air, sea, land and rail
transportation; rail, aircraft and seacraft manufacturing and rehabilitation;
port ownership and operation; operation of water utilities and waste water
treatment facilities; industrial fabrication; bridge erection; heating,
ventilation and air conditioning (HVAC) manufacturing and installation;
manufacturing and operation of pollution control equipment; operation of
medical facilities; development and construction of housing; operation of
broadcast media; and manufacturing, operation, installation and maintenance of
technology-related infrastructure such as local and wide-area network software
and other essential components in the movement of information. Companies
providing construction materials or equipment, or engineering, construction and
contracting services, would also be included, as would companies providing
funding or expertise necessary for the completion of infrastructure projects.
The evolving long-term international trend favoring more market-oriented
economies challenges countries with developing markets to upgrade their
national economies in order to compete in the international marketplace. This
trend may be facilitated by local or international political, economic or
financial developments that could benefit companies engaged in the development
of these countries' national economies. Certain of these countries,
particularly countries such as Mexico and the countries of the Pacific Basin,
have experienced relatively high rates of economic growth in recent years. The
development of the local infrastructures in these countries is a crucial
element in their continued growth. For example, Japan, Hong Kong, Singapore,
Taiwan, South Korea, Thailand, Malaysia, Indonesia and the Philippines have all
recently made substantial, long-term commitments to the development of their
infrastructures.
Many investors, particularly individuals, lack the information, capability or
inclination to invest in foreign capital markets. It also may not be permissible
for such investors to invest directly in certain markets. Unlike many
intermediary investment vehicles, such as closed-end investment companies that
invest in a single country, the Fund will seek to allocate investment risk
among the capital markets of a number of countries. Under normal circumstances,
the Fund will invest at least 65% of its total assets in issuers domiciled in
at least three
Templeton Global Infrastructure Fund -
5
different nations (one of which may be the U.S.). The Fund will not necessarily
seek to diversify investments on a geographical basis or on the basis of the
level of economic development of any particular country. While there exists much
information indicating that foreign capital markets may experience growth as a
result of a renewed international commitment to the development of economic
infrastructures, there can be no assurance, of course, that such growth will
occur or that the securities purchased by the Fund will provide long-term
capital growth.
Consistent with its investment objective, the Fund expects to invest at least
65% of its total assets in securities of issuers listed on U.S. or foreign
securities exchanges or the NASDAQ system, that are principally engaged in or
related to infrastructure industries. The Fund will generally invest in equity
securities of such issuers, defined as common stock, preferred stock,
securities convertible into or exchangeable for such securities, warrants or
rights to subscribe to or purchase such securities, and sponsored or
unsponsored American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and Global Depositary Receipts ("GDRs") (collectively, "depositary
receipts"). The Fund may also invest in debt securities (defined as bonds,
notes, debentures, commercial paper, time deposits and bankers' acceptances,
and which may include structured investments) of issuers involved in or related
to infrastructure industries. There is no limitation on the percentage of the
Fund's assets that may be invested in debt securities, subject to the Fund's
investment objective. Certain debt securities can provide the potential for
capital appreciation based on various factors such as changes in interest
rates, economic and market conditions, improvement in an issuer's ability to
repay principal and pay interest, and ratings upgrades. Additionally,
convertible bonds offer the potential for capital appreciation through the
conversion feature, which enables the holder of the bonds to benefit from
increases in the market price of the securities into which they are
convertible. Debt securities purchased by the Fund may be rated in any category
by Moody's or S&P, or may be unrated by any rating agency. Such securities may
include high-risk, lower quality debt securities, commonly referred to as "junk
bonds." As an operating policy, which may be changed by the Board, the Fund
will not invest more than 5% of its total assets in debt securities rated lower
than Baa by Moody's or BBB by S&P. Debt securities are subject to certain
market and credit risks. See "How Do the Funds Invest Their Assets? - Debt
Securities." in the SAI for descriptions of debt securities rated BBB by S&P
and Baa by Moody's.
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
- Templeton Global Infrastructure Fund
6
currencies, forward foreign currency contracts, and futures contracts and
related options. These are generally referred to as derivative instruments and
involve special risk factors, which are described below. When deemed
appropriate by the Investment Manager, the Fund may invest cash balances in
repurchase agreements and other money market investments to maintain liquidity
in an amount to meet expenses or for day-to-day operating purposes. These
investment techniques are described below and under the heading "How Do the
Funds Invest Their Assets?" in the SAI.
The Fund invests for long-term growth of capital and does not emphasize short-
term trading profits. Accordingly, the Fund expects to have an annual portfolio
turnover rate not exceeding 50%.
Types of Securities the Fund May Invest In
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: debt obligations issued
or guaranteed by the U.S. government or the governments of foreign countries,
their agencies or instrumentalities; short-term time deposits with banks;
repurchase agreements with banks and broker-dealers with respect to U.S.
government obligations; and finance company and corporate commercial paper, and
other short-term corporate obligations, in each case rated Prime-1 by Moody's
or A or better by S&P or, if unrated, of comparable quality as determined by
the Investment Manager.
Borrowing. The Fund may borrow up to one-third of the value of its total assets
from banks to increase its holdings of portfolio securities. Under the 1940 Act,
the Fund is required to maintain continuous asset coverage of 300% with respect
to such borrowings and to sell (within three days) sufficient portfolio holdings
to restore such coverage if it should decline to less than 300% due to market
fluctuations or otherwise, even if such liquidations of the Fund's holdings may
be disadvantageous from an investment standpoint. Leveraging by means of
borrowing may exaggerate the effect of any increase or decrease in the value of
portfolio securities on the Fund's net asset value, and money borrowed will be
Templeton Global Infrastructure Fund -
7
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.
Loans of Portfolio Securities. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of its total
assets to generate income for the purpose of offsetting operating expenses.
Such loans must be secured by collateral (consisting of any combination of
cash, U.S. government securities or irrevocable letters of credit) in an amount
at least equal (on a daily marked-to-market basis) to the current market value
of the securities loaned. The Fund may terminate the loans at any time and
obtain the return of the securities loaned within five business days. The Fund
will continue to receive any interest or dividends paid on the loaned
securities and will continue to retain any voting rights with respect to the
securities. In the event that the borrower defaults on its obligation to return
borrowed securities, because of insolvency or otherwise, the Fund could
experience delays and costs in gaining access to the collateral and could
suffer a loss to the extent that the value of the collateral falls below the
market value of the borrowed securities.
Options on Securities or Indices. To increase its return or to hedge all or a
portion of its portfolio investments, the Fund may write (i.e., sell) covered
put and call options and purchase put and call options on securities or
securities indices that are traded on 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.
- Templeton Global Infrastructure Fund
8
Forward Foreign Currency Contracts and Options on Foreign Currencies. The Fund
may enter into forward foreign currency exchange contracts ("forward
contracts") to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. dollar and foreign currencies. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and privately traded by
currency traders and their customers.
The Fund will enter into forward contracts only under two circumstances. First,
when the Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may desire to "lock in" the U.S. dollar
price of the security in relation to another currency by entering into a forward
contract to buy the amount of foreign currency needed to settle the transaction.
Second, when the Investment Manager believes that the currency of a particular
foreign country may suffer or enjoy a substantial movement against another
currency, it may enter into a forward contract to sell or buy the amount of the
former foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The second investment
practice is generally referred to as "cross-hedging." The Fund has no specific
limitation on the percentage of assets it may commit to forward contracts,
subject to its stated investment objective and policies, except that the Fund
will not enter into a forward contract if the amount of assets set aside to
cover forward contracts would impede portfolio management or the Fund's ability
to meet redemption requests. Although forward contracts will be used primarily
to protect the Fund from adverse currency movements, they also involve the risk
that anticipated currency movements will not be accurately predicted.
The Fund may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines in
the U.S. dollar value of foreign currency-denominated portfolio securities and
against increases in the U.S. dollar cost of such securities to be acquired. As
in the case of other kinds of options, however, the writing of an option on a
foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and the Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of rate movements
adverse to the Fund's position, the Fund 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.
Templeton Global Infrastructure Fund -
9
Futures Contracts. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a specified
debt security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the end of the contract
period. A futures contract on a foreign currency is an agreement to buy or sell
a specified amount of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. In addition, when the Fund enters into a futures contract, it will
segregate assets or "cover" its position in accordance with the 1940 Act. (See
"How Do the Funds Invest Their Assets? - Futures Contracts." in the SAI.) With
respect to positions in futures and related options that do not constitute "bona
fide hedging" positions, the Fund will not enter into a futures contract or
related option contract if, immediately thereafter, the aggregate initial margin
deposits relating to such positions plus premiums paid by it for open futures
option positions, less the amount by which any such options are "in-the-money,"
would exceed 5% of the Fund's total assets.
Repurchase Agreements. For temporary defensive purposes and for cash management
purposes, the Fund may, without limit, enter into repurchase agreements with
U.S. banks and broker-dealers. Under a repurchase agreement, the Fund acquires
a security from a U.S. bank or a registered broker-dealer and simultaneously
agrees to resell the security back to the bank or broker-dealer at a specified
time and price. The repurchase price is in excess of the purchase price by an
amount which reflects an agreed-upon rate of return, which is not tied to the
coupon rate on the underlying security. Under the 1940 Act, repurchase
agreements are considered to be loans collateralized by the underlying security
and therefore will be fully collateralized. However, if the seller should
default on its obligation to repurchase the underlying security, the Fund may
experience delay or difficulty in exercising its rights to realize upon the
security and might incur a loss if the value of the security declines, as well
as incur disposition costs in liquidating the security.
Depositary Receipts. ADRs are depositary receipts typically issued by a U.S.
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs and GDRs are typically issued by foreign banks or
- Templeton Global Infrastructure Fund
10
trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
foreign or a U.S. corporation. Generally, depositary receipts in registered form
are designed for use in the U.S. securities market and depositary receipts in
bearer form are designed for use in securities markets outside the U.S.
Depositary receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Depositary receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of depositary receipts. In unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the depositary receipts.
Depositary receipts also involve the risks of other investments in foreign
securities, as discussed below. For purposes of the Fund's investment policies,
the Fund's investments in depositary receipts will be deemed to be investments
in the underlying securities.
Illiquid and Restricted Securities. The Fund may invest up to 15% of its total
assets in illiquid securities, for which there is a limited trading market and
for which a low trading volume of a particular security may result in abrupt and
erratic price movements. The Fund may be unable to dispose of its holdings in
illiquid securities at then-current market prices and may have to dispose of
such securities over extended periods of time. The Fund may also invest in
securities that are sold (i) in private placement transactions between their
issuers and their purchasers and that are neither listed on an exchange nor
traded over-the-counter, or (ii) in transactions between qualified
institutional buyers pursuant to Rule 144A under the 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 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
Templeton Global Infrastructure Fund -
11
registration. The Fund will limit its investment in restricted securities to
10% of its total assets, except that Rule 144A securities determined by the
Board to be liquid are not subject to this limitation.
Other Policies and Restrictions. The Fund has a number of additional investment
restrictions that limit its activities to some extent. Some of these
restrictions may only be changed with shareholder approval. For a list of these
restrictions and more information about the Fund's investment policies, please
see "How Do the Funds Invest Their Assets?" and "Investment Restrictions" 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 objective will be attained. As with
any investment in securities, the value of, and income from, an investment in
the Fund can decrease as well as increase, depending on a variety of factors
which may affect the values and income generated by the Fund's portfolio
securities, including general economic conditions and market factors. In
addition to the factors which affect the value of individual securities, you
may anticipate that the value of the shares of the Fund will fluctuate with
movements in the broader equity and bond markets. A decline in the stock market
of any country in which the Fund is invested may also be reflected in declines
in the price of shares of the Fund. Changes in currency valuations will also
affect the price of shares of the Fund. History reflects both decreases and
increases in worldwide stock markets and currency valuations, and these may
reoccur unpredictably in the future. The value of debt securities held by the
Fund generally will vary inversely with changes in prevailing interest rates.
Additionally, investment decisions made by the Investment Manager will not
always be profitable or prove to have been correct. The Fund is not intended as
a complete investment program.
The Fund has the right to purchase securities in any foreign country, developed
or developing. 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 investments. There
is the possibility of expropriation, nationalization or confiscatory taxation,
taxation of income earned in foreign nations (including, for example,
withholding taxes on interest and dividends) or other taxes imposed with
respect to investments in foreign nations, foreign exchange controls (which may
include suspension of the ability to transfer currency from a given country),
foreign investment controls on daily stock market movements, default in foreign
government securities, political or social instability, or diplomatic
developments
- Templeton Global Infrastructure Fund
12
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. The Fund may encounter
difficulties or be unable to vote proxies, exercise shareholder rights, pursue
legal remedies, and obtain judgments in foreign courts.
Brokerage commissions, custodial services and other costs relating to investment
in foreign countries are generally more expensive than in the U.S. 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. The Fund may invest in Eastern European countries, which involves
special risks. As an open-end investment company, the Fund is limited in the
extent to which it may invest in illiquid securities. See "What Are the Funds'
Potential Risks?" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
Templeton Global Infrastructure Fund -
13
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
Further, the economies of developing countries generally are heavily dependent
upon international trade and, accordingly, have been and may continue to be
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been and may
continue to be adversely affected by economic conditions in the countries with
which they trade.
The Fund usually effects currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign exchange market. However, some
price spread on currency exchange transactions (to cover service charges) will
be incurred when the Fund converts assets from one currency to another.
As a non-fundamental policy, the Fund will limit its investment in Russian
securities to 5% of its total assets. Russian securities involve additional
significant risks, including political and social uncertainty (for example,
regional conflicts and risk of war), currency exchange rate volatility,
pervasiveness of corruption and crime in the Russian economic system, delays in
settling portfolio transactions and risk of loss arising out of Russia's system
of share registration and custody. For more information on these risks and
other risks associated with Russian securities, please see "What Are the Funds'
Potential Risks?" in the SAI.
The Fund is authorized to invest in debt securities rated in any category by S&P
or Moody's and securities which are unrated by any rating agency. See "How Do
the Funds Invest Their Assets? - Debt Securities." in the SAI. As an operating
policy, which may be changed by the Board without shareholder approval, the
Fund will not invest more than 5% of its total assets in debt securities rated
lower than BBB by S&P or Baa by Moody's. The Board may consider a change in
this operating policy if, in its judgment, economic conditions change such that
a higher level of investment in high-risk, lower quality debt securities would
be consistent with the interests of the Fund and its shareholders. High-risk,
lower quality debt securities, commonly referred to as "junk bonds," are
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligation and may be in default. Unrated debt securities are not necessarily of
lower quality than rated securities, but they may not be attractive to as many
buyers. Regardless of rating levels, all debt securities considered for purchase
(whether rated or unrated) will be carefully analyzed by the Investment Manager
to insure, to the extent possible, that the planned investment is sound. The
Fund
- Templeton Global Infrastructure Fund
14
may, from time to time, invest up to 5% of its total assets in defaulted debt
securities if, in the opinion of the Investment Manager, the issuer may resume
interest payments in the near future.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on the Fund's net asset value, and
money borrowed will be subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining minimum average balances) which
may or may not exceed the income received from the securities purchased with
borrowed funds.
Successful use of futures contracts and related options is subject to special
risk considerations. A liquid secondary market for any futures or options
contract may not be available when a futures or options position is sought to
be closed. In addition, there may be an imperfect correlation between movements
in the securities or foreign currency on which the futures or options contract
is based and movements in the securities or currency in the Fund's portfolio.
Successful use of futures or options contracts is further dependent on the
Investment Manager's ability to correctly predict movements in the securities
or foreign currency markets, and no assurance can be given that its judgment
will be correct. Successful use of options on securities or stock indices is
subject to similar risk considerations. In addition, by writing covered call
options, the Fund gives up the opportunity, while the option is in effect, to
profit from any price increase in the underlying security above the option
exercise price.
There are further risk factors, including possible losses through the holding of
securities in domestic and foreign custodian banks and depositories, described
elsewhere in this prospectus and in the SAI.
WHO MANAGES THE FUND?
The Board. The Board oversees the management of the Fund and elects the Trust's
officers. The officers are responsible for the Fund's day-to-day operations.
The Board also monitors the Fund to ensure no material conflicts exist between
the two classes of shares. While none is expected, the Board will act
appropriately to resolve any material conflict that may arise.
The 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.
Templeton Global Infrastructure Fund -
15
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.
Portfolio Management. The lead portfolio manager for the Fund, since 1995, is
Gary R. Clemons. Mr. Clemons is vice president of the Investment Manager. He
holds a BS in Geology from the University of Nevada and an MBA in Finance from
the University of Wisconsin. Prior to joining the Investment Manager in 1993,
he was a research analyst for Templeton Quantitative Advisors, Inc. in New
York, where he was also responsible for management of a small capitalization
fund. As a portfolio manager and research analyst with Templeton, Mr. Clemons
has responsibility for the telecommunications industries and country coverage
of Columbia, Peru, Sweden and Norway.
Peter Nori and Mark R. Beveridge exercise secondary portfolio management
responsibilities for the Fund. Mr. Nori is vice president of the Investment
Manager. He holds a BS in finance and an MBA with an emphasis in finance from
the University of San Francisco. He is a Chartered Financial Analyst and a
member of the Association for Investment Management and Research. Mr. Nori
completed Franklin's management training program before moving into portfolio
research in 1990 as an equity analyst and co-portfolio manager of the Franklin
Convertible Securities Fund. His current research responsibilities include
covering data processing/software, textile and apparel stocks and country
coverage of Austria. Mr. Beveridge is vice president of the Investment Manager.
He holds a BBA in Finance from the University of Miami. He is a Chartered
Financial Analyst and a Chartered Investment Counselor, and a member of the
South Florida Society of Financial Analysts and the International Society of
Financial Analysts. Before joining the Templeton organization in 1985 as a
security analyst, Mr. Beveridge was a principal with a financial accounting
software firm based in Miami, Florida. He is currently a portfolio manager and
research analyst with responsibility for the industrial component and
appliances/household durables industries. He also has market coverage of
Argentina, Thailand and Denmark.
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 0.70% of its average daily net assets in
investment management fees. On April 15, 1995, the Investment Manager's
- Templeton Global Infrastructure Fund
16
voluntary agreement to reduce its fee in order to limit total expenses of the
Fund expired. Without this voluntary agreement, investment management fees are
0.75% of the Fund's average daily net assets. For the fiscal year ended March
31, 1996, the Fund paid 0.15% of its average daily net assets in business
management fees.
Expenses. For the fiscal year ended March 31, 1996, the "Total Fund Operating
Expenses" were 2.32% and 2.97% of average daily net assets of Class I and Class
II shares, respectively. Without the Investment Manager's voluntary agreement
to limit total expenses, "Total Fund Operating Expenses" would be 2.37% for
Class I shares.
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 Does the Fund Buy Securities For Its Portfolio?" in the SAI for
more information.
The Fund's Rule 12b-1 Plans
Each class has a distribution plan or "Rule 12b-1 Plan" under which it may pay
or reimburse Distributors or others for activities primarily intended to sell
shares of the class. 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 Class I plan may not exceed 0.35% per year of
Class I'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 costs and expenses of
Class I shares that may be reimbursable in future quarters or years were
$1,254,545 (5.5% of net assets) at March 31, 1996.
Under the Class II plan, the Fund may pay Distributors up to 0.75% per year of
Class II's average daily net assets to pay Distributors or others for providing
distribution and related services and bearing certain Class II expenses. All
distribution expenses over this amount will be borne by those who have incurred
them. During the first year after a purchase of Class II shares,
Templeton Global Infrastructure Fund -
17
Distributors may keep this portion of the Rule 12b-1 fees associated with the
Class II purchase.
The Fund may also pay a servicing fee of up to 0.25% per year of Class II's
average daily net assets under the Class II plan. This fee may be used to pay
Securities Dealers or others for, among other things, helping to establish and
maintain customer accounts and records, helping with requests to buy and sell
shares, receiving and answering correspondence, monitoring dividend payments
from the Fund on behalf of customers, and similar servicing and account
maintenance activities.
The Rule 12b-1 fees charged to each class are based only on the fees
attributable to that particular class. For more information, please see "The
Funds' Underwriter" in the SAI.
HOW DOES THE FUND MEASURE PERFORMANCE?
From time to time, each class of the Fund advertises its performance. The more
commonly used measure of performance is total return. 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.
The investment results of each class 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. The Fund
began offering two classes of shares on May 1, 1995: Templeton Global
Infrastructure Fund - Class I and Templeton Global Infrastructure Fund - Class
II. All shares purchased before that time are considered Class I shares.
Additional classes of shares may be offered in the future.
Shares of each class represent proportionate interests in the assets of the Fund
and have the same voting and other rights and preferences as the other class of
the Fund for matters that affect the Fund as a whole. For matters that only
affect one class, however, only shareholders of that class may vote. Each class
will vote separately on matters (1) affecting only that class, (2) expressly
required to be voted on separately by state business trust law, or (3) required
to be voted on
- Templeton Global Infrastructure Fund
18
separately by the 1940 Act. Shares of each class of a series have the same
voting and other rights and preferences as the other classes and series of the
Trust for matters that affect the Trust as a whole. In the future, additional
series may be offered.
The Trust 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 Board member if requested in writing
to do so by shareholders holding at least 10% of the 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
net 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 you 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 Global Infrastructure Fund -
19
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. PLEASE INDICATE WHICH CLASS OF SHARES YOU WANT TO BUY. IF YOU DO NOT
SPECIFY A CLASS, YOUR PURCHASE WILL BE AUTOMATICALLY INVESTED IN CLASS I SHARES.
<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.
Deciding Which Class to Buy
You should consider a number of factors when deciding which class of shares to
buy. IF YOU PLAN TO BUY $1 MILLION OR MORE IN A SINGLE PAYMENT OR YOU QUALIFY
TO BUY CLASS I SHARES WITHOUT A SALES CHARGE, YOU MAY NOT BUY CLASS II SHARES.
Generally, you should consider buying Class I shares if:
- - you expect to invest in the Fund over the long term;
- - you qualify to buy Class I shares at a reduced sales charge; or
- - you plan to buy $1 million or more over time.
You should consider Class II shares if:
- - you expect to invest less than $50,000 in the Franklin Templeton Funds; and
- - you plan to sell a substantial number of your shares within approximately six
years or less of your investment.
Class I shares are generally more attractive for long-term investors because of
Class II's higher Rule 12b-1 fees. These may accumulate over time to outweigh
the lower Class II front-end sales charge and result in lower income dividends
for Class II shareholders. If you qualify to buy Class I shares at a reduced
sales charge based upon the size of your purchase or through our Letter of
Intent or cumulative quantity discount programs, but plan to hold your shares
less than approximately six years, you should evaluate whether it is more
economical for you to buy Class I or Class II shares.
- Templeton Global Infrastructure Fund
20
For purchases of $1 million or more, it is considered more beneficial for you to
buy Class I shares since there is no front-end sales charge, even though these
purchases may be subject to a Contingent Deferred Sales Charge. Any purchase of
$1 million or more is therefore automatically invested in Class I shares. You
may accumulate more than $1 million in Class II shares through purchases over
time, but if you plan to do this you should determine whether it would be more
beneficial for you to buy Class I shares through a Letter of Intent.
Please consider all of these factors before deciding which class of shares to
buy. There are no conversion features attached to either class of shares.
Purchase Price of Fund Shares
For Class I shares, the sales charge you pay depends on the dollar amount you
invest, as shown in the table below. The sales charge for Class II shares is 1%
and, unlike Class I, does not vary based on the size of your purchase.
<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>
- ------------------------------------------------------------------------------
CLASS I
Less than $50,000.................. 5.75% 6.10% 5.00%
$50,000 but less than $100,000..... 4.50% 4.71% 3.75%
$100,000 but less than $250,000.... 3.50% 3.63% 2.80%
$250,000 but less than $500,000.... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000....................... 2.00% 2.04% 1.60%
$1,000,000 or more*................ None None None
CLASS II
Under $1,000,000*.................. 1.00% 1.01% 1.00%
</TABLE>
*A Contingent Deferred Sales Charge of 1% may apply to Class I purchases of $1
million or more and any Class II purchase. 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. Purchases
of Class II shares are limited to purchases below $1 million. Please see
"Deciding Which Class to Buy."
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.
Cumulative Quantity Discounts - Class I Only. To determine if you may pay a
reduced sales charge, the amount of your current Class I purchase is added to
Templeton Global Infrastructure Fund -
21
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, 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 - Class I Only. You may buy Class I 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 on Class I shares.
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
Class I 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 - Class I Only. If you are a member of a qualified group, you
may buy Class I 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,
- Templeton Global Infrastructure Fund
22
- - Has more than 10 members,
- - Can arrange for meetings between our representatives and group members,
- - 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 Class I shares with
money from the following sources or Class II shares with money from the sources
in waiver categories 1 or 4:
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
Templeton Global Infrastructure Fund -
23
Contingent Deferred Sales Charge paid in connection with the earlier
redemption, but a new Contingency Period will begin.
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 Class I 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 - Class I Only" 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
- Templeton Global Infrastructure Fund
24
sponsored by the broker-dealer and either advised by the broker-dealer or
by another registered investment advisor affiliated with that broker.
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 Class II purchases and certain Class I 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 may receive up to 1% of the purchase price for Class II
purchases. During the first year after the purchase, Distributors may keep a
part of the Rule 12b-1 fees associated with that purchase.
2. Securities Dealers will receive up to 1% of the purchase price for Class I
purchases of $1 million or more.
3. Securities Dealers may, in the sole discretion of Distributors, receive up
to 1% of the purchase price for Class I purchases made under waiver category
8 above.
4. Securities Dealers may receive up to 0.25% of the purchase price for Class I
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.
Templeton Global Infrastructure Fund -
25
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.
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.
If you own Class I shares, you may exchange into any of our money funds except
Franklin Templeton Money Fund II ("Money Fund II"). Money Fund II is the only
money fund exchange option available to Class II shareholders. Unlike our other
money funds, shares of Money Fund II may not be purchased directly and no
drafts (checks) may be written on Money Fund II accounts.
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. Some
Franklin Templeton Funds do not offer Class II shares.
<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 Sharehold 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
- Templeton Global Infrastructure Fund
26
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.
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 new fund. See the discussion on
Contingent Deferred Sales Charges below and under "How Do I Sell Shares?"
Contingent Deferred Sales Charge - Class I. For accounts with Class I shares
subject to a Contingent Deferred Sales Charge, shares are exchanged into the
new fund in the order they were purchased. If you exchange Class I 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.
Contingent Deferred Sales Charge - Class II. For accounts with Class II shares
subject to a Contingent Deferred Sales Charge, shares are exchanged into the
new fund proportionately based on the amount of shares subject to a Contingent
Deferred Sales Charge and the length of time the shares have been held. For
example, suppose you own $1,000 in shares that have never been subject to a
CDSC, such as shares from the reinvestment of dividends and capital gains
("free shares"), $2,000 in shares that are no longer subject to a CDSC because
you have held them for longer than 18 months ("matured shares"), and $3,000 in
shares that are still subject to a CDSC ("CDSC liable shares"). If you exchange
$3,000 into a new fund, $500 will be exchanged from free shares, $1,000 from
matured shares, and $1,500 from CDSC liable shares.
Likewise, CDSC liable shares purchased at different times will be exchanged into
a new fund proportionately. For example, assume you purchased $1,000 in shares
3 months ago, 6 months ago, and 9 months ago. If you exchange $1,500 into a new
fund, $500 will be exchanged from shares purchased at each of these three
different times.
While Class II shares are exchanged proportionately, they are redeemed in the
order purchased. In some cases, this means exchanged shares may be CDSC liable
even though they would not be subject to a Contingent Deferred Sales Charge if
they were sold. We believe the proportional method of exchanging Class II
shares more closely reflects the expectations of Class II shareholders if
shares are sold during the Contingency Period. The tax consequences of a sale or
exchange are determined by the Code and not by the method used by the Fund to
transfer shares.
Templeton Global Infrastructure Fund -
27
If you exchange your Class II shares for shares of Money Fund II, the time your
shares are held in that fund will count towards the completion of any
Contingency Period.
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
unable to invest effectively, or (ii) the Fund receives or anticipates
simultaneous orders that may significantly affect the Fund.
- Templeton Global Infrastructure Fund
28
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
(Only available if you have completed and sent to us the telephone
redemption agreement included with this prospectus)
Call Shareholder Services
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.
Under unusual circumstances, we may suspend redemptions or postpone payment for
more than seven days as permitted by federal securities law.
Templeton Global Infrastructure Fund -
29
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
A Contingent Deferred Sales Charge may apply to Class I purchases of $1 million
or more if you sell all or a portion of the shares within one year and any Class
II purchase if you sell the shares within 18 months. 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
- - Redemptions following the death of the shareholder or beneficial owner
- - Redemptions through a systematic withdrawal plan set up before February 1,
1995
- Templeton Global Infrastructure Fund
30
- - 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 in Class I shares, you can withdraw up to $120,000 annually
through a systematic withdrawal plan free of charge. Likewise, if you
maintain an annual balance of $10,000 in Class II shares, $1,200 may be
withdrawn annually 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 to pay a dividend at least annually representing substantially
all of its net investment income and 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.
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.
Templeton Global Infrastructure Fund -
31
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 of each class 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 for each class in many newspapers.
The Net Asset Value of all outstanding shares of each class is calculated on a
pro rata basis. It is based on each class' proportionate participation in the
Fund, determined by the value of the shares of each class. Each class, however,
bears the Rule 12b-1 fees payable under its Rule 12b-1 plan. To calculate Net
Asset Value per share of each class, the assets of each class are valued and
totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares of the class 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 of the class you wish to purchase, unless
you qualify to buy shares at a reduced sales charge or with no sales charge. The
Offering Price of each class is based on the Net Asset Value per share of the
class 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.
- Templeton Global Infrastructure Fund
32
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,
- - The class of shares,
- - 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
Templeton Global Infrastructure Fund -
33
VERIFY THAT THE INSTITUTION IS AN ELIGIBLE GUARANTOR PRIOR TO SIGNING. A
NOTARIZED SIGNATURE IS NOT SUFFICIENT.
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.
- Templeton Global Infrastructure Fund
34
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
Templeton Global Infrastructure Fund -
35
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.
- Templeton Global Infrastructure Fund
36
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 account 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 last 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 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.
Templeton Global Infrastructure Fund -
37
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 code number for each class to use TeleFACTS. The code numbers
for Class I and Class II are 413 and 513.
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
- Templeton Global Infrastructure Fund
38
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.
(1-800/342-5236) 9:30 a.m. to 5:30 p.m.
(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.
Templeton Global Infrastructure Fund -
39
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 - The Fund offers two classes of shares, designated "Class
I" and "Class II." The two classes have proportionate interests in the Fund's
portfolio. They differ, however, primarily in their sales charge structures and
Rule 12b-1 plans.
Code - Internal Revenue Code of 1986, as amended.
Contingency Period - For Class I shares, the 12 month period during which a
Contingent Deferred Sales Charge may apply. For Class II shares, the
contingency period is 18 months. 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 the Contingency Period.
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.
Investment Manager - Templeton Investment Counsel, Inc., Broward Financial
Centre, Fort Lauderdale, FL 33394-3091.
Investor Services - Franklin/Templeton Investor Services, Inc., the Fund's
transfer agent and shareholder servicing agent.
IRS - Internal Revenue Service.
Letter - Letter of Intent.
- Templeton Global Infrastructure Fund
40
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 of the class and includes the front-end sales charge. The maximum front-
end sales charge is 5.75% for Class I and 1% for Class II.
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.
SEC - U.S. Securities and Exchange Commission.
S&P - Standard & Poor's Corporation.
Securities Dealer - a financial institution that, either directly or through
affiliates, has an agreement with Distributors to handle customer orders and
accounts with 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.
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.
Templeton Global Infrastructure Fund -
41
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-named other organization other organization
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)
- Templeton Global Infrastructure Fund
42
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.
Templeton Global Infrastructure Fund -
43
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.
- Templeton Global Infrastructure Fund
44
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of a
resolution or other certificate of authority to authorize the purchase as well
as sale (redemption) of shares and withdrawals by checks or drafts. You may use
the following form of resolution or you may prefer to use your own. It is
understood that the Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly elected
_________________________________ of ___________________________________________
Title Corporate Name
a _______________________________ organized under the laws of the State of
Type of Organization
___________________ and that the following is a true and correct copy
State
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 Global Infrastructure Fund -
45
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 Global Infrastructure Fund
46
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 Global Infrastructure Fund -
47
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
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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.
TL413 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 [_] [_] ______ GREATER EUROPEAN 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>
[_]$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
PROSPECTUS
& APPLICATION
LOGO
TEMPLETON
AMERICAS GOVERNMENT
SECURITIES FUND
-----------------------------------------------
AUGUST 1, 1996
INVESTMENT STRATEGY
GLOBAL INCOME
LOGO
- --------------------------------------------------------------------------------
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.
TEMPLETON
AMERICAS GOVERNMENT
SECURITIES FUND
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.
----------------------------------------------------------
The Fund is a non-diversified series of the
Templeton Global Investment Trust (the "Trust"),
an open-end management investment company.
----------------------------------------------------------
When reading this prospectus, you will see
certain terms in capital letters.
This means the term is explained
in our glossary section.
<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>
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%
----
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>
------------------------------------------------------
$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.
- Templeton Americas Government Securities Fund
2
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>
- ---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
Net asset value, beginning of period $ 9.59 $10.00
------ ------
Income from investment operations:
Net investment income .75 .30
Net realized and unrealized gain (loss) .71 (.43)
------ ------
Total from investment operations 1.46 (.13)
------ ------
DISTRIBUTIONS:
Dividends from net investment income (.69) (.28)
Distributions from net realized gains (.16) --
------ ------
Total distributions (.85) (.28)
------ ------
Change in net asset value .61 (.41)
------ ------
Net asset value, end of period $10.20 $ 9.59
====== ======
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 -
3
(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
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 -
5
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
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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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
8
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 -
9
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
10
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
Templeton Americas Government Securities Fund -
11
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
- Templeton Americas Government Securities Fund
12
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
Templeton Americas Government Securities Fund -
13
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
- Templeton Americas Government Securities Fund
14
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
Templeton Americas Government Securities Fund -
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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
- Templeton Americas Government Securities Fund
16
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.
Templeton Americas Government Securities Fund -
17
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
- Templeton Americas Government Securities Fund
18
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
Templeton Americas Government Securities Fund -
19
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
- Templeton Americas Government Securities Fund
20
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
Templeton Americas Government Securities Fund -
21
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
- Templeton Americas Government Securities Fund
22
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
Templeton Americas Government Securities Fund -
23
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
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 -
25
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
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 -
27
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
28
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 -
29
- - 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
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
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
32
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 -
33
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
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 -
35
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
36
- - 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 -
37
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.
- Templeton Americas Government Securities Fund
38
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.
Templeton Americas Government Securities Fund -
39
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.
- Templeton Americas Government Securities Fund
40
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
Templeton Americas Government Securities Fund -
41
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.
- Templeton Americas Government Securities Fund
42
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.
Templeton Americas Government Securities Fund -
43
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
- Templeton Americas Government Securities Fund
44
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.
Templeton Americas Government Securities Fund -
45
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
- Templeton Americas Government Securities Fund
46
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 -
47
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.
- Templeton Americas Government Securities Fund
48
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.
Templeton Americas Government Securities Fund -
49
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.
- Templeton Americas Government Securities Fund
50
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)
Templeton Americas Government Securities Fund -
51
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.
- Templeton Americas Government Securities Fund
52
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.
Templeton Americas Government Securities Fund -
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- Templeton Americas Government Securities Fund
54
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
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
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
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
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Templeton Americas Government Securities Fund -
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- Templeton Americas Government Securities Fund
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Templeton Americas Government Securities Fund -
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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 [_] [_] ______ GREATER EUROPEAN 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>
[_]$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
PROSPECTUS
& APPLICATION
[LOGO]
- --------------------------------------------------------------------------------
TEMPLETON REGION FUNDS
TEMPLETON GREATER
EUROPEAN FUND
TEMPLETON LATIN
AMERICA FUND
-----------------------------------------------
AUGUST 1, 1996
INVESTMENT STRATEGY
GLOBAL GROWTH
[FRANKLIN TEMPLETON
LOGO]
- --------------------------------------------------------------------------------
This prospectus contains information you should know before investing in the
Funds. Please keep it for future reference.
INVESTMENTS IN FOREIGN SECURITIES INVOLVE CERTAIN CONSIDERATIONS WHICH ARE
NOT NORMALLY INVOLVED IN INVESTMENT IN SECURITIES OF U.S. COMPANIES, AND AN
INVESTMENT IN THE FUNDS MAY BE CONSIDERED SPECULATIVE. EACH FUND MAY INVEST
WITHOUT LIMIT IN EMERGING MARKET COUNTRIES, BORROW MONEY FOR INVESTMENT
PURPOSES, AND MAY INVEST UP TO 15% OF ITS ASSETS IN ILLIQUID SECURITIES,
INCLUDING UP TO 10% OF ITS ASSETS IN RESTRICTED SECURITIES, WHICH MAY
INVOLVE GREATER RISK AND INCREASED FUND EXPENSES. SEE "WHAT ARE THE FUNDS'
POTENTIAL RISKS?"
The Trust's SAI, dated August 1, 1996, as may be amended from time to time,
includes more information about the Funds' 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 Funds at the address shown.
SHARES OF THE FUNDS 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 FUNDS 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.
TEMPLETON
REGION FUNDS
- --------------------------------------------------------------------------------
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.
----------------------------------------------------------
This prospectus describes the Templeton Region Funds, which are
the Templeton Greater European Fund ("Greater European Fund")
and the Templeton Latin America Fund ("Latin America Fund")
(each a "Fund" and collectively the "Funds").
The Funds are separate series of Templeton Global Investment Trust
(the "Trust"), an open-end management investment company.
----------------------------------------------------------
When reading this prospectus, you will see
certain terms in capital letters.
This means the term is explained
in our glossary section.
<TABLE>
<S> <C>
TEMPLETON TABLE OF CONTENTS
REGION FUNDS
- ----------------------- ABOUT THE FUND
August 1, 1996 Expense Summary Financial .............................. 2
Highlights ............................................. 4
How Do the Funds Invest Their Assets? .................. 5
What are the Funds' Potential Risks? ................... 15
Who Manages the Funds? ................................. 19
How Do the Funds Measure Performance? .................. 23
How Is the Trust Organized? ............................ 23
How Taxation Affects You and the Funds ................. 24
ABOUT YOUR ACCOUNT
How Do I Buy Shares? ................................... 25
May I Exchange Shares for Shares of Another Fund? ...... 31
How Do I Sell Shares? .................................. 34
What Distributions Might I Receive From the Funds? ..... 36
Transaction Procedures and Special Requirements ........ 37
700 Central Avenue Services to Help You Manage Your Account ............... 42
St. Petersburg, Florida
33701 GLOSSARY
1-800/DIAL BEN Useful Terms and Definitions ........................... 45
</TABLE>
ABOUT THE FUND
EXPENSE SUMMARY
This table is designed to help you understand the costs of investing in the
Funds. It is based on the historical expenses of each class, after fee
reductions and expense limitations, for the fiscal year ended March 31, 1996.
The Class I and Class II expenses are annualized. Your actual expenses may vary.
A. SHAREHOLDER TRANSACTION EXPENSES(+)
<TABLE>
<CAPTION>
GREATER EUROPEAN FUND LATIN AMERICA FUND
CLASS I CLASS II CLASS I CLASS II
--------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on
Purchase (as a percentage of
offering price) 5.75% 1.00%(++) 5.75% 1.00%(++)
Deferred Sales Charge(+++) NONE 1.00% NONE 1.00%
Exchange Fee (per transaction) $5.00* $5.00* $5.00* $5.00*
</TABLE>
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C> <C> <C>
Management Fees (after fee
reduction) 0.00%** 0.00%** 0.00%** 0.00%**
Rule 12b-1 Fees 0.35%*** 1.00%*** 0.35%*** 1.00%***
Other Expenses (audit, legal,
business management, transfer
agent and custodian) (after
expense reimbursement) 1.50% 1.50% 2.00% 2.00%
-------------------------------------------
Total Fund Operating Expenses
(after expense reimbursement) 1.85%** 2.50%** 2.35%** 3.00%**
-------------------------------------------
</TABLE>
C. EXAMPLE
Assume the annual return for each class is 5% and 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> <C>
Greater European Fund
Class I $75**** $112 $152 $262
Class II $45 $ 87 $142 $291
Latin America Fund
Class I $80**** $127 $176 $311
Class II $50 $102 $166 $338
</TABLE>
For the same Class II investment, you would pay projected expenses of $35
for Greater European Fund and $40 for Latin America Fund if you did not
sell your shares at the end of the first year. Your projected expenses for
the remaining periods would be the same.
- Templeton Region Funds
2
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 Funds pay their operating expenses. The effects of these expenses are
reflected in the Net Asset Value or dividends of each class 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.
(++)Although Class II has a lower front-end sales charge than Class I, its Rule
12b-1 fees are higher. Over time you may pay more for Class II shares. Please
see "How Do I Buy Shares? - Deciding Which Class to Buy."
(+++)A Contingent Deferred Sales Charge of 1% may apply to Class I purchases of
$1 million or more if you sell the shares within one year and any Class II
purchase if you sell the shares within 18 months. There is no front-end sales
charge if you invest $1 million or more in Class I shares. 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 Greater European Fund's total expenses
to an annual rate of 1.85% and 2.50% of average daily net assets of Class I and
Class II shares, respectively, through December 31, 1996; and to limit Latin
America Fund's total expenses to an annual rate of 2.35% and 3.00% of average
daily net assets of Class I and Class II shares, respectively, through December
31, 1996. If these fee reductions are insufficient to so limit the Funds'
expenses, the Business Manager has agreed to make certain payments to reduce
the Funds' expenses. Without these reductions, Greater European Fund's "Other
Expenses" would be 2.46% for both classes and the "Total Fund Operating
Expenses" would be 3.56% for Class I and 4.21% for Class II; Latin America
Fund's "Other Expenses" would be 2.42% for both classes and the "Total Fund
Operating Expenses" would be 4.02% for Class I and 4.67% for Class II. After
December 31, 1996, these agreements may end at any time upon notice to the
Board.
***The Class I and Class II fees are annualized. The actual Rule 12b-1 fees for
the eleven month period ended March 31, 1996 for Greater European Fund were
0.35% and 0.94% for Class I and Class II shares, and for Latin America Fund were
0.35% and 0.88% for Class I and Class II shares, respectively. 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.
Templeton Region Funds -
3
FINANCIAL HIGHLIGHTS
These tables summarize the financial history for each Fund. The information has
been audited by McGladrey & Pullen, LLP, the Funds' independent auditors. Their
audit reports covering the most recent year appear in the Funds' Annual Reports
to Shareholders for the fiscal year ended March 31, 1996. The Annual Reports to
Shareholders also include more information about the Funds' performance. For a
free copy, please call Fund Information.
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
GREATER LATIN
EUROPEAN AMERICA
FUND FUND
CLASS I SHARES --------- --------
YEAR ENDED MARCH 31 1996(1) 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period $ 10.00 $10.00
----- -----
Income from investment operations:
Net investment income .08 .12
Net realized and unrealized gain (loss) .31 .51
----- -----
Total from investment operations .39 .63
Distribution from net investment income -- (.10)
----- -----
Change in net asset value .39 .53
----- -----
Net asset value, end of period $ 10.39 $10.53
===== =====
TOTAL RETURN* 3.90% 6.37%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 4,308 $5,150
Ratio of expenses to average net assets 3.56%** 4.02%**
Ratio of expenses, net of reimbursement, to
average net assets 1.85%** 2.35%**
Ratio of net investment income to average
net assets 1.39%** 1.71%**
Portfolio turnover rate 9.86% --
Average commission rate paid (per share) $ .0205 $ .0004
</TABLE>
(1)For the period May 8, 1995 (commencement of operations) to March 31, 1996.
*Total return does not reflect sales commissions. Not annualized for periods of
less than one year.
**Annualized.
- Templeton Region Funds
4
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
GREATER LATIN
EUROPEAN AMERICA
FUND FUND
CLASS II SHARES --------- --------
YEAR ENDED MARCH 31 1996(1) 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the
period)
Net asset value, beginning of period $ 10.00 $10.00
----- -----
Income from investment operations:
Net investment income .07 .08
Net realized and unrealized gain (loss) .25 .48
----- -----
Total from investment operations .32 .56
Distribution from net investment income -- (.07)
----- -----
Change in net asset value .32 .49
----- -----
Net asset value, end of period $ 10.32 $10.49
===== =====
TOTAL RETURN* 3.20% 5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 1,431 $1,351
Ratio of expenses to average net assets 4.21%** 4.67%**
Ratio of expenses, net of reimbursement, to
average net assets 2.50%** 3.00%**
Ratio of net investment income to average
net assets 1.06%** 1.14%**
Portfolio turnover rate 9.86% --
Average commission rate paid (per share) $ .0205 $ .0004
</TABLE>
(1)For the period May 8, 1995 (commencement of operations) to March 31, 1996.
*Total return does not reflect sales commissions. Not annualized for periods of
less than one year.
**Annualized.
HOW DO THE FUNDS INVEST THEIR ASSETS?
The Funds' Investment Objectives
Greater European Fund's investment objective is long-term capital appreciation.
The Fund seeks to achieve its objective by investing primarily in equity
securities (as defined below) of Greater European Companies. As used in this
prospectus, the term "Greater European Company" means a company (i) that is
organized under the laws of, or with a principal office and domicile in, a
country in Greater Europe, (ii) for which the principal equity securities
trading market is in Greater Europe, or (iii) that derives at least 50% of its
revenues or profits from goods produced or sold, investments made, or services
performed in Greater Europe or that has at least 50% of its assets situated in
Greater Europe. As used in this prospectus, the term "Greater Europe" means
Western, Central and Eastern Europe (including Ukraine, Belarus, Latvia,
Lithuania and Estonia) and Russia. Under normal market conditions, the Fund
will invest at least 75% of its total assets in the equity securities of
Greater European Companies. The balance
Templeton Region Funds -
5
of the Fund's assets will be invested in (i) debt securities (as defined below)
issued by Greater European Companies or issued or guaranteed by Greater
European government entities, (ii) equity securities and debt obligations of
issuers outside Greater Europe, and (iii) short-term and medium-term debt
securities of the type described below under "Temporary Investments."
Latin America Fund's investment objective is long-term capital appreciation. The
Fund seeks to achieve its objective by investing primarily in equity and debt
securities of issuers in the following Latin American countries: Argentina,
Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Ecuador, El
Salvador, French Guyana, Guatemala, Guyana, Honduras, Mexico, Nicaragua,
Panama, Paraguay, Peru, Surinam, Trinidad/Tobago, Uruguay, and Venezuela. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in equity and debt securities of issuers in the countries named above. The
balance of the Fund's assets will be invested in (i) equity securities and debt
obligations of companies and government entities of countries other than those
named above, and (ii) short-term and medium-term debt securities of the type
described below under "Temporary Investments."
Information Regarding Both Funds. Each 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 either Fund's investment objective will be
achieved.
As used in this prospectus, "equity securities" refers to common stock,
preferred stock, securities convertible into or exchangeable for such
securities, warrants or rights to subscribe to or purchase such securities, and
sponsored or unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
(collectively, "depositary receipts"). For capital appreciation, Greater
European Fund may invest up to 25% of its total assets, and Latin America Fund
may invest without limit, in debt securities (defined as bonds, notes,
debentures, commercial paper, time deposits and bankers' acceptances, and which
may include structured investments) which are rated in any rating category by
Moody's or S&P or which are unrated by any rating agency. Such securities may
include high-risk, lower quality debt securities, commonly referred to as "junk
bonds." See "What Are the Funds' Potential Risks?" As an operating policy,
which may be changed by the Board, neither Fund will invest more than 5% of its
total assets in debt securities rated lower than Baa by Moody's or BBB by S&P.
Certain debt securities can provide the potential for capital appreciation
based on various factors such as changes in interest rates, economic and market
conditions,
- Templeton Region Funds
6
improvement in an issuer's ability to repay principal and pay interest, and
ratings upgrades. Additionally, convertible bonds offer the potential for
capital appreciation through the conversion feature, which enables the holder
of the bonds to benefit from increases in the market price of the securities
into which they are convertible. Debt securities are subject to certain market
and credit risks. See "How Do the Funds Invest Their Assets? - Debt
Securities." in the SAI.
Each Fund Investment Manager will select equity investments for the respective
Fund on the basis of fundamental company-by-company analysis (rather than
broader analyses of specific industries or sectors of the economy). Although an
Investment Manager will consider historical value measures, such as
price/earnings ratios, operating profit margins and liquidation values, the
primary factor in selecting equity securities will be the company's current
price relative to its long-term earnings potential, or real book value, as
determined by the Investment Manager. Securities considered for purchase by a
Fund may be listed or unlisted, and may be issued by companies in various
industries, with various levels of market capitalization. The Investment
Managers will actively manage the Funds' assets in response to market,
political and general economic conditions, and will seek to adjust each Fund's
investments based on its perception of which investments would best enable the
Fund to achieve its investment objective.
As a diversified investment company, each Fund, with respect to 75% of its total
assets, may invest no more than 5% of its total assets in securities issued by
any one company or government, exclusive of U.S. government securities. Although
each Fund may invest up to 25% of its assets in a single industry, the Funds
have no present intention of doing so. Each Fund may not invest more than 5% of
its assets in warrants (exclusive of warrants acquired in units or attached to
securities) or more than 15% of its assets in securities with a limited trading
market.
Each Fund may lend its portfolio securities and borrow money for investment
purposes (i.e., "leverage" its portfolio). In addition, each Fund may enter into
transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, structured investments, and
futures contracts and related options. These are generally referred to as
derivative instruments, and involve special risk factors, which are described
below. When deemed appropriate by an Investment Manager, the respective 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.
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When an Investment Manager believes that market conditions warrant, either Fund
may adopt a temporary defensive position and may invest without limit in money
market securities denominated in U.S. dollars or in the currency of any foreign
country. See "Temporary Investments."
The Funds do not emphasize short-term trading profits and usually expect to
have an annual portfolio turnover rate not exceeding 50%.
Brady Bonds. Latin America Fund may invest without limit in certain debt
obligations customarily referred to as "Brady Bonds," which are created through
the exchange of existing commercial bank loans to sovereign entities for new
obligations in connection with debt restructuring under a plan introduced by
former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan").
Brady Bonds are not considered U.S. government securities and are considered
speculative. Brady Plan debt restructurings have been implemented to date in
several countries, including Argentina, Bulgaria, Costa Rica, the Dominican
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 Panama, Peru,
and Poland.
Brady Bonds have been issued only recently and, accordingly, do not have a long
payment history. They may be collateralized or uncollateralized and issued in
various currencies (although most are U.S. dollar-denominated) and they are
actively traded in the over-the-counter secondary market.
U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed par
bonds or floating rate discount bonds, are generally collateralized in full as
to principal by U.S. Treasury zero coupon bonds which have the same maturity as
the Brady Bonds. Interest payments on these Brady Bonds generally are
collateralized on a one-year or longer rolling-forward basis by cash or
securities in an amount that, in the case of fixed-rate bonds, is equal to at
least one year of interest payments or, in the case of floating rate bonds,
initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest
payments, but generally are not collateralized. Brady Bonds are often viewed as
having three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments; (iii)
the uncollateralized interest payments; and (iv) any uncollateralized repayment
of principal at maturity (these uncollateralized amounts constitute the
"residual risk").
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Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have principal repayments at
final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and/or interest coupon payments
collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New
York as collateral agent.
Brady Bonds involve various risk factors including residual risk and the history
of defaults with respect to commercial bank loans by public and private entities
of Brady Countries. There can be no assurance that Brady Bonds in which Latin
America Fund may invest will not be subject to restructuring arrangements or to
requests for new credit, which may cause the Fund to suffer a loss of interest
or principal on any of its holdings.
Types of Securities the Funds May Invest In
The Funds are 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
Funds in some of the markets in which the Funds will invest and may not be
available for extensive use in the future.
Temporary Investments. For temporary defensive purposes, each Fund may invest
up to 100% of its total assets in the following money market securities,
denominated in U.S. dollars or in the currency of any foreign country, issued by
entities organized in the 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 an Investment Manager;
obligations (including certificates of deposit, time deposits and bankers'
acceptances) of banks; and repurchase agreements with banks and broker-dealers
with respect to such securities.
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Borrowing. Each Fund may borrow up to one-third of the value of its total
assets from banks to increase its holdings of portfolio securities. Under the
1940 Act, each Fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% due to market fluctuations or otherwise, even if such liquidations of a
Fund's holdings may be disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on a Fund's net asset value, and
money borrowed will be subject to interest and other costs (which may include
commitment fees and/or the cost of maintaining minimum average balances) which
may or may not exceed the income received from the securities purchased with
borrowed funds.
Loans of Portfolio Securities. Each Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of the Fund's total
assets to generate income for the purpose of offsetting operating expenses. Such
loans must be secured by collateral (consisting of any combination of cash, U.S.
government securities or irrevocable letters of credit) in an amount at least
equal (on a daily marked-to-market basis) to the current market value of the
securities loaned. A Fund may terminate the loans at any time and obtain the
return of the securities loaned within five business days. A Fund will continue
to receive any interest or dividends paid on the loaned securities and will
continue to retain any voting rights with respect to the securities. In the
event that the borrower defaults on its obligation to return borrowed
securities, because of insolvency or otherwise, a Fund could experience delays
and costs in gaining access to the collateral and could suffer a loss to the
extent that the value of the collateral falls below the market value of the
borrowed securities.
Options on Securities or Indices. Each Fund may write (i.e., sell) covered put
and call options and purchase put and call options on securities or securities
indices that are traded on 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. A Fund may write a call or put option only if the option is
"covered." This means that so long as a Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or hold
a call at the same or lower exercise price, for the same exercise period, and
on the same
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securities as the written call. A put is covered if a Fund maintains liquid
assets with a value equal to the exercise price in a segregated account, or
holds a put on the same underlying securities at an equal or greater exercise
price. The value of the underlying securities on which options may be written
at any one time will not exceed 15% of the total assets of a Fund. A Fund will
not purchase put or call options if the aggregate premium paid for such options
would exceed 5% of its total assets at the time of purchase.
Forward Foreign Currency Contracts and Options on Foreign Currencies. The Funds
will normally conduct foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through entering into forward contracts to purchase or sell foreign
currencies. The Funds will generally not enter into a forward contract with a
term of greater than one year. A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers.
The Funds will generally enter into forward contracts only under two
circumstances. First, when a Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed
to settle the transaction. Second, when a Fund's Investment Manager believes
that the currency of a particular foreign country may suffer or enjoy a
substantial movement against another currency, it may enter into a forward
contract to sell or buy the former foreign currency (or another currency which
acts as a proxy for that currency) approximating the value of some or all of
the Fund's portfolio securities denominated in such foreign currency. This
second investment practice is generally referred to as "cross-hedging." The
Funds have no specific limitation on the percentage of assets they may commit
to forward contracts, subject to their stated investment objectives and
policies, except that a Fund will not enter into a forward contract if the
amount of assets set aside to cover forward contracts would impede portfolio
management or the Fund's ability to meet redemption requests. Although forward
contracts will be used primarily to protect the Funds from adverse currency
movements, they also involve the risk that anticipated currency movements will
not be accurately predicted.
The Funds may purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines in
the U.S. dollar value of foreign currency-denominated portfolio securities and
against increases in the U.S. dollar cost of such securities to be acquired. As
in the case of other kinds of options, however, the writing of an option on a
Templeton Region Funds -
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foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and a Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of rate movements
adverse to a Fund's position, it may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign currencies to be written or
purchased by the Funds are traded on U.S. and foreign exchanges or over-the-
counter.
Futures Contracts. For hedging purposes only, each Fund may buy and sell
financial futures contracts, stock and bond index futures contracts, foreign
currency futures contracts and options on any of the foregoing. A financial
futures contract is an agreement between two parties to buy or sell a specified
debt security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the end of the contract
period. A futures contract on a foreign currency is an agreement to buy or sell
a specified amount of a currency for a set price on a future date.
When a Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. In addition, when a Fund enters into a futures contract, it will
segregate assets or "cover" its position in accordance with the 1940 Act. See
"How Do the Funds Invest Their Assets? - Futures Contracts." in the SAI.
Repurchase Agreements. For temporary defensive purposes and for cash management
purposes, the Funds may enter into repurchase agreements with U.S. banks and
broker-dealers. Under a repurchase agreement, a Fund acquires a security from a
U.S. bank or a registered broker-dealer and simultaneously agrees to resell the
security back to the bank or broker-dealer at a specified time and price. The
repurchase price is in excess of the original purchase price paid by a Fund by
an amount which reflects an agreed-upon rate of return and which is not tied to
any coupon rate on the underlying security. Under the 1940 Act, repurchase
agreements are considered to be loans collateralized by the underlying security
and therefore will be fully collateralized. However, if the bank or broker-
dealer should default on its obligation to repurchase the underlying security, a
Fund may experience a delay or difficulties in exercising its rights to realize
upon the security and might incur a loss if the value of the security declines,
as well as incur disposition costs in liquidating the security.
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Depositary Receipts. ADRs are depositary receipts typically used by a U.S. bank
or trust company which evidence ownership of underlying securities issued by a
foreign corporation. EDRs and GDRs are typically issued by foreign banks or
trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
foreign or a U.S. corporation. Generally, depositary receipts in registered form
are designed for use in the U.S. securities market and depositary receipts in
bearer form are designed for use in securities markets outside the U.S.
Depositary receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Depositary receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of depositary receipts. In unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the depositary receipts.
Depositary receipts also involve the risks of other investments in foreign
securities, as discussed below. For purposes of a Fund's investment policies,
the Fund's investments in depositary receipts will be deemed to be investments
in the underlying securities.
Illiquid and Restricted Securities. Each Fund may invest up to 15% of its total
assets in illiquid securities, for which there is a limited trading market and
for which a low trading volume of a particular security may result in abrupt and
erratic price movements. A Fund may be unable to dispose of its holdings in
illiquid securities at then-current market prices and may have to dispose of
such securities over extended periods of time. A Fund may also invest in
securities that are sold (i) in private placement transactions between their
issuers and their purchasers and that are neither listed on an exchange nor
traded over-the-counter, or (ii) in transactions between qualified
institutional buyers pursuant to Rule 144A under the 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 from the sales could,
due to illiquidity, be less than those originally paid by a Fund or less than
their fair value. In addition, issuers whose securities are not publicly traded
may not be subject to the disclosure and other investor protection requirements
that may be applicable if their securities were publicly
Templeton Region Funds -
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traded. If any privately placed or Rule 144A securities held by a Fund are
required to be registered under the securities laws of one or more jurisdictions
before being resold, a Fund may be required to bear the expenses of
registration. Each Fund will limit its investment in restricted securities
other than Rule 144A securities to 10% of its total assets, and will limit its
investment in all restricted securities, including Rule 144A securities, to 15%
of its total assets. Restricted securities, other than Rule 144A securities
determined by the Board of Trustees to be liquid, are considered to be illiquid
and are subject to a Fund's limitation on investment in illiquid securities.
Structured Investments. Included among the issuers of debt securities in which
the Funds may invest are entities organized and operated solely for the purpose
of restructuring the investment characteristics of various securities. These
entities are typically organized by investment banking firms which receive fees
in connection with establishing each entity and arranging for the placement of
its securities. This type of restructuring involves the deposit with or
purchase by an entity, such as a corporation or trust, of specified instruments
and the issuance by that entity of one or more classes of securities
("structured investments") backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued structured investments to create securities
with different investment characteristics such as varying maturities, payment
priorities or interest rate provisions; the extent of the payments made with
respect to structured investments is dependent on the extent of the cash flow
on the underlying instruments. Because structured investments of the type in
which the Funds anticipate investing typically involve no credit enhancement,
their credit risk will generally be equivalent to that of the underlying
instruments.
The Funds are permitted to invest in a class of structured investments that is
either subordinated or unsubordinated to the right of payment of another class.
Subordinated structured investments typically have higher yields and present
greater risks than unsubordinated structured investments. Although a Fund's
purchase of subordinated structured investments would have a similar economic
effect to that of borrowing against the underlying securities, the purchase will
not be deemed to be leverage for purposes of the limitations placed on the
extent of a Fund's assets that may be used for borrowing activities.
Certain issuers of structured investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investment in these
structured investments may be limited by the restrictions contained in the 1940
Act described below under "Investment Companies." Structured investments are
typically sold in private placement transactions, and there currently is no
active trading market for structured investments. To the extent such
investments are
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14
illiquid, they will be subject to the restrictions set forth in "Types of
Securities the Funds May Invest In" above and in the SAI under "Investment
Restrictions."
Investment Companies. Each Fund may invest in other investment companies,
except those for which its Investment Manager serves as investment adviser or
sponsor, which invest principally in securities in which the Fund is authorized
to invest. Under the 1940 Act, each Fund may invest a maximum of 10% of its
total assets in the securities of other investment companies and not more than
5% of the Fund's total assets in the securities of any one investment company,
provided the investment does not represent more than 3% of the voting stock of
the acquired investment company at the time such shares are purchased. To the
extent a Fund invests in other investment companies, a Fund's shareholders will
incur certain duplicative fees and expenses, including investment advisory
fees. A Fund's investment in certain investment companies will result in
special U.S. federal income tax consequences described under "Additional
Information on Distributions and Taxes" in the SAI.
WHAT ARE THE FUNDS' POTENTIAL RISKS?
You should understand that all investments involve risk and there can be no
guarantee against loss resulting from an investment in the Funds, nor can there
be any assurance that the Fund's investment objective will be attained. As with
any investment in securities, the value of, and income from, an investment in a
Fund can decrease as well as increase, depending on a variety of factors which
may affect the values and income generated by a Fund's portfolio securities,
including general economic conditions and market factors. In addition to the
factors which affect the value of individual securities, a shareholder may
anticipate that the value of the shares of a Fund will fluctuate with movements
in the broader equity and bond markets. A decline in the stock market of any
country in which a Fund is invested in equity securities may also be reflected
in declines in the price of shares of the Fund. Changes in the prevailing rates
of interest in any of the countries in which a Fund is invested in fixed income
securities will likely affect the value of such holdings and thus the value of
Fund shares. Increased rates of interest, which frequently accompany inflation
and/or a growing economy, are likely to have a negative effect on the value of
Fund shares. In addition, changes in currency valuations will also affect the
price of shares of the Funds. History reflects both decreases and increases in
stock markets and interest rates in individual countries and throughout the
world, and in currency valuations, and these may reoccur unpredictably in the
future. Additionally, investment decisions made by an Investment Manager will
not always be profitable or prove to have been correct. Neither Fund is
intended as a complete investment program.
Templeton Region Funds -
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Foreign Currency Exchange. Since the Funds are authorized to invest in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates relative to the U.S. dollar will
affect the value of securities in the respective portfolios and the unrealized
appreciation or depreciation of investments insofar as U.S. investors are
concerned. Changes in foreign currency exchange rates relative to the U.S.
dollar will also affect a Fund's yield on assets denominated in currencies other
than the U.S. dollar. The Funds usually effect currency exchange transactions on
a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange
market or through entering into forward contracts. However, some price spread on
currency exchange transactions (to cover service charges) will be incurred when
a Fund converts assets from one currency to another. Many of the currencies of
the countries in which the Funds may invest have experienced devaluations
relative to the U.S. dollar, and may be more highly volatile than currencies of
other more established markets.
Foreign Investments. The Funds have the right to purchase securities in any
foreign country, developed or developing. Investors should consider carefully
the substantial risks involved in investing in securities issued by companies
and governments of foreign nations, which are in addition to the usual risks
inherent in domestic investments. Each Fund's performance is closely tied to
economic and political conditions within the geographic area of its respective
investments. Some of the countries in which the Funds may invest are considered
emerging markets, in which the risks generally associated with foreign
investments are heightened. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations (including, for example, withholding taxes on interest and dividends)
or other taxes imposed with respect to investments in foreign nations, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), foreign investment controls on daily stock
market movements, default in foreign government securities, political or social
instability, or diplomatic developments which could affect investment in
securities of issuers in foreign nations. Some countries may withhold portions
of interest and dividends at the source. In addition, in many countries there
is less publicly available information about issuers than is available in
reports about companies in the 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. The Funds may encounter difficulties or be unable to vote proxies,
exercise shareholder rights, pursue legal remedies, and obtain judgments in
foreign courts.
Brokerage commissions, custodial services, and other costs relating to
investments in foreign countries are generally more expensive than in the U.S.
Foreign
- Templeton Region Funds
16
securities markets also have different clearance and settlement procedures, and
in certain markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when assets of a Fund are uninvested and no return is earned thereon.
The inability of a Fund to make intended security purchases due to settlement
problems could cause 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 a 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, each Fund is limited in the extent
to which it may invest in illiquid securities. The foregoing risks may be
heightened for investments in Eastern Europe and/or Latin America, and there
are further risks specific to investments in those regions. See "What Are the
Funds' Potential Risks?" in the SAI.
Prior governmental approval of foreign investments may be required under
certain circumstances in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among
other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.
Further, the economies of developing countries generally are heavily dependent
upon international trade and, accordingly, have been and may continue to be
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been and
Templeton Region Funds -
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may continue to be adversely affected by economic conditions in the countries
with which they trade.
As a non-fundamental policy, each Fund will limit its investment in Russian
securities to 5% of its total assets. Russian securities involve additional
significant risks, including political and social uncertainty (for example,
regional conflicts and risk of war), currency exchange rate volatility,
pervasiveness of corruption and crime in the Russian economic system, delays in
settling portfolio transactions and risk of loss arising out of Russia's system
of share registration and custody. For more information on these risks and
other risks associated with Russian securities, please see "What Are the Fund's
Potential Risks?" in the SAI.
High-Risk Debt Securities. The Funds are authorized to invest in debt securities
rated in any category by S&P or Moody's and securities which are unrated by any
rating agency. See "How Do the Funds Invest Their Assets? - Debt Securities."
in the SAI. As an operating policy, which may be changed by the Board without
shareholder approval, a Fund will not invest more than 5% of its total assets
in debt securities rated lower than BBB by S&P or Baa by Moody's. The Board may
consider a change in this operating policy if, in its judgment, economic
conditions change such that a higher level of investment in high-risk, lower
quality debt securities would be consistent with the interests of a Fund and
its shareholders. See "How Do the Funds Invest Their Assets? - Debt
Securities." in the SAI for descriptions of debt securities rated BBB by S&P and
Baa by Moody's. High-risk, lower quality debt securities, commonly referred to
as "junk bonds," are regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation and may be in default. Unrated debt
securities are not necessarily of lower quality than rated securities, but they
may not be attractive to as many buyers. Regardless of rating levels, all debt
securities considered for purchase (whether rated or unrated) will be carefully
analyzed by each Investment Manager to insure, to the extent possible, that the
planned investment is sound. Each Fund may, from time to time, invest up to 5%
of its total assets in defaulted debt securities if, in the opinion of the
Investment Manager, the issuer may resume interest payments in the near future.
Leverage. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of portfolio securities on a Fund's net asset
value, and money borrowed will be subject to interest and other costs (which
may include commitment fees and/or the cost of maintaining minimum average
balances) which may or may not exceed the income received from the securities
purchased with borrowed funds. The use of leverage may significantly increase a
Fund's investment risk.
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18
Futures Contracts and Related Options. Successful use of futures contracts and
related options is subject to special risk considerations. A liquid secondary
market for any futures or options contract may not be available when a futures
or options position is sought to be closed. In addition, there may be an
imperfect correlation between movements in the securities or foreign currency
on which the futures or options contract is based and movements in the
securities or currency in a Fund's portfolio. Successful use of futures or
options contracts is further dependent on an Investment Manager's ability to
correctly predict movements in the securities or foreign currency markets, and
no assurance can be given that its judgment will be correct. Successful use of
options on securities or indices is subject to similar risk considerations. In
addition, by writing covered call options, a Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price.
There are further risk factors, including possible losses through the holding of
securities in domestic and foreign custodian banks and depositories, described
elsewhere in this prospectus and in the SAI.
WHO MANAGES THE FUNDS?
The Board. The Board oversees the management of the Funds and elects the
Trust's officers. The officers are responsible for the Funds' day-to-day
operations. The Board also monitors the Funds to ensure no material conflicts
exist between the two classes of shares. While none is expected, the Board will
act appropriately to resolve any material conflict that may arise.
Investment Managers. The Investment Managers are 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 Managers and their 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 Managers and their 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.
Portfolio Management. The lead portfolio manager of the Greater European Fund
since its inception in Dorian B. Foyil. Mr. Foyil is senior vice president of
the Investment Manager. He holds a BBA in accounting and computer science from
Temple University and an MBA in finance from the Wharton School of Business at
the University of Pennsylvania. He is currently on the board of directors and
Templeton Region Funds -
19
serves as chairman of the Bahamas Society of Financial Analysts. Before joining
the Templeton organization, he was an investment research analyst for four years
with UBS Phillips & Drew in London, England. As a portfolio manager and
research analyst with Templeton, Mr. Foyil's research responsibilities include
the technology, life insurance, aerospace and defense industries. He is also
responsible for research coverage of Eastern Europe.
Richard Sean Farrington exercises secondary portfolio management
responsibilities for Greater European Fund. Mr. Farrington is vice president of
Greater European Fund's Investment Manager. He holds a BA in economics from
Harvard University. Mr. Farrington is a Chartered Financial Analyst and is
currently the president of the Bahamas Society of Financial Analysts. He joined
the Templeton organization in 1991 and is currently a research analyst and
portfolio manager. Mr. Farrington's current research responsibilities include
global coverage of the electrical equipment industries, as well as European,
Asian and South American electric utilities. He is also responsible for country
coverage of Hong Kong, China and Taiwan.
The lead portfolio manager of Latin America Fund since July 1996 is Stephen S.
Oler. Mr. Oler is vice president of Latin America Fund's Investment Manager. He
holds a BA in American history from the University of Pennsylvania and a master
of philosophy in international relations from King's College at Cambridge
University. Mr. Oler is a Chartered Financial Analyst and a member of the
Association for Investment Management and Research. Prior to joining the
Templeton organization in March 1996, Mr. Oler was a global portfolio manager
and senior vice president of Baring Asset Management, Inc. During his 11 years
with Baring Asset Management, Inc., Mr. Oler managed several Latin American
funds and Latin American portions of global emerging markets funds. His current
research responsibilities include industry coverage of global non-life
insurance, as well as the markets of Mexico and Greece.
Mark R. Beveridge and Howard S. Leonard exercise secondary portfolio management
responsibilities for Latin America Fund. Mr. Beveridge is vice president of
Latin America Fund's Investment Manager. He holds a BBA in finance from the
University of Miami. He is a Chartered Financial Analyst, a Chartered
Investment Counselor and a member of the South Florida Society of Financial
Analysts and the International Society of Financial Analysts. Before joining
the Templeton organization in 1985 as a security analyst, Mr. Beveridge was a
principal with a financial accounting software firm based in Miami, Florida. He
is currently a portfolio manager and research analyst with responsibility for
the industrial component and appliances/household durables industries. He also
has market coverage of Argentina, Thailand and Denmark.
- Templeton Region Funds
20
Mr. Leonard is executive vice president of Latin America Fund's Investment
Manager. He holds a BBA degree in finance and economics from the Temple
University. He is a Chartered Financial Analyst and a member of the Financial
Analysts of Philadelphia, the Financial Analysts Federation and the
International Society of Security Analysts. Before joining the Templeton
organization in 1989, Mr. Leonard was director of investment research at First
Pennsylvania Bank, where he was responsible for equity and fixed-income
research activities. Mr. Leonard also worked previously at Provident National
Bank as a security analyst covering a variety of industries. He currently
manages both institutional and mutual fund accounts of global and international
mandates. Mr. Leonard has research responsibility for the global forest
products and money managers industries and is responsible for country coverage
of Indonesia, Switzerland, Brazil and India.
Services Provided by the Investment Managers and Business Manager. Each
Investment Manager manages the respective Fund's assets and makes its
investment decisions. The Business Manager provides certain administrative
facilities and services for the Funds. 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. As compensation for its
services, Greater European Fund pays its Investment Manager a monthly fee,
equal on an annual basis to 0.75% of its average daily net assets during the
year. As compensation for its services, Latin America Fund pays its Investment
Manager a monthly fee, equal on an annual basis to 1.25% of its average daily
net assets during the year. Each Fund also pays its own operating expenses,
including: (1) its pro rata portion of the fees and expenses of the Trust's
disinterested Trustees; (2) interest expenses; (3) taxes and governmental fees;
(4) brokerage commissions and other expenses incurred in acquiring or disposing
of portfolio securities; (5) the expenses of registering and qualifying its
Shares for sale with the SEC and with various state securities commissions; (6)
expenses of its independent public accountants and legal counsel; (7) insurance
premiums; (8) fees and expenses of The Chase Manhattan Bank, the custodian, and
Investor Services, and any related services; (9) expenses of obtaining
quotations of portfolio securities and of pricing shares; (10) its pro rata
portion of the expenses of maintaining the Trust's legal existence and of
shareholders' meetings; (11) expenses of preparation and distribution to
existing shareholders of periodic reports, proxy materials and prospectuses;
(12) payments made pursuant to each Fund's distribution plans (see "The Rule
12b-1 Plans" below); and (13) fees and expenses of membership in industry
organizations.
Templeton Region Funds -
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For its services, the Business Manager receives a fee equivalent on an annual
basis to 0.15% of the combined average daily net assets of the funds included in
the Trust (the Funds, Templeton Americas Government Securities Fund, Templeton
Growth and Income Fund and Templeton Global Infrastructure Fund), reduced to
0.135% of such combined assets in excess of $200 million, to 0.10% of such
assets in excess of $700 million, and to 0.075% of such assets in excess of
$1,200 million.
Portfolio Transactions. The Investment Managers try to obtain the best execution
on all transactions. If an 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.
The Rule 12b-1 Plans
Each class has a distribution plan or "Rule 12b-1 Plan" under which it may pay
or reimburse Distributors or others for activities primarily intended to sell
shares of the class. 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 each Fund under the Class I plan may not exceed 0.35% per year of
Class I's average daily net assets. Of this amount, each 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 Funds that costs and expenses
of Class I shares that may be reimbursable in future quarters or years were
$81,058 (1.4% of net assets) for Greater European Fund and $111,748 (1.7% of
net assets) for Latin America Fund at March 31, 1996.
Under the Class II plan, each Fund may pay Distributors up to 0.75% per year of
Class II's average daily net assets to pay Distributors or others for providing
distribution and related services and bearing certain Class II expenses. All
distribution expenses over this amount will be borne by those who have incurred
them. During the first year after a purchase of Class II shares, Distributors
may keep this portion of the Rule 12b-1 fees associated with the Class II
purchase.
- Templeton Region Funds
22
Each Fund may also pay a servicing fee of up to 0.25% per year of Class II's
average daily net assets under the Class II plan. This fee may be used to pay
Securities Dealers or others for, among other things, helping to establish and
maintain customer accounts and records, helping with requests to buy and sell
shares, receiving and answering correspondence, monitoring dividend payments
from each Fund on behalf of customers, and similar servicing and account
maintenance activities.
The Rule 12b-1 fees charged to each class are based only on the fees
attributable to that particular class. For more information, please see "The
Funds' Underwriter" in the SAI.
HOW DO THE FUNDS MEASURE PERFORMANCE?
From time to time, each class of each Fund advertises its performance. The more
commonly used measure of performance is total return. 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.
The investment results of each class will vary. Performance figures are always
based on past performance and do not indicate future results. For a more
detailed description of how the Funds calculate their 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 under the 1940 Act as an open-end
management investment company. In addition to the Funds, both of which are
diversified funds, the Trust has three series of shares: Templeton Americas
Government Securities Fund, a non-diversified fund, and Templeton Growth and
Income Fund and Templeton Global Infrastructure Fund, both diversified funds.
Prospectuses for Templeton Americas Government Securities Fund, Templeton
Growth and Income Fund and Templeton Global Infrastructure Fund are available
upon request and without charge from the Distributor. Each Fund has two classes
of shares of beneficial interest with a par value of $.01: Greater European
Fund - Class I and Greater European Fund - Class II; Latin America Fund - Class
I and Latin America Fund - Class II.
Shares of each class represent proportionate interests in the assets of the
respective Fund and have the same voting and other rights and preferences as
the other class of the Fund for matters that affect the Fund as a whole. For
Templeton Region Funds -
23
matters that only affect one class, however, only shareholders of that class may
vote. Each class will vote separately on matters (1) affecting only that class,
(2) expressly required to be voted on separately by state corporation business
trust law, or (3) required to be voted on separately by the 1940 Act. Shares of
each class of a series have the same voting and other rights and preferences as
the other classes and series of the Trust for matters that affect the Trust as a
whole. In the future, additional series may be offered.
The Trust 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 in writing to do so 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 FUNDS
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 Funds and their shareholders, see "Additional Information on
Distributions and Taxes" in the SAI.
Each 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. Each Fund intends to
distribute to shareholders substantially all of its net investment income and
realized capital gains, which generally will be taxable income or capital gains
in their hands. Distributions declared in October, November or December to
shareholders of record on a date in such month and paid during the following
January will be treated as having been received by shareholders on December 31
in the year such distributions were declared. The Trust will inform shareholders
each year of the amount and nature of such income or gains. Sales or other
dispositions of Fund shares generally will give rise to taxable gain or loss.
- Templeton Region Funds
24
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 respective Fund
with your check. PLEASE INDICATE WHICH CLASS OF SHARES YOU WANT TO BUY. IF YOU
DO NOT SPECIFY A CLASS, YOUR PURCHASE WILL BE AUTOMATICALLY INVESTED IN CLASS I
SHARES.
<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.
Deciding Which Class to Buy
You should consider a number of factors when deciding which class of shares to
buy. IF YOU PLAN TO BUY $1 MILLION OR MORE IN A SINGLE PAYMENT OR YOU QUALIFY TO
BUY CLASS I SHARES WITHOUT A SALES CHARGE, YOU MAY NOT BUY CLASS II SHARES.
Generally, you should consider buying Class I shares if:
- - You expect to invest in a Fund over the long term;
- - You qualify to buy Class I shares at a reduced sales charge; or
- - You plan to buy $1 million or more over time.
You should consider Class II shares if:
- - You expect to invest less than $50,000 in the Franklin Templeton Funds; and
- - You plan to sell a substantial number of your shares within approximately six
years or less of your investment.
Class I shares are generally more attractive for long-term investors because of
Class II's higher Rule 12b-1 fees. These may accumulate over time to outweigh
the lower Class II front-end sales charge and result in lower income dividends
for Class II shareholders. If you qualify to buy Class II shares at a reduced
sales charge based upon the size of your purchase or through our Letter of
Intent or cumulative quantity discount programs, but plan to hold your shares
less than approximately six years, you should evaluate whether it is more
economical for you to buy Class I or Class II shares.
Templeton Region Funds -
25
For purchases of $1 million or more, it is considered more beneficial for you to
buy Class I shares since there is no front-end sales charge, even though these
purchases may be subject to a Contingent Deferred Sales Charge. Any purchase of
$1 million or more is therefore automatically invested in Class I shares. You
may accumulate more than $1 million in Class II shares through purchases over
time, but if you plan to do this you should determine whether it would be more
beneficial for you to buy Class I shares through a Letter of Intent.
Please consider all of these factors before deciding which class of shares to
buy. There are no conversion features attached to either class of shares.
Purchase Price of Fund Shares
For Class I shares, the sales charge you pay depends on the dollar amount you
invest, as shown in the table below. The sales charge for Class II shares is 1%
and, unlike Class I, does not vary based on the size of your purchase.
<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>
CLASS I
Less than $50,000.................. 5.75% 6.10% 5.00%
$50,000 but less than $100,000..... 4.50% 4.71% 3.75%
$100,000 but less than $250,000.... 3.50% 3.63% 2.80%
$250,000 but less than $500,000.... 2.50% 2.56% 2.00%
$500,000 but less than
$1,000,000....................... 2.00% 2.04% 1.60%
$1,000,000 or more*................ None None None
CLASS II
Under $1,000,000*.................. 1.00% 1.01% 1.00%
</TABLE>
*A Contingent Deferred Sales Charge of 1% may apply to Class I purchases of $1
million or more and any Class II purchase. 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. Purchases
of Class II shares are limited to purchases below $1 million. Please see
"Deciding Which Class to Buy."
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.
Cumulative Quantity Discounts - Class I Only. To determine if you may pay a
reduced sales charge, the amount of your current Class I purchase is added to
- Templeton Region Funds
26
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, 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 - Class I Only. You may buy Class I 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 on Class I shares.
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
Class I 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 - Class I Only. If you are a member of a qualified group, you
may buy Class I shares at the 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,
Templeton Region Funds -
27
- - Has more than 10 members,
- - Can arrange for meetings between our representatives and group members,
- - 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 a Fund, and
- - Meets other uniform criteria that allow Distributors to achieve cost savings
in distributing shares.
Sales Charge Waivers. Each 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.
Each Fund's sales charges will not apply if you are buying Class I shares with
money from the following sources or Class II shares with money from the sources
in waiver categories 1 or 4:
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 invested for any
- Templeton Region Funds
28
Contingent Deferred Sales Charge paid in connection with the earlier
redemption, but a new Contingency Period will begin.
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 respective 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.
Each Fund's sales charges will also not apply to Class I 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 - Class I Only" above.
9. An Eligible Governmental Authority. Please consult your legal and
investment advisors to determine if an investment in a 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
Templeton Region Funds -
29
sponsored by the broker-dealer and either advised by the broker-dealer or
by another registered investment advisor affiliated with that broker.
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 Class II purchases and certain Class I 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 a Fund or its
shareholders.
1. Securities Dealers may receive up to 1% of the purchase price for Class II
purchases. During the first year after the purchase, Distributors may keep a
part of the Rule 12b-1 fees associated with that purchase.
2. Securities Dealers will receive up to 1% of the purchase price for Class I
purchases of $1 million or more.
3. Securities Dealers may, in the sole discretion of Distributors, receive up
to 1% of the purchase price for Class I purchases made under waiver category
8 above.
4. Securities Dealers may receive up to 0.25% of the purchase price for Class I
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
- Templeton Region Funds
30
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. Securities Dealers may not use sales of a 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.
If you own Class I shares, you may exchange into any of our money funds except
Franklin Templeton Money Fund II ("Money Fund II"). Money Fund II is the only
money fund exchange option available to Class II shareholders. Unlike our other
money funds, shares of Money Fund II may not be purchased directly and no
drafts (checks) may be written on Money Fund II accounts.
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. Some
Franklin Templeton Funds do not offer Class II shares.
<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.
Templeton Region Funds -
31
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 a
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.
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 new fund. See the discussion on
Contingent Deferred Sales Charges below and under "How Do I Sell Shares?"
Contingent Deferred Sales Charge - Class I. For accounts with Class I shares
subject to a Contingent Deferred Sales Charge, shares are exchanged into the
new fund in the order they were purchased. If you exchange Class I 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.
Contingent Deferred Sales Charge - Class II. For accounts with Class II shares
subject to a Contingent Deferred Sales Charge, shares are exchanged into the
new fund proportionately based on the amount of shares subject to a Contingent
Deferred Sales Charge and the length of time the shares have been held. For
example, suppose you own $1,000 in shares that have never been subject to a
CDSC, such as shares from the reinvestment of dividends and capital gains
("free shares"), $2,000 in shares that are no longer subject to a CDSC because
you have held them for longer than 18 months ("matured shares"), and $3,000 in
shares that are still subject to a CDSC ("CDSC liable shares"). If you exchange
$3,000 into a new fund, $500 will be exchanged from free shares, $1,000 from
matured shares, and $1,500 from CDSC liable shares.
Likewise, CDSC liable shares purchased at different times will be exchanged into
a new fund proportionately. For example, assume you purchased $1,000 in shares
3 months ago, 6 months ago, and 9 months ago. If you exchange $1,500 into a new
fund, $500 will be exchanged from shares purchased at each of these three
different times.
While Class II shares are exchanged proportionately, they are redeemed in the
order purchased. In some cases, this means exchanged shares may be CDSC liable
even though they would not be subject to a Contingent Deferred Sales Charge if
they were sold. We believe the proportional method of exchanging Class II
shares more closely reflects the expectations of Class II shareholders if
- Templeton Region Funds
32
shares are sold during the Contingency Period. The tax consequences of a sale or
exchange are determined by the Code and not by the method used by a Fund to
transfer shares.
If you exchange your Class II shares for shares of Money Fund II, the time your
shares are held in that fund will count towards the completion of any
Contingency Period.
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 a Fund within two weeks of an earlier exchange request, (ii) exchange
shares out of a Fund more than twice in a calendar quarter, or (iii) exchange
shares equal to at least $5 million, or more than 1% of a 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 a Fund would be harmed or unable
to invest effectively, or (ii) a Fund receives or anticipates simultaneous
orders that may significantly affect the Fund.
Templeton Region Funds -
33
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 respective 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.
Under unusual circumstances, we may suspend redemptions or postpone payment for
more than seven days as permitted by federal securities law.
- Templeton Region Funds
34
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
A Contingent Deferred Sales Charge may apply to Class I purchases of $1 million
or more if you sell all or a portion of the shares within one year and any Class
II purchase if you sell the shares within 18 months. 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 a Fund when an account falls below the minimum required
account size
- - Redemptions following the death of the shareholder or beneficial owner
Templeton Region Funds -
35
- - Redemptions through a systematic withdrawal plan, 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 in Class I
shares, you can withdraw up to $120,000 annually through a systematic
withdrawal plan free of charge. Likewise, if you maintain an annual balance
of $10,000 in Class II shares, $1,200 may be withdrawn annually 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 FUNDS?
Each Fund intends to pay a dividend at least annually representing substantially
all of its net investment income and 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 a Fund's shares by the amount of the
distribution.
Distribution Options
You may receive your distributions from a Fund in any of these ways:
1. Buy additional shares of a Fund - You may buy additional shares of a 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.
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.
- Templeton Region Funds
36
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 RESPECTIVE 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
Each Fund is open for business each day the NYSE is open. We determine the Net
Asset Value per share of each class 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 for each class in many newspapers.
The Net Asset Value of all outstanding shares of each class is calculated on a
pro rata basis. It is based on each class' proportionate participation in a
Fund, determined by the value of the shares of each class. Each class, however,
bears the Rule 12b-1 fees payable under its Rule 12b-1 plan. To calculate Net
Asset Value per share of each class, the assets of each class are valued and
totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares of the class outstanding. Each 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 of the class you wish to purchase, unless
you qualify to buy shares at a reduced sales charge or with no sales charge. The
Offering Price of each class is based on the Net Asset Value per share of the
class 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 a 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.
Templeton Region Funds -
37
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 respective Fund's name,
- - The class of shares,
- - 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.
- Templeton Region Funds
38
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.
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 respective 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.
Templeton Region Funds -
39
To obtain any required forms or more information about distribution or transfer
procedures, please call our Retirement Plans Department.
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>
- Templeton Region Funds
40
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
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 a 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.
Templeton Region Funds -
41
SERVICES TO HELP YOU MANAGE YOUR ACCOUNT
Automatic Investment Plan
Our automatic investment plan offers a convenient way to invest in a Fund.
Under the plan, you can have money transferred automatically from your checking
account to the respective Fund each month to buy additional shares. If you are
interested in this program, please refer to the account application included
with this prospectus or contact your investment representative. The market
value of a 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 last 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 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.
- Templeton Region Funds
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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 code number for each class to use TeleFACTS. The code numbers
are 419 and 519 for Class I and Class II of Greater European Fund,
respectively, and 418 and 518 for Class I and Class II of Latin America Fund,
respectively.
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 each 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 a Fund's financial report or an interim quarterly
report.
Institutional Accounts
Additional methods of buying, selling or exchanging shares of a 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, each Fund may not be able to offer these services directly to
you. Please contact your investment representative.
Templeton Region Funds -
43
What If I Have Questions About My Account?
If you have any questions about your account, you may write to Investor
Services at P.O. Box 33030, St. Petersburg, FL 33733-8030. Each Fund and
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.
(1-800/342-5236) 9:30 a.m. to 5:30 p.m. (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.
- Templeton Region Funds
44
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 - Each Fund offers two classes of shares, designated "Class
I" and "Class II." The two classes have proportionate interests in the
respective Fund's portfolio. They differ, however, primarily in their sales
charge structures and Rule 12b-1 plans.
Code - Internal Revenue Code of 1986, as amended
Contingency Period - For Class I shares, the 12 month period during which a
Contingent Deferred Sales Charge may apply. For Class II shares, the
contingency period is 18 months. 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 the Contingency Period.
Distributors - Franklin/Templeton Distributors, Inc., each 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
each 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
Investment Manager - Templeton Global Advisors Limited, P.O. Box N-7759, Lyford
Cay, Nassau, Bahamas for Greater European Fund or Templeton
Templeton Region Funds -
45
Investment Counsel, Inc., Broward Financial Centre, Fort Lauderdale, FL
33394-3091 for Latin America Fund (collectively, the "Investment Managers.")
Investor Services - Franklin/Templeton Investor Services, Inc., each 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 a 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 of the class and includes the front-end sales charge. The maximum front-
end sales charge is 5.75% for Class I and 1% for Class II.
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 a Fund. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
- Templeton Region Funds
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SEP - an employer sponsored simplified employee pension plan established under
section 408(k) of the Code
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.
Templeton Region Funds -
47
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)
- Templeton Region Funds
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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.
Templeton Region Funds -
49
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.
- Templeton Region Funds
50
FOR CORPORATE SHAREHOLDERS--FORM OF RESOLUTION
It will be necessary for corporate shareholders to provide a certified copy of a
resolution or other certificate of authority to authorize the purchase as well
as sale (redemption) of shares and withdrawals by checks or drafts. You may use
the following form of resolution or you may prefer to use your own. It is
understood that the Fund, Franklin Templeton Distributors, Inc., Franklin
Templeton Investor Services, Inc., the custodian bank and their affiliates may
rely upon these authorizations until revoked or amended by written notice
delivered by registered or certified mail to the Fund.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly elected
_______________________________ of _______________________________
Title Corporate Name
a _______________________________ organized under the laws of the State of
Type of Organization
___________________ and that the following is a true and correct copy
State
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 Region Funds -
51
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 Region Funds
52
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 Region Funds -
53
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 Region Funds
54
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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.
TLGIT 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 [_] [_] ______ GREATER EUROPEAN 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>
[_]$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.
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TLGOF APP8/96
TEMPLETON GLOBAL INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 1, 1996
700 CENTRAL AVENUE
ST. PETERSBURG, FL 33701 1-800/DIAL BEN
TABLE OF CONTENTS
How Do the Funds Invest Their Assets?........................
What Are the Funds' Potential Risks?.........................
Investment Restrictions......................................
Officers and Trustees........................................
Investment Advisory and Other Services.......................
How Do the Funds Buy Securities For Their Portfolios?........
How Do I Buy, Sell and Exchange Shares?......................
How Are Fund Shares Valued?..................................
Additional Information on Distributions and Taxes............
The Funds' Underwriter.......................................
How Do the Funds Measure Performance?........................
Miscellaneous Information....................................
Financial Statements.........................................
Useful Terms and Definitions.................................
Appendix.....................................................
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WHEN READING THE SAI, YOU WILL
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SEE CERTAIN TERMS IN CAPITAL LETTERS.
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THIS MEANS THE TERM IS
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EXPLAINED IN OUR GLOSSARY SECTION.
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The Templeton Global Investment Trust (the "Trust") is an open-end management
investment company with five separate series. This SAI describes each series.
There are four diversified series, each offering two classes of shares:
Templeton Growth and Income Fund ("Growth and Income Fund") - Class I and Class
II; Templeton Global Infrastructure Fund ("Infrastructure Fund") - Class I and
Class II; Templeton Greater European Fund ("Greater European Fund") - Class I
and Class II; and Templeton Latin America Fund ("Latin America Fund") - Class I
and Class II. There is also one non-diversified series, offering one class of
shares: Templeton Americas Government Securities Fund ("Americas Government
Securities Fund").
Each Fund may, separately or collectively, be referred to as the "Fund" or
"Funds," or individually by its name.
Growth and Income Fund's investment objective is high total return, which it
seeks to achieve primarily by investing in equity and debt securities of
domestic and foreign companies. The Fund changed its name from Templeton Global
Rising Dividends Fund on July 10, 1995.
Infrastructure Fund's investment objective is long-term capital growth, which it
seeks to achieve primarily by investing in securities of domestic and foreign
companies that are principally engaged in the development, operation or
rehabilitation of the physical and social infrastructures of various nations.
Greater European Fund's investment objective is long-term capital growth, which
it seeks to achieve by investing in equity securities of companies in Greater
Europe (Western, Central and Eastern Europe and Russia).
Latin America Fund's investment objective is long-term capital growth, which it
seeks to achieve by investing in equity securities and debt obligations of
issuers in Latin American countries.
Americas Government Securities Fund's investment objective is a high level of
current income. A secondary objective is total return. It seeks to achieve this
objective by investing in debt securities of governmental entities located in
the Western Hemisphere.
Each Fund's Prospectus, dated August 1, 1996, as may be amended from time to
time, contains the basic information you should know before investing in a Fund.
For a free copy, call 1-800/DIAL BEN or write a Fund at the address shown.
THIS SAI IS NOT A PROSPECTUS. IT CONTAINS INFORMATION IN ADDITION TO AND IN MORE
DETAIL THAN SET FORTH IN THE PROSPECTUS. THIS SAI IS INTENDED TO PROVIDE YOU
WITH ADDITIONAL INFORMATION REGARDING THE ACTIVITIES AND OPERATIONS OF THE
FUNDS, AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS.
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MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENT PRODUCTS:
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ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE U.S. GOVERNMENT;
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ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK;
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ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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HOW DO THE FUNDS INVEST THEIR ASSETS?
INVESTMENT POLICIES. The investment objective and policies of each Fund are
described in each Fund's Prospectus under the heading "How Do the Funds Invest
Their Assets?"
REPURCHASE AGREEMENTS. Repurchase agreements are contracts under which the buyer
of a security simultaneously commits to resell the security to the seller at an
agreed-upon price and date. Under a repurchase agreement, the seller is required
to maintain the value of the securities subject to the repurchase agreement at
not less than their repurchase price. The Investment Manager of each Fund will
monitor the value of such securities daily to determine that the value equals or
exceeds the repurchase price. Repurchase agreements may involve risks in the
event of default or insolvency of the seller, including possible delays or
restrictions upon a Fund's ability to dispose of the underlying securities. A
Fund will enter into repurchase agreements only with parties who meet
creditworthiness standards approved by the Board, I.E., banks or broker-dealers
which have been determined by a Fund's Investment Manager to present no serious
risk of becoming involved in bankruptcy proceedings within the time frame
contemplated by the repurchase transaction.
DEBT SECURITIES. The Funds may invest in debt securities that are rated in any
rating category by S&P or Moody's or that are unrated by any rating agency. As
an operating policy, which may be changed by the Board without shareholder
approval, neither Growth and Income Fund, Infrastructure Fund, Greater European
Fund, nor Latin America Fund will invest more than 5% of its assets in debt
securities rated lower than Baa by Moody's or BBB by S&P. The market value of
debt securities generally varies in response to changes in interest rates and
the financial condition of each issuer. During periods of declining interest
rates, the value of debt securities generally increases. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. These changes in market value will be reflected in a Fund's net asset
value.
Bonds which are rated Baa by Moody's are considered as medium grade obligations,
I.E., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated C by
Moody's are the lowest rated class of bonds, and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.
Bonds rated BBB by S&P are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories. Bonds rated D by S&P are
the lowest rated class of bonds, and generally are in payment default. The D
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Although they may offer higher yields than do higher rated securities,
high-risk, low rated debt securities (commonly referred to as "junk bonds") and
unrated debt securities generally involve greater volatility of price and risk
of principal and income, including the possibility of default by, or bankruptcy
of, the issuers of the securities. In addition, the markets in which low rated
and unrated debt securities are traded are more limited than those in which
higher rated securities are traded. The existence of limited markets for
particular securities may diminish a Fund's ability to sell the securities at
fair value either to meet redemption requests or to respond to a specific
economic event such as a deterioration in the creditworthiness of the issuer.
Reduced secondary market liquidity for certain low rated or unrated debt
securities may also make it more difficult for a Fund to obtain accurate market
quotations for the purposes of valuing the Fund's portfolio. Market quotations
are generally available on many low rated or unrated securities only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of low rated debt securities,
especially in a thinly traded market. Analysis of the creditworthiness of
issuers of low rated debt securities may be more complex than for issuers of
higher rated securities, and the ability of a Fund to achieve its investment
objective may, to the extent of investment in low rated debt securities, be more
dependent upon such creditworthiness analysis than would be the case if the Fund
were investing in higher rated securities.
Low rated debt securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of low rated debt securities have been found to be less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for example, could
cause a decline in low rated debt securities prices because the advent of a
recession could lessen the ability of a highly leveraged company to make
principal and interest payments on its debt securities. If the issuer of low
rated debt securities defaults, a Fund may incur additional expenses seeking
recovery.
A Fund may accrue and report interest income on high yield bonds, such as zero
coupon bonds or pay-in-kind securities, even though it receives no cash interest
until the security's maturity or payment date. In order to qualify for
beneficial tax treatment afforded regulated investment companies, and to
generally be relieved of federal tax liabilities, a Fund must distribute all of
its net income and gains to shareholders (see "Additional Information on
Distributions and Taxes") generally on an annual basis. A Fund may have to
dispose of portfolio securities under disadvantageous circumstances to generate
cash or leverage itself by borrowing cash in order to satisfy the distribution
requirement.
Recent legislation, which requires federally insured savings and loan
associations to divest their investments in low rated debt securities, may have
a material adverse effect on a Fund's net asset value and investment practices.
STRUCTURED INVESTMENTS. Included among the issuers of debt securities in which
each 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 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
each Fund anticipates investing typically involve no credit enhancement, their
credit risk will generally be equivalent to that of the underlying instruments.
Each 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 each 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 such Fund's assets that may be used for borrowing activities.
Certain issuers of structured investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investment in these
structured investments may be limited by the restrictions contained in the 1940
Act. 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 a Fund's restrictions on investments in illiquid securities.
CONVERTIBLE SECURITIES. The Funds may invest in convertible securities,
including convertible debt and convertible preferred stock. Convertible
securities are fixed-income securities which may be converted at a stated price
within a specific amount of time into a specified number of shares of common
stock. These securities are usually senior to common stock in a corporation's
capital structure, but usually are subordinated to non-convertible debt
securities. In general, the value of a convertible security is the higher of its
investment value (its value as a fixed-income security) and its conversion value
(the value of the underlying shares of common stock if the security is
converted). The investment value of a convertible security generally increases
when interest rates decline and generally decreases when interest rates rise.
The conversion value of a convertible security is influenced by the value of the
underlying common stock.
FUTURES CONTRACTS. Each Fund may purchase and sell financial futures contracts.
Although some financial futures contracts call for making or taking delivery of
the underlying securities, in most cases these obligations are closed out before
the settlement date. The closing of a contractual obligation is accomplished by
purchasing or selling an identical offsetting futures contract. Other financial
futures contracts by their terms call for cash settlements.
Each Fund may also buy and sell index futures contracts with respect to any
stock or bond index traded on a recognized stock exchange or board of trade. An
index futures contract is a contract to buy or sell units of an index at a
specified future date at a price agreed upon when the contract is made. The
index futures contract specifies that no delivery of the actual securities
making up the index will take place. Instead, settlement in cash must occur upon
the termination of the contract, with the settlement being the difference
between the contract price and the actual level of the index at the expiration
of the contract.
At the time a Fund purchases a futures contract, an amount of cash, U.S.
government securities, or other highly liquid debt securities equal to the
market value of the contract will be deposited in a segregated account with the
Fund's custodian. When writing a futures contract, a Fund will maintain with its
custodian liquid assets that, when added to the amounts deposited with a futures
commission merchant or broker as margin, are equal to the market value of the
instruments underlying the contract. Alternatively, a Fund may "cover" its
position by owning the instruments underlying the contract or, in the case of an
index futures contract, owning a portfolio with a volatility substantially
similar to that of the index on which the futures contract is based, or holding
a call option permitting the Fund to purchase the same futures contract at a
price no higher than the price of the contract written by the Fund (or at a
higher price if the difference is maintained in liquid assets with the Fund's
custodian).
OPTIONS ON SECURITIES, INDICES AND FUTURES. Each Fund may write covered put and
call options and purchase put and call options on securities, securities indices
and futures contracts that are traded on U.S. and foreign exchanges and in the
over-the-counter markets.
An option on a security or a futures contract is a contract that gives the
purchaser of the option, in return for the premium paid, the right to buy a
specified security or futures contract (in the case of a call option) or to sell
a specified security or futures contract (in the case of a put option) from or
to the writer of the option at a designated price during the term of the option.
An option on a securities index gives the purchaser of the option, in return for
the premium paid, the right to receive from the seller cash equal to the
difference between the closing price of the index and the exercise price of the
option.
Each Fund may write a call or put option only if the option is "covered." A call
option on a security or futures contract written by a Fund is "covered" if the
Fund owns the underlying security or futures contract covered by the call or has
an absolute and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian) upon conversion or exchange of other securities held in its
portfolio. A call option on a security or futures contract is also covered if a
Fund holds a call on the same security or futures contract and in the same
principal amount as the call written where the exercise price of the call held
(a) is equal to or less than the exercise price of the call written or (b) is
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash or high grade U.S. Government securities in a
segregated account with its custodian. A put option on a security or futures
contract written by a Fund is "covered" if the Fund maintains cash or
fixed-income securities with a value equal to the exercise price in a segregated
account with its custodian, or else holds a put on the same security or futures
contract and in the same principal amount as the put written where the exercise
price of the put held is equal to or greater than the exercise price of the put
written.
A Fund will cover call options on securities indices that it writes by owning
securities whose price changes, in the opinion of the Investment Manager, are
expected to be similar to those of the index, or in such other manner as may be
in accordance with the rules of the exchange on which the option is traded and
applicable laws and regulations. Nevertheless, where a Fund covers a call option
on a securities index through ownership of securities, such securities may not
match the composition of the index. In that event, a Fund will not be fully
covered and could be subject to risk of loss in the event of adverse changes in
the value of the index. A Fund will cover put options on securities indices that
it writes by segregating assets equal to the option's exercise price, or in such
other manner as may be in accordance with the rules of the exchange on which the
option is traded and applicable laws and regulations.
A Fund will receive a premium from writing a put or call option, which increases
its gross income in the event the option expires unexercised or is closed out at
a profit. If the value of a security, index or futures contract on which a Fund
has written a call option falls or remains the same, the Fund will realize a
profit in the form of the premium received (less transaction costs) that could
offset all or a portion of any decline in the value of the portfolio securities
being hedged. If the value of the underlying security, index or futures contract
rises, however, a Fund will realize a loss in its call option position, which
will reduce the benefit of any unrealized appreciation in its investments. By
writing a put option, a Fund assumes the risk of a decline in the underlying
security, index or futures contract. To the extent that the price changes of the
portfolio securities being hedged correlate with changes in the value of the
underlying security, index or futures contract, writing covered put options will
increase a Fund's losses in the event of a market decline, although such losses
will be offset in part by the premium received for writing the option.
Each Fund may also purchase put options to hedge its investments against a
decline in value. By purchasing a put option, a Fund will seek to offset a
decline in the value of the portfolio securities being hedged through
appreciation of the put option. If the value of a Fund's investments does not
decline as anticipated, or if the value of the option does not increase, each
Funds' loss will be limited to the premium paid for the option plus related
transaction costs. The success of this strategy will depend, in part, on the
accuracy of the correlation between the changes in value of the underlying
security, index or futures contract and the changes in value of a Fund's
security holdings being hedged.
A Fund may purchase call options on individual securities or futures contracts
to hedge against an increase in the price of securities or futures contracts
that it anticipates purchasing in the future. Similarly, a Fund may purchase
call options on a securities index to attempt to reduce the risk of missing a
broad market advance, or an advance in an industry or market segment, at a time
when the Fund holds uninvested cash or short-term debt securities awaiting
investment. When purchasing call options, a Fund will bear the risk of losing
all or a portion of the premium paid if the value of the underlying security,
index or futures contract does not rise.
There can be no assurance that a liquid market will exist when a Fund seeks to
close out an option position. Trading could be interrupted, for example, because
of supply and demand imbalances arising from a lack of either buyers or sellers,
or the options exchange could suspend trading after the price has risen or
fallen more than the maximum specified by the exchange. Although a Fund may be
able to offset to some extent any adverse effects of being unable to liquidate
an option position, it may experience losses in some cases as a result of such
inability. The value of over-the-counter options purchased by a Fund, as well as
the cover for options written by a Fund, are considered not readily marketable
and are subject to the Trust's limitation on investments in securities that are
not readily marketable. See "Investment Restrictions."
FOREIGN CURRENCY HEDGING TRANSACTIONS. In order to hedge against foreign
currency exchange rate risks, each Fund may enter into forward foreign currency
exchange contracts and foreign currency futures contracts, as well as purchase
put or call options on foreign currencies, as described below. Each Fund may
also conduct its foreign currency exchange transactions on a spot (I.E., cash)
basis at the spot rate prevailing in the foreign currency exchange market.
A Fund may enter into forward foreign currency exchange contracts ("forward
contracts") to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. dollar and foreign currencies. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and privately traded by
currency traders and their customers. A Fund may enter into a forward contract,
for example, when it enters into a contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in" the U.S. dollar
price of the security. In addition, for example, when a Fund believes that a
foreign currency may suffer or enjoy a substantial movement against another
currency, it may enter into a forward contract to sell an amount of the former
foreign currency approximating the value of some or all of its portfolio
securities denominated in such foreign currency. This second investment practice
is generally referred to as "cross-hedging." Because in connection with a Fund's
forward foreign currency transactions, an amount of its assets equal to the
amount of the purchase will be held aside or segregated to be used to pay for
the commitment, a Fund will always have cash, cash equivalents or high quality
debt securities available in an amount sufficient to cover any commitments under
these contracts or to limit any potential risk. The segregated account will be
marked-to-market on a daily basis. While these contracts are not presently
regulated by the Commodity Futures Trading Commission ("CFTC"), the CFTC may in
the future assert authority to regulate forward contracts. In such event, the
Funds' ability to utilize forward contracts in the manner set forth above may be
restricted. Forward contracts may limit potential gain from a positive change in
the relationship between the U.S. dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance for a Fund
than if it had not engaged in such contracts.
A Fund may purchase and write put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of foreign portfolio
securities and against increases in the dollar cost of foreign securities to be
acquired. As is the case with other kinds of options, however, the writing of an
option on foreign currency will constitute only a partial hedge up to the amount
of the premium received, and a Fund could be required to purchase or sell
foreign currencies at disadvantageous exchange rates, thereby incurring losses.
The purchase of an option on foreign currency may constitute an effective hedge
against fluctuation in exchange rates, although, in the event of rate movements
adverse to its position, a Fund may forfeit the entire amount of the premium
plus related transaction costs. Options on foreign currencies to be written or
purchased by a Fund will be traded on U.S. and foreign exchanges or
over-the-counter.
A Fund may enter into exchange-traded contracts for the purchase or sale for
future delivery of foreign currencies ("foreign currency futures"). This
investment technique will be used only to hedge against anticipated future
changes in exchange rates which otherwise might adversely affect the value of a
Fund's portfolio securities or adversely affect the prices of securities that a
Fund intends to purchase at a later date. The successful use of foreign currency
futures will usually depend on the ability of the Investment Manager to forecast
currency exchange rate movements correctly. Should exchange rates move in an
unexpected manner, a Fund may not achieve the anticipated benefits of foreign
currency futures or may realize losses.
WHAT ARE THE FUNDS' POTENTIAL RISKS?
Each Fund has the right to purchase securities in any foreign country, developed
or developing. You should consider carefully the substantial risks involved in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in domestic investments.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published about companies in the 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. The Funds, therefore, may
encounter difficulty in obtaining market quotations for purposes of valuing its
portfolio and calculating its net asset value. Foreign markets have
substantially less volume than the NYSE and securities of some foreign companies
are less liquid and more volatile than securities of comparable U.S. companies.
Commission rates in foreign countries, which are generally fixed rather than
subject to negotiation as in the U.S., are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers and listed companies than in the U.S.
Investments in companies domiciled in developing countries may be subject to
potentially higher risks than investments in developed countries. These risks
include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict a
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interests; (iv) foreign taxation; (v)
the absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property; (vi) the absence,
until recently in certain Eastern European countries, of a capital market
structure or market-oriented economy; and (vii) the possibility that recent
favorable economic developments in Eastern Europe may be slowed or reversed by
unanticipated political or social events in such countries.
To the extent of the Communist Party's influence, investments in such countries
may involve risks of nationalization, expropriation and confiscatory taxation.
The communist governments of a number of Eastern European countries expropriated
large amounts of private property in the past, in many cases without adequate
compensation, and there can be no assurance that such expropriation will not
occur in the future. In the event of such expropriation, a Fund could lose a
substantial portion of any investments it has made in the affected countries.
Further, no accounting standards exist in Eastern European countries. Finally,
even though certain Eastern European currencies may be convertible into U.S.
dollars, the conversion rates may be artificial to the actual market values and
may be adverse to Fund shareholders.
Certain Eastern European countries, which do not have market economies, are
characterized by an absence of developed legal structures governing private and
foreign investments and private property. Certain countries require governmental
approval prior to investments by foreign persons, or limit the amount of
investment by foreign persons in a particular company, or limit the investment
of foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for
purchase by nationals.
Governments in certain Eastern European countries may require that a
governmental or quasi-governmental authority act as custodian of a Fund's assets
invested in such country. To the extent such governmental or quasi-governmental
authorities do not satisfy the requirements of the 1940 Act to act as foreign
custodians of a Fund's cash and securities, the Fund's investment in such
countries may be limited or may be required to be effected through
intermediaries. The risk of loss through governmental confiscation may be
increased in such countries.
The Infrastructure Fund, Growth and Income Fund, and Greater European Fund may
each invest a portion of its assets in Russian securities. There can be no
assurance that appropriate sub-custody arrangements will be available to the
Funds if and when one or more of the Funds seeks to invest a portion of its
assets in Russian securities. As a non-fundamental policy, none of these Funds
will invest more than 5% of its total assets in Russian securities.
Investing in Russian securities involves a high degree of risk and special
considerations not typically associated with investing in the U.S. securities
markets, and should be considered highly speculative. Such risks include: (i)
delays in settling portfolio transactions and risk of loss arising out of
Russia's system of share registration and custody; (ii) the risk that it may be
impossible or more difficult than in other countries to obtain and/or enforce a
judgment; (iii) pervasiveness of corruption and crime in the Russian economic
system; (iv) currency exchange rate volatility and the lack of available
currency hedging instruments; (v) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation); (vi) controls on
foreign investment and local practices disfavoring foreign investors and
limitations on repatriation of invested capital, profits and dividends, and on a
Fund's ability to exchange local currencies for U.S. dollars; (vii) the risk
that the government of Russia or other executive or legislative bodies may
decide not to continue to support the economic reform programs implemented since
the dissolution of the Soviet Union and could follow radically different
political and/or economic policies to the detriment of investors, including
non-market-oriented policies such as the support of certain industries at the
expense of other sectors or investors, or a return to the centrally planned
economy that existed prior to the dissolution of the Soviet Union; (viii) the
financial condition of Russian companies, including large amounts of
inter-company debt which may create a payments crisis on a national scale; (ix)
dependency on exports and the corresponding importance of international trade;
(x) the risk that the Russian tax system will not be reformed to prevent
inconsistent, retroactive and/or exorbitant taxation; and (xi) possible
difficulty in identifying a purchaser of securities held by a Fund due to the
underdeveloped nature of the securities markets.
There is little historical data on Russian securities markets because they are
relatively new and a substantial proportion of securities transactions in Russia
are privately negotiated outside of stock exchanges. Because of the recent
formation of the securities markets as well as the underdeveloped state of the
banking and telecommunications systems, settlement, clearing and registration of
securities transactions are subject to significant risks. Ownership of shares
(except where shares are held through depositories that meet the requirements of
the 1940 Act) is defined according to entries in the company's share register
and normally evidenced by extracts from the register or by formal share
certificates. However, there is no central registration system for shareholders
and these services are carried out by the companies themselves or by registrars
located throughout Russia. These registrars are not necessarily subject to
effective state supervision and it is possible for a Fund to lose its
registration through fraud, negligence or even mere oversight. While a Fund will
endeavor to ensure that its interest continues to be appropriately recorded
either itself or through a custodian or other agent inspecting the share
register and by obtaining extracts of share registers through regular
confirmations, these extracts have no legal enforceability and it is possible
that subsequent illegal amendment or other fraudulent act may deprive a Fund of
its ownership rights or improperly dilute its interests. In addition, while
applicable Russian regulations impose liability on registrars for losses
resulting from their errors, it may be difficult for a Fund to enforce any
rights it may have against the registrar or issuer of the securities in the
event of loss of share registration. Furthermore, although a Russian public
enterprise with more than 1,000 shareholders is required by law to contract out
the maintenance of its shareholder register to an independent entity that meets
certain criteria, in practice this regulation has not always been strictly
enforced. Because of this lack of independence, management of a company may be
able to exert considerable influence over who can purchase and sell the
company's shares by illegally instructing the registrar to refuse to record
transactions in the share register. This practice may prevent a Fund from
investing in the securities of certain Russian issues deemed suitable by its
Investment Manager. Further, this also could cause a delay in the sale of
Russian securities by a Fund if a potential purchaser is deemed unsuitable,
which may expose the Fund to potential loss on the investment.
Investing in Latin American issuers involves a high degree of risk and special
considerations not typically associated with investing in the U. S. and other
more developed securities markets, and should be considered highly speculative.
Such risks include: (i) restrictions or controls on foreign investment and
limitations on repatriation of invested capital and Latin America Fund's ability
to exchange local currencies for U.S. dollars; (ii) higher and sometimes
volatile rates of inflation (including the risk of social unrest associated with
periods of hyper-inflation); (iii) the risk that certain Latin American
countries, which are among the largest debtors to commercial banks and foreign
governments and which have experienced difficulty in servicing sovereign debt
obligations in the past, may negotiate to restructure sovereign debt
obligations; (iv) the risk that it may be impossible or more difficult than in
other countries to obtain and/or enforce a judgment; (v) currency exchange rate
fluctuations and the lack of available currency hedging instruments; (vi) more
substantial government involvement in and control over the local economies; and
(vii) dependency on exports and the corresponding importance of international
trade.
Latin American countries may be subject to a greater degree of economic,
political, and social instability than is the case in the U.S., Japan, or
Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or military involvement in
political and economic decision-making, including changes in governmental
control through extra-constitutional means; (ii) popular unrest associated with
demands for improved political, economic, and social conditions; (iii) internal
insurgencies and terrorist activities; (iv) hostile relations with neighboring
countries; (v) ethnic, religious and racial disaffection; and (vi) drug
trafficking.
Each Fund endeavors to buy and sell foreign currencies on as favorable a basis
as practicable. Some price spread on currency exchange (to cover service
charges) may be incurred, particularly when a Fund changes investments from one
country to another or when proceeds of the sale of shares in U.S. dollars are
used for the purchase of securities in foreign countries. Also, some countries
may adopt policies which would prevent a Fund from transferring cash out of the
country or withhold portions of interest and dividends at the source. There is
the possibility of cessation of trading on national exchanges, expropriation,
nationalization or confiscatory taxation, withholding and other foreign taxes on
income or other amounts, foreign exchange controls (which may include suspension
of the ability to transfer currency from a given country), default in foreign
government securities, political or social instability, or diplomatic
developments which could affect investments in securities of issuers in foreign
nations.
The Funds may be affected either unfavorably or favorably by fluctuations in the
relative rates of exchange between the currencies of different nations, by
exchange control regulations and by indigenous economic and political
developments. Some countries in which the Funds may invest may also have fixed
or managed currencies that are not free-floating against the U.S. dollar.
Further, certain currencies may not be internationally traded. Certain of these
currencies have experienced a steady devaluation relative to the U.S. dollar.
Any devaluations in the currencies in which the Funds' portfolio securities are
denominated may have a detrimental impact on the Funds. Through the flexible
policy of the Funds, the Investment Managers endeavor to avoid unfavorable
consequences and to take advantage of favorable developments in particular
nations where from time to time they place the Funds' investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such as
changing the emphasis on investments from one nation to another and from one
type of security to another. Some of these decisions may later prove profitable
and others may not. No assurance can be given that profits, if any, will exceed
losses.
The Board considers at least annually the likelihood of the imposition by any
foreign government of exchange control restrictions which would affect the
liquidity of the Funds' assets maintained with custodians in foreign countries,
as well as the degree of risk from political acts of foreign governments to
which such assets may be exposed. The Board also considers the degree of risk
involved through the holding of portfolio securities in domestic and foreign
securities depositories (see "Investment Advisory and Other Services"). However,
in the absence of willful misfeasance, bad faith or gross negligence on the part
of an Investment Manager, any losses resulting from the holding of portfolio
securities in foreign countries and/or with securities depositories will be at
the risk of the shareholders. No assurance can be given that the Board's
appraisal of the risks will always be correct or that such exchange control
restrictions or political acts of foreign governments will not occur.
A Fund's ability to reduce or eliminate its futures and related options
positions will depend upon the liquidity of the secondary markets for such
futures and options. The Funds intend to purchase or sell futures and related
options only on exchanges or boards of trade where there appears to be an active
secondary market, but there is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. Use of futures and
options for hedging may involve risks because of imperfect correlations between
movements in the prices of the futures or options and movements in the prices of
the securities being hedged. Successful use of futures and related options by a
Fund for hedging purposes also depends upon the Investment Manager's ability to
predict correctly movements in the direction of the market, as to which no
assurance can be given.
There are several risks associated with transactions in options on securities
indices. For example, there are significant differences between the securities
and options markets that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objectives. A decision
as to whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events. There can be no
assurance that a liquid market will exist when a Fund seeks to close out an
option position. If a Fund were unable to close out an option that it had
purchased on a securities index, it would have to exercise the option in order
to realize any profit or the option may expire worthless. If trading were
suspended in an option purchased by the Fund, it would not be able to close out
the option. If restrictions on exercise were imposed, a Fund might be unable to
exercise an option it has purchased. Except to the extent that a call option on
an index written by a Fund is covered by an option on the same index purchased
by the Fund, movements in the index may result in a loss to the Fund; however,
such losses may be mitigated by changes in the value of the Fund's securities
during the period the option was outstanding.
Additional risks may be involved with the Funds' special investment techniques,
including loans of portfolio securities and borrowing for investment purposes.
These risks are described under the heading "How Do the Funds Invest Their
Assets? - Types of Securities the Funds May Invest In"" in each Fund's
Prospectus.
INVESTMENT RESTRICTIONS
The Funds have adopted the following restrictions as fundamental policies. These
restrictions may not be changed without the approval of a majority of the
outstanding voting securities of a Fund. Under the 1940 Act, this means the
approval of (i) more than 50% of the outstanding shares of a Fund or (ii) 67% or
more of the shares of a Fund present at a shareholder meeting if more than 50%
of the outstanding shares of the Fund are represented at the meeting in person
or by proxy, whichever is less. Each Fund MAY NOT:
1. Invest in real estate or mortgages on real estate (although
the Funds may invest in marketable securities secured by real
estate or interests therein); invest in other open-end
investment companies (except in connection with a merger,
consolidation, acquisition or reorganization); invest in
interests (other than publicly issued debentures or equity
stock interests) in oil, gas or other mineral exploration or
development programs; or purchase or sell commodity contracts
(except futures contracts as described in the Fund's
Prospectus).
2. Purchase any security (other than obligations of the U.S.
government, its agencies or instrumentalities) if, as a
result, as to 75% of a Fund's total assets (a) more than 5% of
the Fund's total assets would then be invested in securities
of any single issuer, or (b) the Fund would then own more than
10% of the voting securities of any single issuer; provided,
however, that this restriction does not apply to Americas
Government Securities Fund.
3. Act as an underwriter; issue senior securities except as set
forth in investment restriction 6 below; or purchase on margin
or sell short, except that each Fund may make margin payments
in connection with futures, options and currency transactions.
4. Loan money, except that a Fund may (a) purchase a portion of
an issue of publicly distributed bonds, debentures, notes and
other evidences of indebtedness, (b) enter into repurchase
agreements and (c) lend its portfolio securities.
5. Borrow money, except that a Fund may borrow money from banks
in an amount not exceeding 33-1/3% of the value of its total
assets (including the amount borrowed).
6. Mortgage, pledge or hypothecate its assets (except as may be
necessary in connection with permitted borrowings); provided,
however, this does not prohibit escrow, collateral or margin
arrangements in connection with its use of options, futures
contracts and options on future contracts.
7. Invest more than 25% of its total assets in a single industry.
8. Participate on a joint or a joint and several basis in any
trading account in securities. (See "How Do the Funds Buy
Securities for their Portfolios?") as to transactions in the
same securities for the Funds and/or other mutual funds and
clients with the same or affiliated advisers.)
If a Fund receives from an issuer of securities held by the Fund subscription
rights to purchase securities of that issuer, and if the Fund exercises such
subscription rights at a time when the Fund's portfolio holdings of securities
of that issuer would otherwise exceed the limits set forth in Investment
Restrictions 2 or 7 above, it will not constitute a violation if, prior to
receipt of securities upon exercise of such rights, and after announcement of
such rights, the Fund has sold at least as many securities of the same class and
value as it would receive on exercise of such rights.
ADDITIONAL RESTRICTIONS. Each Fund has adopted the following additional
restrictions which are not fundamental and which may be changed without
shareholder approval, to the extent permitted by applicable law, regulation or
regulatory policy. Under these restrictions, a Fund may not:
1. Purchase or retain securities of any company in which Trustees
or officers of the Trust or of a Fund's Investment Manager,
individually owning more than 1/2 of 1% of the securities of
such company, in the aggregate own more than 5% of the
securities of such company.
2. Invest more than 5% of the value of its total assets in
securities of issuers which have been in continuous operation
less than three years.
3. Invest more than 5% of its net assets in warrants whether or
not listed on the NYSE or American Stock Exchange, and more
than 2% of its net assets in warrants that are not listed on
those exchanges. Warrants acquired in units or attached to
securities are not included in this restriction.
4. Purchase or sell real estate limited partnership interests.
5. Purchase or sell interests in oil, gas and mineral leases
(other than securities of companies that invest in or sponsor
such programs).
6. Invest for the purpose of exercising control over management
of any company.
7. Purchase more than 10% of a company's outstanding voting
securities.
8. Invest more than 15% of the Fund's total assets in securities
that are not readily marketable (including repurchase
agreements maturing in more than seven days and
over-the-counter options purchased by the Fund), including no
more than 10% of its total assets in restricted securities.
Rule 144A securities are not subject to the 10% limitation on
restricted securities, although a Fund will limit its
investment in all restricted securities, including Rule 144A
securities, to 15% of its total assets.
If a percentage restriction is met at the time of investment, a later increase
or decrease in the percentage due to a change in value of portfolio securities
or the amount of assets will not be considered a violation of any of the
foregoing restrictions.
OFFICERS AND TRUSTEES
The Board has the responsibility for the overall management of the Trust,
including general supervision and review of its investment activities. The
Board, in turn, elects the officers of the Trust who are responsible for
administering the Trust's day-to-day operations. The affiliations of the
officers and Board members and their principal occupations for the past five
years are shown below. Members of the Board who are considered "interested
persons" of the Trust under the 1940 Act are indicated by an asterisk "*".
<TABLE>
<CAPTION>
POSITION AND
OFFICES WITH THE PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TRUST DURING THE PAST FIVE YEARS
<S> <C> <C>
HARRIS J. ASHTON Trustee Chairman of the board, president, and chief executive
Metro Center officer of General Host Corporation (nursery and craft
1 Station Place centers); and a director of RBC Holdings (U.S.A.) Inc. (a
Stamford, Connecticut bank holding company) and Bar-S Foods.
Age 64
NICHOLAS F. BRADY* Trustee Chairman of Templeton Emerging Markets Investment Trust
102 East Dover Street PLC; chairman of Templeton Latin America Investment Trust
Easton, Maryland PLC; chairman of Darby Overseas Investments, Ltd. (an
Age 66 investment firm) (1994-present); chairman and director of
Templeton Central and Eastern European Fund; director of
the Amerada Hess Corporation, Capital Cities/ABC, Inc.,
Christiana Companies, and the H.J. Heinz Company;
Secretary of the United States Department of the Treasury
(1988-January 1993); and chairman of the board of Dillon,
Read & Co. Inc. (investment banking) prior thereto.
F. BRUCE CLARKE Trustee Retired; formerly, credit adviser, National Bank of
19 Vista View Blvd. Canada, Toronto.
Thornhill, Ontario
Age 86
POSITION AND
OFFICES WITH THE PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TRUST DURING THE PAST FIVE YEARS
MARTIN L. FLANAGAN* Trustee and Vice Senior vice president, treasurer, and chief financial
777 Mariners Island Blvd. President officer of Franklin Resources, Inc.; director, and
San Mateo, California executive vice president of Templeton Investment Counsel,
Age 36 Inc.; director, president and chief executive officer of
Templeton Global Investors, Inc.; accountant with Arthur
Andersen & Company (1982-1983); and a member of the
International Society of Financial Analysts and the
American Institute of Certified Public Accountants.
HASSO-G VON DIERGARDT- Trustee Farmer; and president of Clairhaven Investments, Ltd. and
NAGLO other private investment companies.
R.R. 3
Stouffville, Ontario
Age 80
S. JOSEPH FORTUNATO Trustee Member of the law firm of Pitney, Hardin, Kipp & Szuch;
200 Campus Drive and a director of General Host Corporation.
Florham Park, New Jersey
Age 64
JOHN Wm. GALBRAITH Trustee President of Galbraith Properties, Inc. (personal
360 Central Avenue investment company); director of Gulf West Banks, Inc.
Suite 1300 (bank holding company) (1995-present) and Mercantile Bank
St. Petersburg, Florida (1991-1995); vice chairman of Templeton, Galbraith &
Age 74 Hansberger Ltd. (1986-1992); and chairman of Templeton
Funds Management, Inc. (1974-1991).
ANDREW H. HINES, JR. Trustee Consultant for the Triangle Consulting Group; chairman of
150 2nd Avenue N. the board and chief executive officer of Florida Progress
St. Petersburg, Florida Corporation (1982-February 1990) and director of various
Age 73 of its subsidiaries; chairman and director of Precise
Power Corporation; executive-in-residence of Eckerd
College (1991-present); and a director of Checkers
Drive-In Restaurants, Inc.
POSITION AND
OFFICES WITH THE PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TRUST DURING THE PAST FIVE YEARS
CHARLES B. JOHNSON* Trustee, Chairman President, chief executive officer, and director of
777 Mariners Island Blvd. of the Board and Franklin Resources, Inc.; chairman of the board and
San Mateo, California Vice President director of Franklin Advisers, Inc. and Franklin Templeton
Age 63.
Distributors,
Inc.; director
of Franklin
Administrative
Services,
Inc., and
General Host
Corporation
and Templeton
Global
Investors,
Inc.; and
officer and
director,
trustee or
managing
general
partner, as
the case may
be, of most
other
subsidiaries
of Franklin
Resources,
Inc.
BETTY P. KRAHMER Trustee Director or trustee of various civic associations;
2201 Kentmere Parkway formerly, economic analyst, U.S. Government.
Wilmington, Delaware
Age 67
GORDON S. MACKLIN Trustee Chairman of White River Corporation (information
8212 Burning Tree Road services); director of Fund America Enterprises Holdings,
Bethesda, Maryland Inc., MCI Communications Corporation, Fusion Systems
Age 68 Corporation, Infovest Corporation, and MedImmune, Inc.;
formerly held the following positions: chairman of
Hambrecht and Quist Group; director of H&Q Healthcare
Investors and Lockheed Martin Corporation; and president
of the National Association of Securities Dealers, Inc.
FRED R. MILLSAPS Trustee Manager of personal investments (1978-present); chairman
2665 N.E. 37th Drive and chief executive officer of Landmark Banking
Fort Lauderdale, Florida Corporation (1969-1978); financial vice president of
Age 67 Florida Power and Light (1965-1969); vice president of The
Federal Reserve Bank of Atlanta (1958-1965); and a
director of various other business and nonprofit
organizations.
MARK G. HOLOWESKO President President and director of Templeton Global Advisors
Lyford Cay Limited; chief investment officer of global equity
Nassau, Bahamas research for Templeton Worldwide, Inc.; president or vice
Age 36 president of the Templeton Funds; formerly, investment
administrator with Roy West Trust Corporation (Bahamas)
Limited (1984-1985).
POSITION AND
OFFICES WITH THE PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TRUST DURING THE PAST FIVE YEARS
RUPERT H. JOHNSON, JR. Vice President Executive vice president and director of Franklin
777 Mariners Island Blvd. Resources, Inc. and Franklin Templeton Distributors, Inc.;
San Mateo, California president and director of Franklin Advisers, Inc.; director
Age 55 of Franklin Templeton Investor Services, Inc.; and officer
and/or director, trustee or managing general partner, as
the case may be, of most other subsidiaries of Franklin
Resources, Inc., and an officer and/or director, as the
case may be, of various investment companies in the
Franklin Templeton Group.
HARMON E. BURNS Vice President Executive vice president, secretary and director of
777 Mariners Island Blvd. Franklin Resources, Inc.; executive vice president and
San Mateo, California director of Franklin Templeton Distributors, Inc.;
Age 51 executive vice president of Franklin Advisers, Inc.;
director of Franklin Templeton Investor Services, Inc.;
officers and/or director, as the case may be of other
subsidiaries of Franklin Resources, Inc.
CHARLES E. JOHNSON Vice President Senior vice president and director of Franklin Resources,
500 East Broward Blvd. Inc.; senior vice president of Franklin Templeton
Ft. Lauderdale, Florida Distributors, Inc.; president and director of Franklin
Age 40 Institutional Service Corporation; president and chief
executive officer of Templeton Worldwide, Inc.; chairman of
the board of Templeton Investment Counsel, Inc.; vice
president and/or director, as the case may be, for some of
the subsidiaries of Franklin Resources, Inc.; and an
officer and/or director, as the case may be, of various
investment companies in the Franklin Templeton Group.
DEBORAH R. GATZEK Vice President Senior vice president and general counsel of Franklin
777 Mariners Island Blvd. Resources, Inc.; senior vice president of Franklin
San Mateo, California Templeton Distributors, Inc.; vice president of Franklin
Age 47 Advisers, Inc. and officer of various investment companies
in the Franklin Templeton Group of Funds.
POSITION AND
OFFICES WITH THE PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TRUST DURING THE PAST FIVE YEARS
DORIAN FOYIL Vice President Vice president, Portfolio Management/Research, of
Lyford Cay Templeton Global Advisors Limited;
Nassau, Bahamas formerly, research analyst, UBS Phillips & Drew (London).
Age 38
SAMUEL J. FORESTER, JR. Vice President President of the Templeton Global Bond Managers Division
500 East Broward Blvd. of Templeton Investment Counsel, Inc.; president or vice
Fort Lauderdale, Florida president of other Templeton Funds; founder and partner of
Age 48 Forester, Hairston Investment Management (1989-1990);
managing director (Mid-East Region) of Merrill Lynch,
Pierce, Fenner & Smith Inc. (1987-1988); and an advisor
for Saudi Arabian Monetary Agency (1982-1987).
JOHN R. KAY Vice President Vice president of the Templeton Funds; vice president and
500 East Broward Blvd. treasurer of Templeton Global Investors, Inc. and
Fort Lauderdale, Florida Templeton Worldwide, Inc.; assistant vice president of
Age 56 Franklin
Templeton
Distributors,
Inc.;
formerly, vice
president and
controller of
the Keystone
Group, Inc.
GARY CLEMONS Vice President Research analyst for Templeton Investment Counsel, Inc.
500 East Broward Blvd. (1993-present); formerly, research analyst for Templeton
Fort Lauderdale, Florida Quantitative Advisors, Inc.
Age 39
DOUGLAS R. LEMPEREUR Vice President Senior vice president of the Templeton Global Bond
500 East Broward Blvd. Managers Division of Templeton Investment Counsel, Inc.;
Fort Lauderdale, Florida formerly, securities analyst for Colonial Management
Age 47 Associates
(1985-1988),
Standish, Ayer
& Wood
(1977-1985),
and The First
National Bank
of Chicago
(1974-1977).
NEIL S. DEVLIN Vice President Senior vice president, Portfolio Management/Research, of
500 East Broward Blvd. the Templeton Global Bond Managers division of Templeton
Fort Lauderdale, Florida Investment Counsel, Inc.; formerly, portfolio manager and
Age 39 bond analyst for Constitutional Capital Management
(1985-1987); and a bond trader and research analyst for
Bank of New England (1982-1985).
POSITION AND
OFFICES WITH THE PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TRUST DURING THE PAST FIVE YEARS
JAMES R. BAIO Treasurer Certified public accountant; treasurer of the Templeton
500 East Broward Blvd. Funds; senior vice president of Templeton Worldwide, Inc.,
Fort Lauderdale, Florida Templeton Global Investors, Inc., and Templeton Funds
Age 42 Trust
Company;
formerly,
senior tax
manager for
Ernst & Young
(certified
public
accountants)
(1977-1989).
</TABLE>
The table above shows the officers and Board members who are affiliated with
Distributors and the Investment Managers. Nonaffiliated members of the Board and
Mr. Brady are currently paid an annual retainer and/or fees for attendance at
Board and Committee meetings, the amount of which is based on the level of
assets in each Fund. Accordingly, the Trust currently pays the independent
Trustees and Mr. Brady an annual retainer of $1,000 and a fee of $100 per
meeting of the Board and its portion of a flat fee of $2,000 for each Audit
Committee meeting and/or Nominating and Compensation Committee meeting attended.
As shown above, some of the nonaffiliated Board members also serve as directors,
trustees or managing general partners of other investment companies in the
Franklin Templeton Group of Funds. They may receive fees from these funds for
their services. The following table provides the total fees paid to
nonaffiliated Board members and Mr. Brady by the Trust and by other funds in the
Franklin Templeton Group of Funds.
<TABLE>
<CAPTION>
NUMBER OF BOARDS IN THE
TOTAL FEES RECEIVED FROM FRANKLIN TEMPLETON GROUP
TOTAL FEES RECEIVED THE FRANKLIN TEMPLETON OF FUNDS ON WHICH EACH
FROM THE TRUST* GROUP OF FUNDS** SERVES***
NAME
<S> <C> <C> <C>
Harris J. Ashton $425 $ 327,925 55
Nicholas F. Brady 425 98,225 23
F. Bruce Clarke 479 83,350 19
Hasso-G von Diergardt-
Naglo 425 77,350 19
S. Joseph Fortunato 425 344,745 57
John Wm. Galbraith 325 70,100 22
Andrew H. Hines, Jr. 809 106,325 23
Betty P. Krahmer 425 93,475 23
Gordon S. Macklin 755 321,525 52
Fred R. Millsaps 479 104,325 23
</TABLE>
* For the fiscal year ended March 31, 1996.
** For the calendar year ended December 31, 1995.
*** We base the number of boards on the number of registered investment
companies in the Franklin Templeton Group of Funds. This number does not
include the total number of series or funds within each investment
company for which the Board members are responsible. The Franklin
Templeton Group of Funds currently includes 60 registered investment
companies, with approximately 164 U.S. based funds or series.
Nonaffiliated members of the Board and Mr. Brady are reimbursed for expenses
incurred in connection with attending board meetings, paid pro rata by each fund
in the Franklin Templeton Group of Funds for which they serve as director,
trustee or managing general partner. No officer or Board member received any
other compensation, including pension or retirement benefits, directly from the
Trust or other funds in the Franklin Templeton Group of Funds. Certain officers
or Board members who are shareholders of Resources may be deemed to receive
indirect remuneration by virtue of their participation, if any, in the fees paid
to its subsidiaries.
As of June 25, 1996, the officers and Board members, as a group, owned less than
1% of each class of each Fund.
Many of the Board members also own shares in other funds in the Franklin
Templeton Group of Funds. Charles B. Johnson and Rupert H. Johnson, Jr. are
brothers and the father and uncle, respectively, of Charles E. Johnson.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT MANAGERS AND SERVICES PROVIDED. Growth and Income Fund's and Greater
European Fund's Investment Manager is TGA. Infrastructure Fund's and Latin
America Fund's Investment Manager is TICI. Americas Government Securities Fund's
Investment Manager is TICI, through its TGBM division. Each Fund's Investment
Manager, provides investment research and portfolio management services,
including the selection of securities for the Fund to buy, hold or sell and the
selection of brokers through whom the Fund's portfolio transactions are
executed. TGA renders its services to Growth and Income Fund and Greater
European Fund from outside the U.S. Each Investment Manager's activities are
subject to the review and supervision of the Board to whom the Investment
Manager renders periodic reports of the Fund's investment activities. Each
Investment Manager is covered by fidelity insurance on its officers, directors
and employees for the protection of the Trust.
The Investment Managers and their affiliates act as investment managers to
numerous other investment companies or funds and accounts. Each Investment
Manager may give advice and take action with respect to any of the other funds
it manages, or for its own account, that may differ from action taken by the
Investment Manager on behalf of each Fund. Similarly, with respect to a Fund,
the Investment Manager is not obligated to recommend, buy or sell, or to refrain
from recommending, buying or selling any security that the Investment Manager
and access persons, as defined by the 1940 Act, may buy or sell for its or their
own account or for the accounts of any other fund. The Investment Manager is not
obligated to refrain from investing in securities held by a Fund or other funds
that it manages. Of course, any transactions for the accounts of an Investment
Manager and other access persons will be made in compliance with the Trust's
Code of Ethics.
INVESTMENT MANAGEMENT AGREEMENTS. Under its investment management agreement,
Growth and Income Fund pays TGA a monthly fee equal on an annual basis to 0.75%
of its average daily net assets. Infrastructure Fund pays TICI a monthly fee
equal on an annual basis to 0.75% of its average daily net assets. Americas
Government Securities Fund pays TICI a monthly fee equal on an annual basis to
0.60% of its average daily net assets. Greater European Fund pays TGA a monthly
fee equal on an annual basis to 0.75% of its average daily net assets. Latin
America Fund pays TICI a monthly fee equal on an annual basis to 1.25% of its
average daily net assets.
The investment management fee will be reduced as necessary to comply with the
most stringent limits on Fund expenses of any state where a Fund offers it
shares. Currently, the most restrictive limitation on a fund's allowable
expenses for each fiscal year, as a percentage of its average net assets, is
2.5% of the first $30 million in assets, 2% of the next $70 million, and 1.5% of
assets over $100 million. Expense reductions have not been necessary based on
state requirements.
An investment management agreement for a Fund may continue in effect for
successive annual periods if its continuance is specifically approved at least
annually by a vote of the Board or by a vote of the holders of a majority of the
Fund's outstanding voting securities, and in either event by a majority vote of
the Board members who are not parties to the investment management agreement or
interested persons of any such party (other than as members of the Board), cast
in person at a meeting called for that purpose. Each investment management
agreement may be terminated without penalty at any time by the Board or by a
vote of the holders of a majority of a Fund's outstanding voting securities, or
by the respective Investment Manager on 60 days' written notice, and will
automatically terminate in the event of its assignment, as defined in the 1940
Act.
SUB-ADVISORY AGREEMENT. Under a sub-advisory agreement between TICI and
Advisers, Advisers provides TICI with investment advisory assistance and
portfolio management advice with respect to Americas Government Securities
Fund's portfolio. Advisers provides TICI on an ongoing basis with research
services, including information, analytical reports, computer screening studies,
statistical data and factual resumes pertaining to securities.
The sub-advisory agreement may continue in effect for successive annual periods
if its continuance is specifically approved at least annually by a vote of the
Board or by a vote of the holders of a majority of Americas Government
Securities Fund's outstanding voting securities, and in either event by a
majority vote of the Board members who are not parties to the sub-advisory
agreement or interested persons of any such party (other than as members of the
Board) cast in person at a meeting called for that purpose. The sub-advisory
agreement may be terminated without penalty at any time by the Trust's Board or
by vote of a majority of Americas Government Securities Fund's outstanding
shares or by either TICI or Advisers upon not less than 60 days' written notice,
and will automatically terminate in the event of its assignment, as defined in
the 1940 Act.
SUB-ADVISORY FEES. For its services, TICI pays to Advisers a fee in U.S. dollars
at an annual rate of 0.25% of Americas Government Securities Fund's average
daily net assets. During the fiscal year ended March 31, 1996 and the period
June 27, 1994 to March 31, 1995, Advisers received sub-advisory fees of $8,033
and $2,932.
BUSINESS MANAGER AND SERVICES PROVIDED. The Business Manager provides office
space and furnishings, facilities and equipment required for managing the
business affairs of the Funds. The Business Manager also maintains all internal
bookkeeping, clerical, secretarial and administrative personnel and services and
provides certain telephone and other mechanical services. The Business Manager
is covered by fidelity insurance on its officers, directors and employees for
the protection of the Trust.
BUSINESS MANAGEMENT AGREEMENT. Under its business management agreement, the
Business Manager receives a monthly fee equal on an annual basis to 0.15% of the
first $200,000,000 of the Trust's aggregate average daily net assets (I.E.,
total of the Funds), reduced to 0.135% annually of the Trust's aggregate net
assets in excess of $200,000,000, further reduced to 0.1% annually of such net
assets in excess of $700,000,000, and further reduced to 0.075% annually of such
net assets in excess of $1,200 million. The fee is allocated between the Funds
according to their respective average daily net assets. Each class of shares of
each Fund pays a portion of the fee, determined by the proportion of the Fund
that it represents.
INVESTMENT MANAGEMENT AND BUSINESS MANAGEMENT FEES. For the fiscal years and
periods indicated below, before fee reductions and expense limitations, the
Funds' investment management and business management fees totaled:
<TABLE>
<CAPTION>
ONE YEAR ONE YEAR MARCH 14, 1994
ENDED ENDED TO
MARCH 31, 1996 MARCH 31, 1995 MARCH 31, 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Growth & Income Fund
Investment management fees $64,366 -0- $25,969
Business management fees 12,868 -0- 5,188
Infrastructure Fund
Investment management fees $158,648 -0- $75,663
Business management fees 31,729 -0- 15,126
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR JUNE 27, 1994
ENDED TO
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
Americas Government Securities Fund
Investment management fees
Business management fees $19,280 $7,036
4,822 1,752
</TABLE>
<TABLE>
<CAPTION>
MAY 8, 1995
TO
MARCH 31, 1996
<S> <C>
Greater European Fund
Investment management fees $24,741
Business management fees 4,949
Latin America Fund
Investment management fees 44,350
Business management fees 5,322
</TABLE>
Under an agreement by the respective Investment Manager and the Business Manager
to limit their fees, each Fund (except for Infrastructure Fund) paid no
investment management or business management fees for the fiscal years and
periods indicated above. The agreement to limit the expenses of Infrastructure
Fund was terminated on April 15, 1995. Infrastructure Fund paid investment
management and business management fees for the fiscal year and period as
follows:
<TABLE>
<CAPTION>
ONE YEAR MARCH 14, 1994
ENDED TO
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
Investment management fees $158, 648 $75,663
Business management fees 31,729 15,126
</TABLE>
SHAREHOLDER SERVICING AGENT. Investor Services, a wholly-owned subsidiary of
Resources, is the Fund's shareholder servicing agent and acts as the Fund's
transfer agent and dividend-paying agent. Investor Services is compensated on
the basis of a fixed fee per account.
CUSTODIAN. The Chase Manhattan Bank, at its principal office at MetroTech
Center, Brooklyn, New York 11245, and at the offices of its branches and
agencies throughout the world, acts as custodian of the each Fund's. The
custodian does not participate in decisions relating to the purchase and sale of
portfolio securities.
AUDITORS. McGladrey & Pullen LLP, 555 Fifth Avenue, New York, New York 10017 are
the Funds' independent auditors. During the fiscal year ended March 31, 1996,
their auditing services consisted of rendering opinions on the financial
statements of each Fund included in the Funds' Annual Report to Shareholders for
the fiscal year ended March 31, 1996, and review of the Trust's filings with the
SEC and the IRS.
HOW DO THE FUNDS BUY SECURITIES FOR THEIR PORTFOLIOS?
The selection of brokers and dealers to execute transactions in each Fund's
portfolio is made by the Fund's Investment Manager in accordance with criteria
set forth in the investment management agreement and any directions that the
Board may give.
When placing a portfolio transaction, each Investment Manager seeks to obtain
prompt execution of orders at the most favorable net price. When portfolio
transactions are done on a securities exchange, the amount of commission paid by
a Fund is negotiated between the Investment Manager and the broker executing the
transaction. The determination and evaluation of the reasonableness of the
brokerage commissions paid in connection with portfolio transactions are based
to a large degree on the professional opinions of the persons responsible for
the placement and review of the transactions. These opinions are based on, among
others, the experience of these individuals in the securities industry and
information available to them about the level of commissions being paid by other
institutional investors of comparable size. Each Investment Manager will
ordinarily place orders to buy and sell over-the-counter securities on a
principal rather than agency basis with a principal market maker unless, in the
opinion of the Investment Manager, a better price and execution can otherwise be
obtained. Purchases of portfolio securities from underwriters will include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers will include a spread between the bid and ask price.
The amount of commission is not the only factor an Investment Manager considers
in the selection of a broker to execute a trade. If an Investment Manager
believes it is in a Fund's best interest, the Investment Manager may place
portfolio transactions with brokers who provide the types of services described
below, even if it means the Fund will pay a higher commission than if no weight
were given to the broker's furnishing of these services. This will be done only
if, in the opinion of an Investment Manager, the amount of any additional
commission is reasonable in relation to the value of the services. Higher
commissions will be paid only when the brokerage and research services received
are bona fide and produce a direct benefit to a Fund or assist an Investment
Manager in carrying out its responsibilities to a Fund, or when it is otherwise
in the best interest of a Fund to do so, whether or not such services may also
be useful to the Investment Manager in advising other clients.
When an Investment Manager believes several brokers are equally able to provide
the best net price and execution, it may decide to execute transactions through
brokers who provide quotations and other services to a Fund, in an amount of
total brokerage as may reasonably be required in light of these services.
Specifically, these services may include providing the quotations necessary to
determine a Fund's net asset value, as well as research, statistical and other
data.
It is not possible to place a dollar value on the special executions or on the
research services received by an Investment Manager from dealers effecting
transactions in portfolio securities. The allocation of transactions in order to
obtain additional research services permits each Investment Manager to
supplement its own research and analysis activities and to receive the views and
information of individuals and research staff of other securities firms. As long
as it is lawful and appropriate to do so, each Investment Manager and its
affiliates may use this research and data in their investment advisory
capacities with other clients. If the Trust's officers are satisfied that the
best execution is obtained, the sale of Fund shares (which shall be deemed to
include also shares of other funds which have either the same investment adviser
or an investment adviser affiliated with a Fund's Investment Manager) may also
be considered a factor in the selection of broker-dealers to execute a Fund's
portfolio transactions.
Because Distributors is a member of the National Association of Securities
Dealers, it may sometimes receive certain fees when a Fund tenders portfolio
securities pursuant to a tender-offer solicitation. As a means of recapturing
brokerage for the benefit of a Fund, any portfolio securities tendered by a Fund
will be tendered through Distributors if it is legally permissible to do so. In
turn, the next investment management fee payable to that Fund's Investment
Manager will be reduced by the amount of any fees received by Distributors in
cash, less any costs and expenses incurred in connection with the tender.
If purchases or sales of securities of a Fund and one or more other investment
companies or clients supervised by an Investment Manager are considered at or
about the same time, transactions in these securities will be allocated among
the several investment companies and clients in a manner deemed equitable to all
by the Investment Manager, taking into account the respective sizes of the funds
and the amount of securities to be purchased or sold. In some cases this
procedure could have a detrimental effect on the price or volume of the security
so far as a Fund is concerned. In other cases it is possible that the ability to
participate in volume transactions and to negotiate lower brokerage commissions
will be beneficial to a Fund.
During the fiscal years and periods indicated below, each Fund paid the
following brokerage commissions:
<TABLE>
<CAPTION>
ONE YEAR ONE YEAR MARCH 14, 1994
ENDED ENDED TO
MARCH 31, 1996 MARCH 31, 1995 MARCH 31, 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Growth & Income Fund $26,767 $11,237 -0-
Infrastructure Fund 56,451 63,971 -0-
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR JUNE 27, 1994
ENDED TO
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
Americas Government Securities Fund
-0- -0-
</TABLE>
<TABLE>
MARCH 8, 1945
TO
MARCH 31, 1996
<S> <C>
Greater European Fund $17,067
Latin America Fund 20,945
</TABLE>
As of March 31, 1996, each Fund did not own securities of its regular
broker-dealers.
HOW DO I BUY, SELL AND EXCHANGE SHARES?
ADDITIONAL INFORMATION ON BUYING SHARES
Each Fund continuously offers its shares through Securities Dealers who have an
agreement with Distributors. Securities Dealers may at times receive the entire
sales charge. A Securities Dealer who receives 90% or more of the sales charge
may be deemed an underwriter under the Securities Act of 1933, as amended.
Securities laws of states where a Fund offers its shares may differ from federal
law. Banks and financial institutions that sell shares of a Fund may be required
by state law to register as securities dealers. Financial institutions or their
affiliated brokers may receive an agency transaction fee in the percentages
indicated in the table under "How Do I Buy Shares? - Purchase Price of Fund
Shares" in the respective Prospectus.
When you buy shares, if you submit a check or a draft that is returned unpaid to
a Fund we may impose a $10 charge against your account for each returned item.
Under agreements with certain banks in Taiwan, Republic of China, the Funds'
shares are available to these banks' trust accounts without a sales charge. The
banks may charge service fees to their customers who participate in the trusts.
A portion of these service fees may be paid to Distributors or one of its
affiliates to help defray expenses of maintaining a service office in Taiwan,
including expenses related to local literature fulfillment and communication
facilities.
Class I shares of a Fund may be offered to investors in Taiwan through
securities advisory firms known locally as Securities Investment Consulting
Enterprises. In conformity with local business practices in Taiwan, Class I
shares may be offered with the following schedule of sales charges for all Funds
except Americas Government Securities Fund:
SIZE OF PURCHASE - U.S. DOLLARS SALES CHARGE
- ------------------------------- ------------
Under $30,000 3.0%
$30,000 but less than $50,000 2.5%
$50,000 but less than $100,000 2.0%
$100,000 but less than $200,000 1.5%
$200,000 but less than $400,000 1.0%
$400,000 or more 0%
In conformity with local business practices in Taiwan, shares of Americas
Government Securities Fund may be offered with the following schedule of sales
charges:
SIZE OF PURCHASE - U.S. DOLLARS SALES CHARGE
Under $30,000 3.0%
$30,000 but less than $100,000 2.0%
$100,000 but less than $400,000 1.0%
$400,000 or more 0%
OTHER PAYMENTS TO SECURITIES DEALERS. For all Funds, except for Americas
Government Securities Fund, Distributors will pay the following commissions, out
of its own resources, to Securities Dealers who initiate and are responsible for
purchases of Class I shares of $1 million or more: 1% on sales of $1 million to
$2 million, plus 0.80% on sales of $2 million to $3 million, plus 0.50% on sales
of $3 million to $50 million, plus 0.25% on sales of $50 million to $100
million, plus 0.15% on sales of $100 million or more.
For Americas Government Securities Fund, Distributors will pay the following
commissions, out of its own resources, to Securities Dealers who initiate and
are responsible for purchases of Class I shares of $1 million or more: 0.75% on
sales of $1 million to $2 million, plus 0.60% on sales of $2 million to $3
million, plus 0.50% on sales of $3 million to $50 million, plus 0.25% on sales
of $50 million to $100 million, plus 0.15% on sales of $100 million or more.
Either Distributors or one of its affiliates may pay the following amounts, out
of its own resources, to Securities Dealers who initiate and are responsible for
purchases of Class I shares by certain retirement plans pursuant to a sales
charge waiver, as discussed in the respective Prospectus: 1% on sales of
$500,000 to $2 million, plus 0.80% on sales of $2 million to $3 million, plus
0.50% on sales of $3 million to $50 million, plus 0.25% on sales of $50 million
to $100 million, plus 0.15% on sales of $100 million or more. Distributors may
make these payments in the form of contingent advance payments, which may be
recovered from the securities dealer or set off against other payments due to
the dealer if shares are sold within 12 months of the calendar month of
purchase. Other conditions may apply. All terms and conditions may be imposed by
an agreement between Distributors, or one of its affiliates, and the securities
dealer.
These breakpoints are reset every 12 months for purposes of additional
purchases.
LETTER OF INTENT. You may qualify for a reduced sales charge when you buy Class
I shares, or shares of Americas Government Securities Fund, as described in each
Fund's Prospectus. At any time within 90 days after the first investment that
you want to qualify for a reduced sales charge, you may file with a Fund a
signed shareholder application with the Letter of Intent section completed.
After the Letter is filed, each additional investment will be entitled to the
sales charge applicable to the level of investment indicated on the Letter.
Sales charge reductions based on purchases in more than one Franklin Templeton
Fund will be effective only after notification to Distributors that the
investment qualifies for a discount. Your holdings in the Franklin Templeton
Funds, including Class II shares, acquired more than 90 days before the Letter
is filed, will be counted towards completion of the Letter but will not be
entitled to a retroactive downward adjustment in the sales charge. Any
redemptions you make during the 13-month period, except in the case of certain
retirement plans, will be subtracted from the amount of the purchases for
purposes of determining whether the terms of the Letter have been completed. If
the Letter is not completed within the 13-month period, there will be an upward
adjustment of the sales charge, depending on the amount actually purchased (less
redemptions) during the period. The upward adjustment does not apply to certain
retirement plans. If you execute a Letter prior to a change in the sales charge
structure of a Fund, you may complete the Letter at the lower of the new sales
charge structure or the sales charge structure in effect at the time the Letter
was filed.
As mentioned in each Fund's Prospectus, five percent (5%) of the amount of the
total intended purchase will be reserved in Class I shares of the Fund
registered in your name until you fulfill the Letter. This policy of reserving
shares does not apply to certain retirement plans. If total purchases, less
redemptions, equal the amount specified under the Letter, the reserved shares
will be deposited to an account in your name or delivered to you or as you
direct. If total purchases, less redemptions, exceed the amount specified under
the Letter and is an amount that would qualify for a further quantity discount,
a retroactive price adjustment will be made by Distributors and the securities
dealer through whom purchases were made pursuant to the Letter (to reflect such
further quantity discount) on purchases made within 90 days before and on those
made after filing the Letter. The resulting difference in offering price will be
applied to the purchase of additional shares at the offering price applicable to
a single purchase or the dollar amount of the total purchases. If the total
purchases, less redemptions, are less than the amount specified under the
Letter, you will remit to Distributors an amount equal to the difference in the
dollar amount of sales charge actually paid and the amount of sales charge that
would have applied to the aggregate purchases if the total of the purchases had
been made at a single time. Upon remittance, the reserved shares held for your
account will be deposited to an account in your name or delivered to you or as
you direct. If within 20 days after written request the difference in sales
charge is not paid, the redemption of an appropriate number of reserved shares
to realize the difference will be made. In the event of a total redemption of
the account prior to fulfillment of the Letter, the additional sales charge due
will be deducted from the proceeds of the redemption, and the balance will be
forwarded to you.
If a Letter is executed on behalf of certain retirement plans, the level and any
reduction in sales charge for these plans will be based on actual plan
participation and the projected investments in the Franklin Templeton Funds
under the Letter. These plans are not subject to the requirement to reserve 5%
of the total intended purchase, or to any penalty as a result of the early
termination of a plan, nor are these plans entitled to receive retroactive
adjustments in price for investments made before executing the Letter.
REINVESTMENT DATE. Shares acquired through the reinvestment of dividends will be
purchased at the net asset value determined on the business day following the
dividend record date (sometimes known as the "ex-dividend date"). The processing
date for the reinvestment of dividends may vary and does not affect the amount
or value of the shares acquired.
ADDITIONAL INFORMATION ON EXCHANGING SHARES
If you request the exchange of the total value of your account, declared but
unpaid income dividends and capital gain distributions will be exchanged into
the new fund and will be invested at net asset value. Backup withholding and
information reporting may apply. Information regarding the possible tax
consequences of an exchange is included in the tax section in this SAI and in
each Fund's Prospectus.
If a substantial number of shareholders should, within a short period, sell
their shares of a Fund under the exchange privilege, the Fund might have to sell
portfolio securities it might otherwise hold and incur the additional costs
related to such transactions. On the other hand, increased use of the exchange
privilege may result in periodic large inflows of money. If this occurs, it is
each Fund's general policy to initially invest this money in short-term,
interest-bearing money market instruments, unless it is believed that attractive
investment opportunities consistent with the Fund's investment objective exist
immediately. This money will then be withdrawn from the short-term money market
instruments and invested in portfolio securities in as orderly a manner as is
possible when attractive investment opportunities arise.
The proceeds from the sale of shares of an investment company are generally not
available until the fifth business day following the sale. The funds you are
seeking to exchange into may delay issuing shares pursuant to an exchange until
that fifth business day. The sale of Fund shares to complete an exchange will be
effected at net asset value at the close of business on the day the request for
exchange is received in proper form. Please see "May I Exchange Shares for
Shares of Another Fund?" in each Fund's Prospectus.
ADDITIONAL INFORMATION ON SELLING SHARES
SYSTEMATIC WITHDRAWAL PLAN. There are no service charges for establishing or
maintaining a systematic withdrawal plan. Once your plan is established, any
distributions paid by a Fund will be automatically reinvested in your account.
Payments under the plan will be made from the redemption of an equivalent amount
of shares in your account, generally on the first business day of the month in
which a payment is scheduled.
Redeeming shares through a systematic withdrawal plan may reduce or exhaust the
shares in your account if payments exceed distributions received from a Fund.
This is especially likely to occur if there is a market decline. If a withdrawal
amount exceeds the value of your account, your account will be closed and the
remaining balance in your account will be sent to you. Because the amount
withdrawn under the plan may be more than your actual yield or income, part of
the payment may be a return of your investment.
A Fund may discontinue a systematic withdrawal plan by notifying you in writing
and will automatically discontinue a systematic withdrawal plan if all shares in
your account are withdrawn or if a Fund receives notification of the
shareholder's death or incapacity.
THROUGH YOUR SECURITIES DEALER. If you sell shares through your securities
dealer, it is your dealer's responsibility to transmit the order to a Fund in a
timely fashion. Any loss to you resulting from your dealer's failure to do so
must be settled between you and your securities dealer.
REDEMPTIONS IN KIND. Each Fund has committed itself to pay in cash (by check)
all requests for redemption by any shareholder of record, limited in amount,
however, during any 90-day period to the lesser of $250,000 or 1% of the value
of a Fund's net assets at the beginning of the 90-day period. This commitment is
irrevocable without the prior approval of the SEC. In the case of redemption
requests in excess of these amounts, the Board reserves the right to make
payments in whole or in part in securities or other assets of a Fund, in case of
an emergency, or if the payment of such a redemption in cash would be
detrimental to the existing shareholders of a Fund. In these circumstances, the
securities distributed would be valued at the price used to compute a Fund's net
assets and you may incur brokerage fees in converting the securities to cash.
Each Fund does not intend to redeem illiquid securities in kind. If this
happens, however, you may not be able to recover your investment in a timely
manner.
GENERAL INFORMATION
If dividend checks are returned to a Fund marked "unable to forward" by the
postal service, we will consider this a request by you to change your dividend
option to reinvest all distributions. The proceeds will be reinvested in
additional shares at net asset value until we receive new instructions.
If mail is returned as undeliverable or we are unable to locate you or verify
your current mailing address, we may deduct the costs of our efforts to find you
from your account. These costs may include a percentage of the account when a
search company charges a percentage fee in exchange for its location services.
All checks, drafts, wires and other payment mediums used to buy or sell shares
of a Fund must be denominated in U.S. dollars. We may, in our sole discretion,
either (a) reject any order to buy or sell shares denominated in any other
currency or (b) honor the transaction or make adjustments to your account for
the transaction as of a date and with a foreign currency exchange factor
determined by the drawee bank.
SPECIAL SERVICES. The Franklin Templeton Institutional Services Department
provides specialized services, including recordkeeping, for institutional
investors. The cost of these services is not borne by a Fund.
Investor Services may pay certain financial institutions that maintain omnibus
accounts with a Fund on behalf of numerous beneficial owners for recordkeeping
operations performed with respect to such owners. For each beneficial owner in
the omnibus account, a Fund may reimburse Investor Services an amount not to
exceed the per account fee that the Fund normally pays Investor Services. These
financial institutions may also charge a fee for their services directly to
their clients.
Certain shareholder servicing agents may be authorized to accept your
transaction request.
HOW ARE FUND SHARES VALUED?
We calculate the net asset value per share of each class of each Fund separately
as of the scheduled close of the NYSE, generally 4:00 p.m. Eastern time, each
day that the NYSE is open for trading. As of the date of this SAI, the Trust is
informed that the NYSE observes the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
For the purpose of determining the aggregate net assets of each Fund, cash and
receivables are valued at their realizable amounts. Interest is recorded as
accrued and dividends are recorded on the ex-dividend date. Portfolio securities
listed on a securities exchange or on the NASDAQ National Market System for
which market quotations are readily available are valued at the last quoted sale
price of the day or, if there is no such reported sale, within the range of the
most recent quoted bid and ask prices. Over-the-counter portfolio securities are
valued within the range of the most recent quoted bid and ask prices. Portfolio
securities that are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market as
determined by an Investment Manager.
Portfolio securities underlying actively traded call options are valued at their
market price as determined above. The current market value of any option held by
a Fund is its last sale price on the relevant exchange prior to the time when
assets are valued. Lacking any sales that day or if the last sale price is
outside the bid and ask prices, options are valued within the range of the
current closing bid and ask prices if the valuation is believed to fairly
reflect the contract's market value.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
of the NYSE on each day that the NYSE is open. Trading in European or Far
Eastern securities generally, or in a particular country or countries, may not
take place on every NYSE business day. Furthermore, trading takes place in
various foreign markets on days that are not business days for the NYSE and on
which the net asset value of each class for each Fund is not calculated. Thus,
the calculation of the net asset value of each class for each Fund does not take
place contemporaneously with the determination of the prices of many of the
portfolio securities used in the calculation and, if events materially affecting
the values of these foreign securities occur, the securities will be valued at
fair value as determined by management and approved in good faith by the Board.
Generally, trading in corporate bonds, U.S. government securities and money
market instruments is substantially completed each day at various times before
the scheduled close of the NYSE. The value of these securities used in computing
the net asset value of each class is determined as of such times. Occasionally,
events affecting the values of these securities may occur between the times at
which they are determined and the scheduled close of the NYSE that will not be
reflected in the computation of the net asset value of each class. If events
materially affecting the values of these securities occur during this period,
the securities will be valued at their fair value as determined in good faith by
the Board.
Other securities for which market quotations are readily available are valued at
the current market price, which may be obtained from a pricing service, based on
a variety of factors including recent trades, institutional size trading in
similar types of securities (considering yield, risk and maturity) and/or
developments related to specific issues. Securities and other assets for which
market prices are not readily available are valued at fair value as determined
following procedures approved by the Board. With the approval of the Board, a
Fund may utilize a pricing service, bank or securities dealer to perform any of
the above described functions.
ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
You may receive two types of distributions from a Fund:
1. INCOME DIVIDENDS. A Fund receives income generally in the form of dividends,
interest and other income derived from its investments. This income, less the
expenses incurred in a Fund's operations, is its net investment income from
which income dividends may be distributed. Thus, the amount of dividends paid
per share may vary with each distribution.
2. CAPITAL GAIN DISTRIBUTIONS. A Fund may derive capital gains or losses in
connection with sales or other dispositions of its portfolio securities.
Distributions by a Fund derived from net short-term and net long-term capital
gains (after taking into account any net capital loss carryovers) may generally
be made twice each year. One distribution may be made in December to reflect any
net short-term and net long-term capital gains realized by a Fund as of October
31 of that year. Any net short-term and net long-term capital gains realized by
a Fund during the remainder of the fiscal year may be distributed following the
end of the fiscal year. These distributions, when made, will generally be fully
taxable to a Fund's shareholders. Each Fund may make one distribution derived
from net short-term and net long-term capital gains in any year or adjust the
timing of its distributions for operational or other reasons.
TAXES
As stated in each Fund's Prospectus, the Fund has elected to be treated as a
regulated investment company under Subchapter M of the Code. The Board reserves
the right not to maintain the qualification of a Fund as a regulated investment
company if it determines this course of action to be beneficial to shareholders.
In that case, a Fund will be subject to federal and possibly state corporate
taxes on its taxable income and gains, and distributions to shareholders will be
taxable to the extent of a Fund's available earnings and profits.
The following discussion summarizes certain U.S. federal tax considerations
incident to an investment in a Fund.
Each Fund intends to qualify as a regulated investment company under the Code.
To so qualify, each Fund must, among other things: (a) derive at least 90% of
its gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock or securities and gains
from the sale or other disposition of foreign currencies, or other income
(including gains from options, futures contracts and forward contracts) derived
with respect to the Fund's business of investing in stocks, securities or
currencies; (b) derive less than 30% of its gross income from the sale or other
disposition of the following assets held for less than three months: (i) stock
and securities, (ii) options, futures and forward contracts (other than options,
futures and forward contracts on foreign currencies), and (iii) foreign
currencies (and options, futures and forward contracts on foreign currencies)
which are not directly related to the Fund's principal business of investing in
stocks and securities (or options and futures with respect to stock or
securities); (c) diversify its holdings so that, at the end of each quarter, (i)
at least 50% of the value of the Fund's total assets is represented by cash and
cash items, U.S. government securities, securities of other regulated investment
companies, and other securities, with such other securities limited in respect
of any one issuer to an amount not greater in value than 5% of the Fund's total
assets and to not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of the Fund's total assets is
invested in the securities (other than U.S. government securities or securities
of other regulated investment companies) of any one issuer or of any two or more
issuers that the Fund controls and that are determined to be engaged in the same
business or similar or related businesses; and (d) distribute at least 90% of
its investment company taxable income (which includes, among other items,
dividends, interest and net short-term capital gains in excess of net long-term
capital losses) each taxable year.
The Treasury Department is authorized to issue regulations providing that
foreign currency gains that are not directly related to a Fund's principal
business of investing in stock or securities (or options and futures with
respect to stock or securities) will be excluded from the income which qualifies
for purposes of the 90% gross income requirement described above. To date,
however, no such regulations have been issued.
The status of the Funds as regulated investment companies does not involve
government supervision of management or of their investment practices or
policies. As a regulated investment company, a Fund generally will be relieved
of liability for U.S. federal income tax on that portion of its net investment
income and net realized capital gains which it distributes to its shareholders.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement also are subject to a nondeductible 4% excise tax. To
prevent application of the excise tax, each Fund intends to make distributions
in accordance with the calendar year distribution requirement.
Dividends of net investment income and net short-term capital gains are taxable
to you as ordinary income. Distributions of net investment income may be
eligible for the corporate dividends-received deduction to the extent
attributable to a Fund's qualifying dividend income. However, the alternative
minimum tax applicable to corporations may reduce the benefit of the
dividends-received deduction. Distributions of net capital gains (the excess of
net long-term capital gains over net short-term capital losses) designated by a
Fund as capital gain dividends are taxable to you as long-term capital gains,
regardless of the length of time you have held the Fund's shares, and are not
eligible for the dividends-received deduction. Generally, dividends and
distributions are taxable to you, whether received in cash or reinvested in
shares of a Fund. Any distributions that are not from a Fund's net investment
income or net capital realized gain may be characterized as a return of capital
to you or, in some cases, as capital gain. You will be notified annually as to
the federal tax status of dividends and distributions you receive and any tax
withheld thereon.
Distributions by a Fund reduce the net asset value of the Fund shares. Should a
distribution reduce the net asset value below your cost basis, the distribution
nevertheless would be taxable to you as ordinary income or capital gain as
described above, even though, from an investment standpoint, it may constitute a
partial return of capital. In particular, you should be careful to consider the
tax implication of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time includes the amount of the forthcoming
distribution, but the distribution will generally be taxable to you.
Certain of the debt securities acquired by the Funds may be treated as debt
securities that were originally issued at a discount. Original issue discount
can generally be defined as the difference between the price at which a security
was issued and its stated redemption price at maturity. Although no cash income
is actually received by the Funds, original issue discount that accrues on a
debt security in a given year generally is treated for Federal income tax
purposes as interest and, therefore, such income would be subject to the
distribution requirements of the Code.
Some of the debt securities may be purchased by the Funds at a discount which
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes.
The gain realized on the disposition of any taxable debt security having market
discount generally will be treated as ordinary income to the extent it does not
exceed the accrued market discount on such debt security. Generally, market
discount accrues on a daily basis for each day the debt security is held by a
Fund at a constant rate over the time remaining to the debt security's maturity
or, at the election of a Fund, at a constant yield to maturity which takes into
account the semiannual compounding of interest.
A Fund may invest in debt securities issued in bearer form. Special rules
applicable to bearer debt may in some cases result in (i) treatment of gain
realized with respect to such a debt security as ordinary income and (ii)
disallowance of deductions for losses realized on dispositions of such debt
securities. If these special rules apply, the amount that must be distributed to
Fund shareholders may be increased as compared to a fund that did not invest in
debt securities issued in bearer form.
A Fund may invest in stocks of foreign companies that are classified under the
Code as passive foreign investment companies ("PFICs"). In general, a foreign
company is classified as a PFIC if at least one-half of its assets constitute
investment-type assets or 75% or more of its gross income is investment-type
income. Under the PFIC rules, an "excess distribution" received with respect to
PFIC stock is treated as having been realized ratably over the period during
which a Fund held the PFIC stock. A Fund itself will be subject to tax on the
portion, if any, of the excess distribution that is allocated to that Fund's
holding period in prior taxable years (and an interest factor will be added to
the tax, as if the tax had actually been payable in such prior taxable years)
even though the Fund distributes the corresponding income to shareholders.
Excess distributions include any gain from the sale of PFIC stock as well as
certain distributions from a PFIC. All excess distributions are taxable as
ordinary income.
A Fund may be able to elect alternative tax treatment with respect to PFIC
stock. Under an election that currently may be available, a Fund generally would
be required to include in its gross income its share of the earnings of a PFIC
on a current basis, regardless of whether any distributions are received from
the PFIC. If this election is made, the special rules, discussed above, relating
to the taxation of excess distributions, would not apply. In addition, another
election may be available that would involve marking-to-market the Funds' PFIC
shares at the end of each taxable year (and on certain other dates prescribed in
the Code), with the result that unrealized gains are treated as though they were
realized. If this election were made, tax at the Fund level under the PFIC rules
would generally be eliminated, but the Funds could, in limited circumstances,
incur nondeductible interest charges. Each Fund's intention to qualify annually
as a regulated investment company may limit its elections with respect to PFIC
shares.
Because the application of the PFIC rules may affect, among other things, the
character of gains, the amount of gain or loss and the timing of the recognition
of income with respect to PFIC stock, as well as subject a Fund itself to tax on
certain income from PFIC stock, the amount that must be distributed to
shareholders, and which will be taxed to you as ordinary income or long-term
capital gain, may be increased or decreased substantially as compared to a fund
that did not invest in PFIC stock.
Income received by a Fund from sources within foreign countries may be subject
to withholding and other income or similar taxes imposed by such countries. If
more than 50% of the value of a Fund's total assets at the close of its taxable
year consists of securities of foreign corporations, that Fund will be eligible
and intends to elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by that Fund. Pursuant to this election, you will be required
to include in gross income (in addition to taxable dividends actually received)
your pro rata share of the foreign taxes paid by a Fund, and will be entitled
either to deduct (as an itemized deduction) your pro rata share of foreign
income and similar taxes in computing your taxable income or to use it as a
foreign tax credit against your U.S. federal income tax liability, subject to
limitations. No deduction for foreign taxes may be claimed if you do not itemize
deductions, but in such case you may be eligible to claim the foreign tax credit
(see below). You will be notified within 60 days after the close of the relevant
Fund's taxable year whether the foreign taxes paid by the Fund will "pass
through" for that year.
Generally, a credit for foreign taxes is subject to the limitation that it may
not exceed your U.S. tax attributable to your foreign source taxable income. For
this purpose, if the pass-through election is made, the source of a Fund's
income flows through to its Shareholders. With respect to a Fund, gains from the
sale of securities will be treated as derived from U.S. sources and certain
currency fluctuation gains, including fluctuation gains from foreign
currency-denominated debt securities, receivables and payables, will be treated
as ordinary income derived from U.S. sources. The limitation on the foreign tax
credit is applied separately to foreign source passive income (as defined for
purposes of the foreign tax credit), including the foreign source passive income
passed through by a Fund. You may be unable to claim a credit for the full
amount of your proportionate share of the foreign taxes paid by a Fund. Foreign
taxes may not be deducted in computing alternative minimum taxable income and
the foreign tax credit can be used to offset only 90% of the alternative minimum
tax (as computed under the Code for purposes of this limitation) imposed on
corporations and individuals. If a Fund is not eligible to make the election to
"pass through" to its shareholders its foreign taxes, the foreign income taxes
it pays generally will reduce investment company taxable income and the
distributions by a Fund will be treated as U.S. source income.
Certain options, futures, and foreign currency forward contracts in which the
Funds may invest are "section 1256 contracts." Gains or losses on section 1256
contracts generally are considered 60% long-term and 40% short-term capital
gains or losses ("60/40"); however, foreign currency gains or losses (as
discussed below) arising from certain section 1256 contracts may be treated as
ordinary income or loss. Also, section 1256 contracts held by a Fund at the end
of each taxable year (and on certain other dates as prescribed under the Code)
are "marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized.
Generally, the hedging transactions undertaken by a Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by a Fund. In addition, losses
realized by a Fund on positions that are part of the straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to a Fund of hedging transactions are not
entirely clear. The hedging transactions may increase the amount of short-term
capital gain realized by a Fund which is taxed as ordinary income when
distributed to shareholders.
A Fund may make one or more of the elections available under the Code which are
applicable to straddles. If a Fund makes any of the elections, the amount,
character, and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which must be distributed to
shareholders and which will be taxed to you as ordinary income or long-term
capital gain may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
Requirements relating to each Fund's tax status as a regulated investment
company may limit the extent to which a Fund will be able to engage in
transactions in options, futures, and foreign currency forward contracts.
If a Fund invests in another investment company, it is possible that the Fund
would not receive information or distributions from the underlying investment
company in a time frame that permits the Fund to meet its tax-related
requirements in an optimal manner. However, it is anticipated that the Fund
would seek to minimize these risks. The diversification and distribution
requirements applicable to each Fund may limit the extent to which each Fund
will be able to invest in other investment companies.
Under the Code, gains or losses attributable to fluctuations in foreign currency
exchange rates which occur between the time a Fund accrues income or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time a Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain financial contracts and options, gains or losses
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of disposition also are
treated as ordinary gain or loss. These gains and losses, referred to under the
Code as "section 988" gains and losses, may increase or decrease the amount of a
Fund's net investment income to be distributed to its shareholders as ordinary
income. For example, fluctuations in exchange rates may increase the amount of
income that a Fund must distribute in order to qualify for treatment as a
regulated investment company and to prevent application of an excise tax on
undistributed income. Alternatively, fluctuations in exchange rates may decrease
or eliminate income available for distribution. If section 988 losses exceed
other net investment income during a taxable year, a Fund would not be able to
make ordinary dividend distributions, or distributions made before the losses
were realized would be recharacterized as return of capital to shareholders for
Federal income tax purposes, rather than as an ordinary dividend, reducing your
basis in your Fund shares, or as a capital gain.
Upon the sale or exchange of your shares, you will realize a taxable gain or
loss depending upon your basis in the shares. Such gain or loss will be treated
as capital gain or loss if the shares are capital assets in your hands, and
generally will be long-term if your holding period for the shares is more than
one year and generally otherwise will be short-term. Any loss realized on a sale
or exchange will be disallowed to the extent that the shares disposed of are
replaced (including replacement through the reinvesting of dividends and capital
gain distributions in a Fund) within a period of 61 days beginning 30 days
before and ending 30 days after the disposition of the shares. In such a case,
the basis of the shares acquired will be adjusted to reflect the disallowed
loss. Any loss realized by you on the sale of a Fund's shares held by you for
six months or less will be treated for federal income tax purposes as a
long-term capital loss to the extent of any distributions of long-term capital
gains you received with respect to such shares.
In some cases, you will not be permitted to take sales charges into account for
purposes of determining the amount of gain or loss realized on the disposition
of your shares. This prohibition generally applies where (i) you incur a sales
charge in acquiring the stock of a regulated investment company, (ii) the stock
is disposed of before the 91st day after the date on which it was acquired, and
(iii) you subsequently acquire shares of the same or another regulated
investment company and the otherwise applicable sales charge is reduced or
eliminated under a "reinvestment right" received upon the initial purchase of
shares of stock. In that case, the gain or loss recognized will be determined by
excluding from the tax basis of the shares exchanged all or a portion of the
sales charge incurred in acquiring those shares. This exclusion applies to the
extent that the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of having incurred a sales charge
initially. Sales charges affected by this rule are treated as if they were
incurred with respect to the stock acquired under the reinvestment right. This
provision may be applied to successive acquisitions of stock.
Each Fund generally will be required to withhold federal income tax at a rate of
31% ("backup withholding") from dividends paid, capital gain distributions, and
redemption proceeds to you if (i) you fail to furnish a Fund with your correct
taxpayer identification number or social security number and to make such
certifications as a Fund may require, (ii) the IRS notifies you or a Fund that
you have failed to report properly certain interest and dividend income to the
IRS and to respond to notices to that effect, or (iii) when required to do so,
you fail to certify that you are not subject to backup withholding. Any amounts
withheld may be credited against your federal income tax liability.
Dividends, including capital gain dividends, declared in October, November, or
December with a record date in such month and paid during the following January
will be treated as having been paid by a Fund and received by shareholders on
December 31 of the calendar year in which declared, rather than the calendar
year in which the dividends are actually received.
Distributions also may be subject to state, local and foreign taxes. U.S. tax
rules applicable to foreign investors may differ significantly from those
outlined above. This discussion does not purport to deal with all of the tax
consequences applicable to shareholders. You are advised to consult your own tax
advisers for details with respect to the particular tax consequences of an
investment in a Fund.
THE FUNDS' UNDERWRITER
Pursuant to underwriting agreements in effect until May 1, 1997, Distributors
acts as principal underwriter in a continuous public offering for all classes of
each Fund's shares. Each underwriting agreement will continue in effect for
successive annual periods if its continuance is specifically approved at least
annually by a vote of the Board or by a vote of the holders of a majority of a
Fund's outstanding voting securities, and in either event by a majority vote of
the Board members who are not parties to the underwriting agreement or
interested persons of any such party (other than as members of the Board), cast
in person at a meeting called for that purpose. The underwriting agreement
terminates automatically in the event of its assignment and may be terminated by
either party on 60 days' written notice.
Distributors pays the expenses of the distribution of Fund shares, including
advertising expenses and the costs of printing sales material and prospectuses
used to offer shares to the public. Each Fund pays the expenses of preparing and
printing amendments to its registration statements and prospectuses (other than
those necessitated by the activities of Distributors) and of sending
prospectuses to existing shareholders.
In connection with the offering of each Fund shares, the following table sets
forth aggregate underwriting commissions, the net underwriting discounts and
commissions retained by Distributors after allowances to dealers, and
compensation received by Distributors in connection with redemptions or
repurchases of Fund shares, for each of the fiscal years and periods indicated
below.
<TABLE>
<CAPTION>
ONE YEAR ONE YEAR MARCH 14, 1994
ENDED ENDED TO
GROWTH AND INCOME FUND MARCH 31, 1996 MARCH 31, 1995 MARCH 31, 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Total underwriting commissions paid
$145,909 $181,252 -0-
Net underwriting discounts and
commissions received $29,842 $22,379 -0-
GLOBAL INFRASTRUCTURE
Total underwriting commissions paid
$211,424 $677,878 -0-
Net underwriting discounts and
commissions received $25,501 $52,041 -0-
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR JUNE 27, 1994
AMERICAS GOVERNMENT SECURITIES FUND ENDED TO
MARCH 31, 1996 MARCH 31, 1995
<S> <C> <C>
Total underwriting commissions paid
$19,359 $7,179
Net underwriting discounts and
commissions received $2,021 $963
</TABLE>
<TABLE>
<CAPTION>
MAY 8, 1995
TO
GREATER EUROPEAN FUND MARCH 31, 1996
<S> <C>
Total underwriting commissions paid
$112,442
Net underwriting discounts and
commissions received ($1,130)
LATIN AMERICA FUND
Total underwriting commissions paid
$190,756
Net underwriting discounts and
commissions received $9,226
</TABLE>
Distributors may be entitled to reimbursement under the Rule 12b-1 plan for each
class, as discussed below. Except as noted, Distributors received no other
compensation from a Fund for acting as underwriter.
THE RULE 12B-1 PLANS
Each Fund has adopted a distribution plan or "Rule 12b-1 plan" with respect to
each class of shares pursuant to Rule 12b-1 of the 1940 Act.
THE CLASS I PLANS. Under the Class I plans (which includes the plan for all
shares issued by Americas Government Securities Fund), each Fund may reimburse
Distributors or others up to a maximum of 0.35% per year of Class I's average
daily net assets, payable quarterly, for costs and expenses incurred in
connection with any activity which is primarily intended to result in the sale
of the Funds' shares. Under the Class I plans, the costs and expenses not
reimbursed in any one given quarter (including costs and expenses not reimbursed
because they exceed 0.35% of a Fund's average daily net assets attributable to
Class I shares) may be reimbursed in subsequent quarters or years.
THE CLASS II PLAN. Under the Class II plan, Growth and Income Fund,
Infrastructure Fund, Greater European Fund and Latin America Fund each pays
Distributors up to 0.75% per year of Class II's average daily net assets,
payable quarterly, for costs and expenses incurred by Distributors or others in
connection with any activity which is primarily intended to result in the sale
of the Funds' shares. Up to 0.25% of such net assets may be paid to dealers for
personal service and/or maintenance of shareholder accounts.
During the first year after a purchase of Class II shares, Distributors may keep
this portion of the Rule 12b-1 fees associated with the Class II purchase.
THE CLASS I AND CLASS II PLANS. For both the Class I and Class II plans,
payments to Distributors or others could be for various types of activities,
including (i) payments to broker-dealers who provide certain services of value
to each Fund's shareholders (sometimes referred to as a "trail fee"); (ii)
reimbursement of expenses relating to selling and servicing efforts or of
organizing and conducting sales seminars; (iii) payments to employees or agents
of the Distributors who engage in or support distribution of shares; (iv)
payments of the costs of preparing, printing and distributing prospectuses and
reports to prospective investors and of printing and advertising expenses; (v)
payment of dealer commissions and wholesaler compensation in connection with
sales of the Funds' shares and interest or carrying charges in connection
therewith; and (vi) such other similar services as the Board determines to be
reasonably calculated to result in the sale of shares.
In no event shall the aggregate asset-based sales charges, which include
payments made under each plan, plus any other payments deemed to be made
pursuant to a plan, exceed the amount permitted to be paid pursuant to the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.,
Article III, Section 26(d)4.
To the extent fees are for distribution or marketing functions, as distinguished
from administrative servicing or agency transactions, certain banks will not be
entitled to participate in the plans as a result of applicable federal law
prohibiting certain banks from engaging in the distribution of mutual fund
shares. These banking institutions, however, are permitted to receive fees under
the plans for administrative servicing or for agency transactions. If you are a
customer of a bank that is prohibited from providing these services, you would
be permitted to remain a shareholder of the Fund, and alternate means for
continuing the servicing would be sought. In this event, changes in the services
provided might occur and you might no longer be able to avail yourself of any
automatic investment or other services then being provided by the bank. It is
not expected that you would suffer any adverse financial consequences as a
result of any of these changes.
Each plan has been approved in accordance with the provisions of Rule 12b-1. The
plans are renewable annually by a vote of the Board, including a majority vote
of the Board members who are not interested persons of a Fund and who have no
direct or indirect financial interest in the operation of the plans, cast in
person at a meeting called for that purpose. It is also required that the
selection and nomination of such Board members be done by the non-interested
members of the Board. The plans and any related agreement may be terminated at
any time, without penalty, by vote of a majority of the non-interested Board
members on not more than 60 days' written notice, by Distributors on not more
than 60 days' written notice, by any act that constitutes an assignment of the
distribution agreement or by vote of a majority of the outstanding shares of the
class. Distributors or any dealer or other firm may also terminate their
respective distribution or service agreement at any time upon written notice.
The plans and any related agreements may not be amended to increase materially
the amount to be spent for distribution expenses without approval by a majority
of the outstanding shares of the class, and all material amendments to the plans
or any related agreements shall be approved by a vote of the non-interested
members of the Board, cast in person at a meeting called for the purpose of
voting on any such amendment.
Distributors is required to report in writing to the Board at least quarterly on
the amounts and purpose of any payment made under the plans and any related
agreements, as well as to furnish the Board with such other information as may
reasonably be requested in order to enable the Board to make an informed
determination of whether the plans should be continued.
For the fiscal year ended March 31, 1996, the total amounts paid by each Fund
pursuant to the Class I and Class II plans, and the purposes for which they were
used, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
GROWTH AND INCOME FUND CLASS I CLASS II
Total Amount Paid $221,717 $38,729
Advertising 58,677 5,483
Printing and mailing of prospectuses
other than to current shareholders 17,563 1,166
Payments to underwriters 2,034 19,675
Payments to broker-dealers 18,633 7,497
Other 124,810 4,908
INFRASTRUCTURE FUND CLASS I CLASS II
Total Amount Paid $479,470 $26,195
Advertising 233,959 5,170
Printing and mailing of prospectuses
other than to current shareholders 57,101 1,190
Payments to underwriters 4,610 11,144
Payments to broker-dealers 50,652 6,636
Other 133,148 2,055
GREATER EUROPEAN FUND CLASS I CLASS II
Total Amount Paid $ 91,078 $47,669
Advertising 64,438 27,012
Printing and mailing of prospectuses
other than to current shareholders 16,478 6,908
Payments to underwriters 2,102 4,386
Payments to broker-dealers 6,073 8,530
Other 1,987 833
LATIN AMERICA FUND CLASS I CLASS II
Total Amount Paid $120,345 $44,579
Advertising 87,905 24,724
Printing and mailing of prospectuses
other than to current shareholders 18,442 5,187
Payments to underwriters 2,794 6,526
Payments to broker-dealers 7,211 7,019
Other 3,993 1,123
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
AMERICAS GOVERNMENT SECURITIES FUND
Total Amount Paid $ 7,019
Advertising 1,118
Printing and mailing of prospectuses
other than to current shareholders 2,930
Payments to underwriters 122
Payments to broker-dealers 2,837
Other 12
</TABLE>
HOW DO THE FUNDS MEASURE PERFORMANCE?
Performance quotations are subject to SEC rules. These rules require the use of
standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by a Fund be accompanied by
certain standardized performance information computed as required by the SEC.
Current yield and average annual total return quotations used by the Funds are
based on the standardized methods of computing performance mandated by the SEC.
If a Rule 12b-1 plan is adopted, performance figures reflect fees from the date
of the plan's implementation. An explanation of these and other methods used by
the Funds to compute or express performance for each class follows. Regardless
of the method used, past performance is not necessarily indicative of future
results, but is an indication of the return to shareholders only for the limited
historical period used.
TOTAL RETURN
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is determined by
finding the average annual rates of return over one-, five- and ten-year
periods, or fractional portion thereof, that would equate an initial
hypothetical $1,000 investment to its ending redeemable value. The calculation
assumes the maximum front-end sales charge is deducted from the initial $1,000
purchase, and income dividends and capital gain distributions are reinvested at
net asset value. The quotation assumes the account was completely redeemed at
the end of each one-, five- and ten-year period and the deduction of all
applicable charges and fees. If a change is made to the sales charge structure,
historical performance information will be restated to reflect the maximum
front-end sales charge currently in effect.
When considering the average annual total return quotations, you should keep in
mind that the maximum front-end sales charge reflected in each quotation is a
one time fee charged on all direct purchases, which will have its greatest
impact during the early stages of your investment. This charge will affect
actual performance less the longer you retain your investment in the Fund. The
average annual total return for Class I for the one-year period ended on March
31, 1996, if applicable, and for the period from commencement of operations
through March 31, 1996, and for Class II, the period from the commencement of
sales to March 31, 1996:
<TABLE>
<CAPTION>
ONE YEAR MARCH 14, 1994 MAY 1, 1995
ENDED TO TO
MARCH 31, 1996 MARCH 31, 1996 MARCH 31, 1996
-------------- -------------- --------------
<S> <C> <C> <C>
GROWTH AND INCOME FUND
Class I 11.98% 6.45%
Class II 14.39%
INFRASTRUCTURE FUND
Class I 5.31% -0.12%
Class II 5.58%
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR JUNE 27, 1994
ENDED TO
MARCH 31, 1996 MARCH 31, 1995
<S> <C> <C>
AMERICAS GOVERNMENT SECURITIES FUND
10.58% 5.10%
</TABLE>
<TABLE>
MAY 8, 1995
TO
MARCH 31, 1996
<S> <C>
GREATER EUROPEAN FUND
Class I -2.07%
Class II 1.19%
LATIN AMERICA FUND
Class I 0.26%
Class II 3.63%
</TABLE>
These figures were calculated according to the SEC formula:
P(1+T)n = ERV
where:
P =a hypothetical initial payment of $1,000
T =average annual total return
n =number of years
ERV =ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period.
CUMULATIVE TOTAL RETURN. The Fund may also quote the cumulative total return for
each class, in addition to the average annual total return. These quotations are
computed the same way, except the cumulative total return will be based on the
actual return for each class for a specified period rather than on the average
return over the period. The cumulative total return for Class I for the one-year
period ended on March 31, 1996, if applicable; for the period from commencement
of operations through March 31, 1996; and for Class II, the period from the
commencement of sales to March 31, 1996:
<TABLE>
<CAPTION>
ONE YEAR MARCH 14, 1994 MAY 1, 1995
ENDED TO TO
MARCH 31, 1996 MARCH 31, 1996 MARCH 31, 1996
-------------- -------------- --------------
<S> <C> <C> <C>
GROWTH AND INCOME FUND
Class I 11.98% 13.67%
Class II 14.39%
INFRASTRUCTURE FUND
Class I 5.31% -.24%
Class II 5.58%
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR JUNE 27, 1994
ENDED TO
MARCH 31, 1996 MARCH 31, 1995
<S> <C> <C>
AMERICAS GOVERNMENT SECURITIES FUND
10.58% 9.11%
</TABLE>
<TABLE>
<CAPTION>
MAY 8, 1995
TO
MARCH 31, 1996
<S> <C>
GREATER EUROPEAN FUND
Class I -2.07%
Class II 1.19%
LATIN AMERICA FUND
Class I .26%
Class II 3.63%
</TABLE>
YIELD
CURRENT YIELD. Current yield of Americas Government Securities Fund shows the
income per share earned by the Fund. It is calculated by dividing the net
investment income per share of each class earned during a 30-day base period by
the applicable maximum offering price per share on the last day of the period
and annualizing the result. Expenses accrued for the period include any fees
charged to all shareholders of the class during the base period. The yield for
the 30-day period ended on March 31, 1996, was 6.0%.
This figure was obtained using the following SEC formula:
Yield = 2 [(A-B + 1)6 - 1]
cd
where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
CURRENT DISTRIBUTION RATE
Current yield, which is calculated according to a formula prescribed by the SEC,
is not indicative of the amounts which were or will be paid to shareholders of a
class. Amounts paid to shareholders are reflected in the quoted current
distribution rate. The current distribution rate is usually computed by
annualizing the dividends paid per share by a class during a certain period and
dividing that amount by the current maximum offering price. The current
distribution rate differs from the current yield computation because it may
include distributions to shareholders from sources other than dividends and
interest, such as premium income from option writing and short-term capital
gains and is calculated over a different period of time. The current
distribution rate for Americas Government Securities Fund for the 30-day period
ended on March 31, 1996, was 6.76%.
VOLATILITY
Occasionally statistics may be used to show a Fund's volatility or risk.
Measures of volatility or risk are generally used to compare a Fund's net asset
value or performance to a market index. One measure of volatility is beta. Beta
is the volatility of a fund relative to the total market, as represented by an
index considered representative of the types of securities in which the fund
invests. A beta of more than 1.00 indicates volatility greater than the market
and a beta of less than 1.00 indicates volatility less than the market. Another
measure of volatility or risk is standard deviation. Standard deviation is used
to measure variability of net asset value or total return around an average over
a specified period of time. The idea is that greater volatility means greater
risk undertaken in achieving performance.
OTHER PERFORMANCE QUOTATIONS
For investors who are permitted to buy Class I shares, including shares of
Americas Government Securities Fund, without a sales charge, sales literature
about Class I may quote a current distribution rate, yield, cumulative total
return, average annual total return and other measures of performance as
described elsewhere in this SAI with the substitution of net asset value for the
public offering price.
Sales literature referring to the use of the Fund as a potential investment for
Individual Retirement Accounts (IRAs), Business Retirement Plans, and other
tax-advantaged retirement plans may quote a total return based upon compounding
of dividends on which it is presumed no federal income tax applies.
A Fund may include in its advertising or sales material information relating to
investment objectives and performance results of funds belonging to the
Templeton Funds. Resources is the parent company of the advisors and underwriter
of both the Franklin Templeton Funds.
COMPARISONS AND OTHER INFORMATION
From time to time, advertisements or information for a Fund may include a
discussion of certain attributes or benefits to be derived from an investment in
a Fund. The advertisements or information may include symbols, headlines, or
other material that highlights or summarizes the information discussed in more
detail in the communication.
Advertisements or information may also compare a class' performance to the
return on CDs or other investments. You should be aware, however, that an
investment in a Fund involves the risk of fluctuation of principal value, a risk
generally not present in an investment in a CD issued by a bank. For example, as
the general level of interest rates rise, the value of a Fund's fixed-income
investments, if any, as well as the value of its shares that are based upon the
value of such portfolio investments, can be expected to decrease. Conversely,
when interest rates decrease, the value of a Fund's shares can be expected to
increase. CDs are frequently insured by an agency of the U.S. government. An
investment in a Fund is not insured by any federal, state or private entity.
In assessing comparisons of performance, you should keep in mind that the
composition of the investments in the reported indices and averages is not
identical to a Fund's portfolio, the indices and averages are generally
unmanaged, and the items included in the calculations of the averages may not be
identical to the formula used by a Fund to calculate its figures. In addition,
there can be no assurance that a Fund will continue its performance as compared
to these other averages.
Performance information for each Fund may be compared, in reports and
promotional literature, to: (i) unmanaged indices so that investors may compare
the Fund's results with those of a group of unmanaged securities widely regarded
by investors as representative of the securities market in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, Inc., a widely
used independent research firm which ranks mutual funds by overall performance,
investment objectives and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment in a Fund. Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Performance information for a Fund reflects only the performance of a
hypothetical investment in a Fund during the particular time period on which the
calculations are based. Performance information should be considered in light of
a Fund's investment objective and policies, characteristics and quality of the
portfolio and the market conditions during the given time period, and should not
be considered as a representation of what may be achieved in the future.
From time to time, each Fund and its Investment Manager may also refer
to the following information:
(1) Each Investment Manager's and its affiliates' market share of
international equities managed in mutual funds prepared or published by
Strategic Insight or a similar statistical organization.
(2) The performance of U.S. equity and debt markets relative to foreign
markets prepared or published by Morgan Stanley Capital International
or a similar financial organization.
(3) The capitalization of U.S. and foreign stock markets as prepared or
published by the International Finance Corporation, Morgan Stanley
Capital International or a similar financial organization.
(4) The geographic and industry distribution of the Funds' portfolio and
the Funds' top ten holdings.
(5) The gross national product and populations, including age
characteristics, literacy rates, foreign investment improvements due to
a liberalization of securities laws and a reduction of foreign exchange
controls, and improving communication technology, of various countries
as published by various statistical organizations.
(6) To assist investors in understanding the different returns and risk
characteristics of various investments, each Fund may show historical
returns of various investments and published indices (E.G., Ibbotson
Associates, Inc. Charts and Morgan Stanley EAFE - Index).
(7) The major industries located in various jurisdictions as published by
the Morgan Stanley Index.
(8) Rankings by DALBAR Surveys, Inc. with respect to mutual fund
shareholder services.
(9) Allegorical stories illustrating the importance of persistent long-term
investing.
(10) Each Fund's portfolio turnover rate and its ranking relative to
industry standards as published by Lipper Analytical Services, Inc. or
Morningstar, Inc.
(11) A description of the Templeton organization's investment management
philosophy and approach, including its worldwide search for undervalued
or "bargain" securities and its diversification by industry, nation and
type of stocks or other securities.
(12) The number of shareholders in a Fund or the aggregate number of
shareholders of the Franklin Templeton Group of Funds or the dollar
amount of fund and private account assets under management.
(13) Comparison of the characteristics of various emerging markets,
including population, financial and economic conditions.
(14) Quotations from the Templeton organization's founder, Sir John
Templeton,* advocating the virtues of diversification and long-term
investing, including the following:
"Never follow the crowd. Superior performance is possible only if you
invest differently from the crowd."
"Diversify by company, by industry and by country."
"Always maintain a long-term perspective."
"Invest for maximum total real return."
"Invest - don't trade or speculate."
"Remain flexible and open-minded about types of investment."
"Buy low."
"When buying stocks, search for bargains among quality stocks."
"Buy value, not market trends or the economic outlook."
"Diversify. In stocks and bonds, as in much else, there is safety in
numbers."
"Do your homework or hire wise experts to help you."
"Aggressively monitor your investments."
"Don't panic."
"Learn from your mistakes."
"Outperforming the market is a difficult task."
"An investor who has all the answers doesn't even understand all the
questions."
"There's no free lunch."
"And now the last principle: Do not be fearful or negative too often."
MISCELLANEOUS INFORMATION
A Fund may help you achieve various investment goals such as accumulating money
for retirement, saving for a down payment on a home, college costs and other
long-term goals. The Franklin College Costs Planner may help you in determining
how much money must be invested on a monthly basis in order to have a projected
amount available in the future to fund a child's college education. (Projected
college cost estimates are based upon current costs published by the College
Board.) The Franklin Retirement Planning Guide leads you through the steps to
start a retirement savings program. Of course, an investment in a Fund cannot
guarantee that these goals will be met.
The Trust is a member of the Franklin Templeton Group of Funds, one of the
largest mutual fund organizations in the U.S., and may be considered in a
program for diversification of assets. Founded in 1947, Franklin, one of the
oldest mutual fund organizations, has managed mutual funds for over 48 years and
now services more than 2.5 million shareholder accounts. In 1992, Franklin, a
leader in managing fixed-income mutual funds and an innovator in creating
domestic equity funds, joined forces with Templeton Worldwide, Inc., a pioneer
in international investing. Together, the Franklin Templeton Group has over $143
billion in assets under management for more than 4.1 million U.S. based mutual
fund shareholder and other accounts. The Franklin Templeton Group of Funds
offers 114 U.S. based mutual funds to the public. A Fund may identify itself by
its NASDAQ symbol or CUSIP number.
The Dalbar Surveys, Inc. broker-dealer survey has ranked Franklin Templeton
number one in service quality for five of the past eight years (Resources
acquired Templeton in October 1992).
As of June 25, 1996, the principal shareholders of each Fund, beneficial or of
record, are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARE AMOUNT PERCENTAGE
<S> <C> <C>
GROWTH AND INCOME FUND -CLASS I
Templeton Global Investors, Inc. 106,102 8%
500 E. Broward Blvd. Ste. 2100
Ft. Lauderdale, FL 33394
GROWTH AND INCOME FUND - CLASS II
Smith Barney Inc. 15,637 5%
388 Greenwich Street
New York, NY 10013
INFRASTRUCTURE FUND - CLASS II
Raymond James & Associates, Inc. 9,549 5%
FAO John J. Whitehouse TEE
JJ Whitehouse Liv TR
8037 Pebble Creek Lane W
Ponte Vedra Beach , FL 32082
Donaldson Lufkin Jenrette 10,440 6%
Securities Corporation, Inc.
PO Box 2052
Jersey City, NJ 07303
GREATER EUROPEAN FUND - CLASS I
Templeton Global Investors, Inc. 50,144 10%
c/o Barry R. Forbes
500 E. Broward Blvd. Ste. 2100
Ft. Lauderdale, FL 33394
Merrill Lynch Pierce Fenner & Smith, Inc. 34,481 7%
PO Box 45286
Jacksonville, FL 32232-5286
PaineWebber 49,841 10%
FBO American Guaranty & Trust Co.
TTEE Sara Brianne Kiner Trust
PO Box 15627
Wilmington, DE 19850-5627
NAME AND ADDRESS SHARE AMOUNT PERCENTAGE
PaineWebber 24,060 5%
FBO American Guaranty & Trust Co.
Shanika Baldwin Trust
PO Box 15627
Wilmington, DE 19850-5627
GREATER EUROPEAN FUND - CLASS II
Templeton Global Investors, Inc. 49,979 28%
c/o Barry R. Forbes
500 E. Broward Blvd. Ste. 2100
Ft. Lauderdale, FL 33394
PaineWebber 49,529 28%
FBO JP Barger
JPB Enterprises
8A Henshaw Street
Woburn, MA 01801-4627
Margaret M. Fields 14,673 8%
610 East Avenue, Apt. 6
Rochester, NY 14607
LATIN AMERICA FUND - CLASS I
Templeton Global Investors, Inc. 50,577 9%
c/o Barry R. Forbes
500 E. Broward Blvd. Ste. 2100
Ft. Lauderdale, FL 33394
AMERICAS GOVERNMENT SECURITIES FUND
Templeton Global Investors, Inc. 283,155 72%
c/o Mike Corcoran
500 E. Broward Blvd. Ste. 2100
Ft. Lauderdale, FL 33394
</TABLE>
From time to time, the number of Fund shares held in the "street name" accounts
of various securities dealers for the benefit of their clients or in centralized
securities depositories may exceed 5% of the total shares outstanding.
Employees of Resources or its subsidiaries who are access persons under the 1940
Act are permitted to engage in personal securities transactions subject to the
following general restrictions and procedures: (i) the trade must receive
advance clearance from a compliance officer and must be completed within 24
hours after clearance; (ii) copies of all brokerage confirmations must be sent
to a compliance officer and, within 10 days after the end of each calendar
quarter, a report of all securities transactions must be provided to the
compliance officer; and (iii) access persons involved in preparing and making
investment decisions must, in addition to (i) and (ii) above, file annual
reports of their securities holdings each January and inform the compliance
officer (or other designated personnel) if they own a security that is being
considered for a fund or other client transaction or if they are recommending a
security in which they have an ownership interest for purchase or sale by a fund
or other client.
In the event of disputes involving multiple claims of ownership or authority to
control your account, a Fund has the right (but has no obligation) to: (a)
freeze the account and require the written agreement of all persons deemed by
the Fund to have a potential property interest in the account, prior to
executing instructions regarding the account; (b) interplead disputed funds or
accounts with a court of competent jurisdiction; or (c) surrender ownership of
all or a portion of the account to the IRS in response to a Notice of Levy.
FINANCIAL STATEMENTS
The audited financial statements contained in the Annual Report to Shareholders
of a Fund, for the fiscal year ended March 31, 1996, including the auditors'
report, are incorporated herein by reference.
USEFUL TERMS AND DEFINITIONS
1940 ACT - Investment Company Act of 1940, as amended
ADVISERS - Franklin Advisers, Inc. a wholly owned subsidiary of Resources and
the Sub-Adviser for Americas Government Securities Fund
BOARD - The Board of Trustees of the Trust
BUSINESS MANAGER - Templeton Global Investors, Inc., a wholly owned subsidiary
of Resources
CD - Certificate of deposit
CLASS I AND CLASS II - Each Fund, except for Americas Government Securities
Fund, offers two classes of shares, designated "Class I" and "Class II." The two
classes have proportionate interests in a Fund's portfolio. They differ,
however, primarily in their sales charge structures and Rule 12b-1 plans.
CODE - Internal Revenue Code of 1986, as amended
DISTRIBUTORS - Franklin/Templeton Distributors, Inc., the Fund's principal
underwriter
FRANKLIN ADVISERS - Franklin Advisers, Inc., a wholly owned subsidiary of
Resources and the Sub-Adviser for Americas Government Securities Fund
FRANKLIN FUNDS - the mutual funds in the Franklin Group of FundsAE 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
FRANKLIN TEMPLETON GROUP OF FUNDS - all U.S. registered mutual funds in the
Franklin Group of FundsAE and the Templeton Group of Funds
INVESTMENT MANAGERS - In the case of Growth and Income Fund and Greater European
Fund, the Investment Manager is TGA in the case of Infrastructure Fund and Latin
America Fund, the Investment Manager is TICI; and in the case of Americas
Government Securities Fund, the Investment Manager is TICI, through its TGBM
division (collectively "Investment Managers")
INVESTOR SERVICES - Franklin/Templeton Investor Services, Inc.
IRS - Internal Revenue Service
LETTER - Letter of Intent
MOODY'S - Moody's Investors Service, 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.
NYSE - the New York Stock Exchange
OFFERING PRICE - The public offering price is based on the net asset value per
share of the class and includes the front-end sales charge. The maximum
front-end sales charge is 5.75% for Class I (except Americas Government
Securities Fund is 4.25%) and 1% for Class II.
PROSPECTUS - the prospectus for the Fund dated August 1, 1996, as may be amended
from time to time
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 which, either directly or through
affiliates, has an agreement with Distributors to handle customer orders and
accounts with the Fund. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
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
TGA - Templeton Global Advisors Limited, the Investment Manager of Growth and
Income Fund and Greater European Fund
TGBM - Templeton Global Bond Managers, a division of TICI, through whom TICI
provides investment advisory services to Americas Government Securities Fund
TICI - Templeton Investment Counsel, Inc., the Investment Manager of
Infrastructure Fund and Latin America Fund. TICI also is the Investment Manager
of Americas Government Securities Fund, through TICI's Templeton Global Bond
Managers division
U.S. - United States
WE/OUR/US - Unless a different meaning is indicated by the context, these terms
refer to the Fund and/or Investor Services, Distributors, or another
wholly-owned subsidiary of Resources.
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.
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.
- --------
* Sir John Templeton sold the Templeton organization to Resources in
October, 1992 and resigned from each Fund's Board on April 16, 1995. He
is no longer involved with the investment management process.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS: Incorporated by reference from
Registrant's 1996 Annual Report to Shareholders of
Templeton Growth and Income Fund, Templeton Global
Infrastructure Fund, Templeton Americas Government
Securities Fund and Templeton Region Funds:
Independent Auditor's Report
Investment Portfolio as of March 31, 1996
Statement of Assets and Liabilities as of March 31, 1996
Statement of Operations for fiscal year ended March 31, 1996
Statement of Changes in Net Assets for the years ended
March 31, 1996 and 1995
Notes to Financial Statements
(b) EXHIBITS
(1) Trust Instrument ***
(2) By-Laws ***
(3) Not Applicable
(4) (A) Not Applicable
(5) (A) Investment Management Agreement -
Templeton Growth and Income Fund
(B) Investment Management Agreement -***
Templeton Global Infrastructure Fund
(C) Investment Management Agreement -***
Templeton Americas Government Securities Fund
(E) Investment Management Agreement -
Templeton Greater European Fund
(F) Investment Management Agreement -
Templeton Latin America Fund
(6) (A) Amended and Restated Distribution Agreement
(B) Form of Dealer Agreement Agreement ***
(7) Not Applicable
(8) Amended and Restated Custody Agreement
(9) (A) Amended and Restated Business Management Agreement
(B) Amended and Restated Transfer Agent Agreement
(C) Form of Sub-Transfer Agent Services Agreement ***
(D) Form of Shareholder Sub-Accounting Services
Agreement ***
(10) Opinion and consent of counsel (filed with Rule
24f-2 Notice) **
(11) Opinion and consent of independent public accountants
(12) Not Applicable
(13) (A) Investment Letter *
(14) Not Applicable
(15) (A)(i)Distribution Plan -- Templeton Growth and
Income Fund Class I Shares *
(ii)Distribution Plan -- Templeton Growth and
Income Fund Class II Shares *
(B)(i)Distribution Plan -- Templeton Global
Infrastructure Fund Class I Shares *
(ii)Distribution Plan -- Templeton Global
Infrastructure Fund Class II Shares *
(C) Distribution Plan -- Templeton Americas
Government Securities Fund ***
(D)(i)Distribution Plan -- Templeton Greater European
Fund Class I Shares
(ii)Distribution Plan -- Templeton Greater European
Fund Class II Shares
(E)(i)Distribution Plan -- Templeton Latin America
Fund Class I Shares
(ii)Distribution Plan -- Templeton Latin America
Fund Class II Shares
(16) Schedule showing computation of performance quotations
provided in response to Item 22 (unaudited) ***
(18) Form of Multiclass Plan *
(27) Financial Data Schedule
- --------------------
* Filed with Post-Effective Amendment No. 5 to the Registration
Statement on May 1, 1995
** Rule 24f-2 Notice filed with the Securities and Exchange Commission on
May 28, 1996.
*** Filed with Post-Effective Amendment No. 7 to the Registration
Statement on July 7, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of
TITLE OF CLASS RECORDHOLDERS
Templeton Growth and Income Fund
Shares of Beneficial Interest, 1,494 as of
par value $0.01 per Share - June 30, 1996
Class I
Shares of Beneficial Interest, 288 as of
par value $0.01 per Share - June 30, 1996
Class II:
Templeton Global Infrastructure Fund
Shares of Beneficial Interest, 3,257 as of
par value $0.01 per Share - June 30, 1996
Class I
Shares of Beneficial Interest, 255 as of
par value $0.01 per Share - June 30, 1996
Class II:
Templeton Americas Government Securities Fund
Shares of Beneficial Interest, 135 as of
par value $0.01 per Share - June 30, 1996
Class I
Templeton Greater European Fund
Shares of Beneficial Interest, 544 as of
par value $0.01 per Share - June 30, 1996
Class I
Shares of Beneficial Interest, 155 as of
par value $0.01 per Share - June 30, 1996
Class II:
Templeton Latin America Fund
Shares of Beneficial Interest, 951 as of
par value $0.01 per Share - June 30, 1996
Class I
<PAGE>
Shares of Beneficial Interest, 216 as of
par value $0.01 per Share - June 30, 1996
Class II:
ITEM 27. INDEMNIFICATION.
Reference is made to Article IV of the Registrant's
Declaration of Trust, which is filed herewith.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the Registrant by the Registrant
pursuant to the Declaration of Trust or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers
or controlling persons of the Registrant in connection with
the successful defense of any act, suit or proceeding) is
asserted by such trustees, officers or controlling persons in
connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND ITS
OFFICERS AND DIRECTORS
The business and other connections of Templeton Global
Advisors Limited (the investment adviser of Templeton Growth
and Income Fund and Templeton Greater European Fund) and
Templeton Investment Counsel, Inc. (the investment adviser of
Templeton Global Infrastructure Fund, Templeton Americas
Government Securities Fund and Templeton Latin America Fund)
are described in Parts A and B of this Registration Statement.
For information relating to the investment advisers' officers
and directors, reference is made to Forms ADV filed under the
Investment Advisers Act of 1940 by Templeton Global Advisors
Limited and Templeton Investment Counsel, Inc.
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Franklin Templeton Distributors, Inc. also
acts as principal underwriter of shares of:
Franklin Templeton Japan Fund
Templeton American Trust, Inc.
Templeton Capital Accumulator Fund, Inc.
Templeton Developing Markets Trust
Templeton Funds, Inc.
Templeton Global Opportunities Trust
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
Templeton Real Estate Securities Fund
Templeton Smaller Companies Growth Fund, Inc.
Templeton Variable Products Series Fund
AGE High Income Fund, Inc.
Franklin Balance Sheet Investment Fund
Franklin California Tax Free Income Fund, Inc.
Franklin California Tax Free Trust
Franklin Custodian Funds, Inc. Franklin Equity Fund
Franklin Federal Money Fund Franklin Federal Tax-Free
Income Fund Franklin Gold Fund Franklin Investors
Securities Trust Franklin Managed Trust Franklin
Money Fund Franklin Municipal Securities Trust
Franklin New York Tax-Free Income Fund Franklin New
York Tax-Free Trust Franklin Premier Return Fund
Franklin Real Estate Securities Fund Franklin
Strategic Series
Franklin Tax-Advantaged High Yield Securities Fund
Franklin Tax-Advantaged International Bond Fund
Franklin Tax-Advantaged U.S. Government
Securities Fund
Franklin Tax Exempt Money Fund
Franklin Tax-Free Trust
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Templeton Money Fund Trust
Franklin Value Investors Trust
Institutional Fiduciary Trust
(b) The directors and officers of FTD, located at 777
Mariners island Blvd., San Mateo, California 94404, are as
follows:
<TABLE>
<CAPTION>
Position with UNDERWRITER Position with THE REGISTRANT
NAME
<S> <C> <C>
Charles B. Johnson Chairman of the Board and Director Trustee, Chairman and Vice
President
Gregory E. Johnson President None
Rupert H. Johnson, Jr. Executive Vice President and Director Vice President
Harmon E. Burns Executive Vice President and Director Vice President
Edward V. McVey Senior Vice President None
Kenneth V. Domingues Senior Vice President None
Kenneth A. Lewis Treasurer None
William J. Lippman Senior Vice President None
Richard C. Stoker Senior Vice President None
Charles E. Johnson Senior Vice President Vice President
500 E Broward Blvd.
Ft. Lauderdale, FL
Deborah R. Gatzek Senior Vice President and Assistant Vice President
Secretary
James K. Blinn Vice President None
Richard O. Conboy Vice President None
James A. Escobedo Vice President None
Loretta Fry Vice President None
Robert N. Geppner Vice President None
Mike Hackett Vice President None
Bret W. Feuss Vice President None
Peter Jones Senior Vice President None
700 Central Avenue
St. Petersburg, FL
Philip J. Kearns Vice President None
Ken Leder Vice President None
Jack Lemein Vice President None
John R. McGee Vice President None
Thomas M. Mistele Vice President Secretary
700 Central Avenue
St. Petersburg, FL
Harry G. Mumford Vice President None
Vivian J. Palmieri Vice President None
Kent P. Strazza Vice President None
Alison Hawksley Assistant Vice President None
John R. Kay Assistant Vice President Vice President
500 E Broward Blvd.
Ft. Lauderdale, FL
Annette Mulcaire Assistant Vice President None
Leslie M. Kratter Secretary None
Philip A. Scatena Assistant Treasurer None
Karen DeBellis Assistant Treasurer Assistant Treasurer
700 Central Avenue
St. Petersburg, FL
</TABLE>
(c) Not Applicable (Information on unaffiliated underwriters).
ITEM 29. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books, and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated
thereunder are in the possession of Templeton Global
Investors, Inc., 500 East Broward Blvd., Fort Lauderdale,
Florida 33394.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS.
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant undertakes to call a meeting of Shareholders
for the purpose of voting upon the question f removal of a
Trustee or Trustees when requested to do so by the holders of
at least 10% of the Registrant's outstanding shares of
beneficial interest and in connection with such meeting to
comply with the shareholder communications provisions of
Section 16(c) of the Investment Company Act of 1940.
(d) Registrant undertakes to furnish to each person to whom
its Prospectus is provided a copy of its latest Annual Report,
upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, the Registrant, as amended, the
Registrant certifies that it meets all the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of St. Petersburg in the State of Florida on the 22nd day of July, 1996.
TEMPLETON GLOBAL INVESTMENT TRUST
(REGISTRANT)
By:
Mark G. Holowesko*
President
*By:/s/THOMAS M. MISTELE
Thomas M. Mistele,
attorney-in-fact**
Pursuant to the requirements of the Securities Act of 1933, as
amended, this amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
____________________ President (Chief July 22, 1996
Mark G. Holowesko* Executive Officer)
____________________ Trustee July 22, 1996
Charles B. Johnson*
____________________ Trustee July 22, 1996
Martin L. Flanagan*
____________________ Trustee July 22, 1996
Betty P. Krahmer*
____________________ Trustee July 22, 1996
Hasso-G von Diergardt-
Naglo*
____________________ Trustee July 22, 1996
F. Bruce Clarke*
___________________ Trustee July 22, 1996
Fred R. Millsaps*
____________________ Trustee July 22, 1996
Harris J. Ashton*
____________________ Trustee July 22, 1996
S. Joseph Fortunato*
____________________ Trustee July 22, 1996
Andrew H. Hines, Jr.*
____________________ Trustee July 22, 1996
John Wm. Galbriath*
____________________ Trustee July 22, 1996
Gordon S. Macklin*
____________________ Trustee July 22, 1996
Nicholas F. Brady*
____________________ Treasurer (Chief July 22 , 1996
James R. Baio* Financial and
Accounting Officer)
</TABLE>
*By: /s/THOMAS M. MISTELE
Thomas M. Mistele,
Attorney-in-fact**
** Powers of Attorney were previously filed in Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A of Templeton Global Investment Trust
(File No. 33-73244), filed on March 1, 1994, or are contained herewith.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned,
being a duly elected Trustee of Templeton Global Investment Trust (the "Trust"),
constitutes and appoints Allan S. Mostoff, Jeffrey L. Steele, William J.
Kotapish and Thomas M. Mistele, and each of them, his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution
for him in his name, place and stead, in any and all capacities, to sign the
Trust's registration statement and any and all amendments thereto, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and conforming all that said attorneys-in-fact and agents, or any of them, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Dated: August 31, 1995
/s/ JOHN WM. GALBRAITH
John Wm. Galbriath
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being the
duly elected Treasurer and Chief Financial Officer of Templeton Global
Investment Trust (the "Trust"), constitutes and appoints Allan S. Mostoff,
Jeffrey L. Steele, William J. Kotapish and Thomas M. Mistele, and each of them,
his true and lawful attorneys-in-fact and agents with full power of substitution
and resubstitution for him in his name, place and stead, in any and all
capacities, to sign the Trust's registration statement and any and all
amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and conforming all that said attorneys-in-fact and
agents, or any of them, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Dated: March 1, 1996
/s/ CHARLES B. JOHNSON
Charles B. Johnson
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 14th day of March, 1994, and amended
and restated the 25th day of May, 1995 and the 21st day of December, 1995,
between TEMPLETON GLOBAL INVESTMENT TRUST (hereinafter referred to as the
"Trust"), on behalf of Templeton Growth and Income Fund (the "Fund"), and
TEMPLETON GLOBAL ADVISORS LIMITED (hereinafter referred to as the "Investment
Manager").
In consideration of the mutual agreements herein made, the
Trust on behalf of the Fund and the Investment Manager understand and agree as
follows:
(1) The Investment Manager shall manage the investment and
reinvestment of the Fund's assets consistent with the provisions of the Trust
Instrument of the Trust and the investment policies adopted and declared by the
Trust's Board of Trustees. In pursuance of the foregoing, the Investment Manager
shall make all determinations with respect to the investment of the Fund's
assets and the purchase and sale of its investment securities, and shall take
such steps as may be necessary to implement those determinations. Such
determinations and services shall include determining the manner in which any
voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's investment securities shall be exercised, subject to
guidelines adopted by the Board of Trustees. It is understood that all acts of
the Investment Manager in performing this Agreement are performed by it outside
the United States.
(2) The Investment Manager is not required to furnish any
personnel, overhead items or facilities for the Fund, including trading desk
facilities or daily pricing of the Fund's portfolio.
(3) The Investment Manager shall be responsible for selecting
members of securities exchanges, brokers and dealers (such members, brokers and
dealers being hereinafter referred to as "brokers") for the execution of the
Fund's portfolio transactions consistent with the Trust's brokerage policies
and, when applicable, the negotiation of commissions in connection therewith.
All decisions and placements shall be made in accordance with
the following principles:
A. Purchase and sale orders will usually be placed with
brokers which are selected by the
Investment Manager as able to achieve "best
execution" of such orders. "Best execution" shall
mean prompt and reliable execution at the most
favorable security price, taking into account the
other provisions hereinafter set forth. The
determination of what may constitute best execution
and price in the execution of a securities
transaction by a broker involves a number of
considerations, including, without limitation, the
overall direct net economic result to the Fund
(involving both price paid or received and any
commissions and other costs paid), the efficiency
with which the transaction is effected, the ability
to effect the transaction at all where a large block
is involved, availability of the broker to stand
ready to execute possibly difficult transactions in
the future, and the financial strength and stability
of the broker. Such considerations are judgmental and
are weighed by the Investment Manager in determining
the overall reasonableness of brokerage commissions.
B. In selecting brokers for portfolio transactions, the
Investment Manager shall take into account its past
experience as to brokers qualified to achieve "best
execution," including brokers who specialize in any
foreign securities held by the Fund.
C. The Investment Manager is authorized to allocate
brokerage business to brokers who have provided
brokerage and research services, as such services
are defined in Section 28(e) of the Securities
Exchange Act of 1934 (the "1934 Act"), for the Fund
and/or other accounts, if any, for which the
Investment Manager exercises investment discretion
(as defined in Section 3(a)(35) of the 1934 Act) and
as to transactions for which fixed minimum commission
rates are not applicable, to cause the Fund to pay
a commission for effecting a securities transaction
in excess of the amount another broker would have
charged for effecting that transaction, if the
Investment Manager determines in good faith that
such amount of commission is reasonable in relation
to the value of the brokerage and research services
provided by such broker, viewed in terms of either
that particular transaction or the Investment
Manager's overall terms of either responsibilities
with respect to the Fund and the other accounts, if
any, as to which it exercises investment discretion.
In reaching such determination, the Investment
Manager will not be required to place or attempt to
place a specific dollar value on the research or
execution services of a broker or on the portion of
any commission reflecting either of said services.
In demonstrating that such determinations were
made in good faith, the Investment Manager shall be
prepared to show that all commissions were allocated
and paid for purposes contemplated by the Trust's
brokerage policy; that the research services provide
lawful and appropriate assistance to the Investment
Manager in the performance of its investment
decision-making responsibilities; and that the
commissions paid were within a reasonable range.
Whether commissions were within a reasonable range
shall be based on any available information as to
the level of commission known to be charged by other
brokers on comparable transactions, but there shall
be taken into account the Trust's policies that (i)
obtaining a low commission is deemed secondary to
obtaining a favorable securities price, since it is
recognized that usually it is more beneficial to the
Fund to obtain a favorable price than to pay the
lowest commission; and (ii) the quality,
comprehensiveness and frequency of research studies
that are provided for the investment Manager are
useful to the Investment Manager in performing its
advisory services under this Agreement. Research
services provided by brokers to the Investment
Manager are considered to be in addition to, and not
in lieu of, services required to be performed by the
Investment Manager under this Agreement. Research
furnished by brokers through which the Fund effects
securities transactions may be used by the Investment
Manager for any of its accounts, and not all research
may be used by the Investment Manager for the Fund.
When execution of portfolio transactions is
allocated to brokers trading on exchanges with fixed
brokerage commission rates, account may be taken of
various services provided by the broker.
D. Purchases and sales of portfolio securities within
the United States other than on a securities exchange
shall be executed with primary market makers acting
as principal, except where, in the judgment of the
Investment Manager, better prices and execution may
be obtained on a commission basis or from other
sources.
E. Sales of the Fund's shares (which shall be deemed to
include also shares of other registered investment
companies which have either the same adviser or an
investment adviser affiliated with the Investment
Manager) by a broker are one factor among others to
be taken into account in deciding to allocate
portfolio transactions (including agency
transactions, principal transactions, purchases in
underwritings or tenders in response to tender
offers) for the account of the Fund to that broker;
provided that the broker shall furnish "best
execution," as defined in subparagraph A above, and
that such allocation shall be within the scope of
the Trust's policies as stated above; provided
further, that in every allocation made to a broker
in which the sale of Fund shares is taken into
account, there shall be no increase in the amount of
the commissions or other compensation paid to such
broker beyond a reasonable commission or other
compensation determined, as set forth in
subparagraph C above, on the basis of best execution
alone or best execution plus research services,
without taking account of or placing any value upon
such sale of the Trust's shares.
(4) The Fund agrees to pay to the Investment Manager a monthly
fee in dollars at an annual rate of 0.75% of the Fund's average daily net
assets, payable at the end of each calendar month. The Investment Manager may
waive all or a portion of its fees provided for hereunder and such waiver shall
be treated as a reduction in purchase price of its services. The Investment
Manager shall be contractually bound hereunder by the terms of any publicly
announced waiver of its fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
Notwithstanding the foregoing, if the total expenses of the
Fund (including the fee to the Investment Manager) in any fiscal year of the
Trust exceed any expense limitation imposed by applicable State law, the
Investment Manager shall reimburse the Fund for such excess in the manner and to
the extent required by applicable State law. The term "total expenses," as used
in this paragraph, does not include interest, taxes, litigation expenses,
distribution expenses, brokerage commissions or other costs of acquiring or
disposing of any of the Fund's portfolio securities or any costs or expenses
incurred or arising other than in the ordinary and necessary course of the
Fund's business. When the accrued amount of such expenses exceeds this limit,
the monthly payment of the Investment Manager's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the balance
of the Trust's fiscal year if accrued expenses thereafter fall below the limit.
(5) This Agreement is amended and restated as of December 21,
1995 and shall continue in effect until July 31, 1996. If not sooner terminated,
this Agreement shall continue in effect for successive periods of 12 months each
thereafter, provided that each such continuance shall be specifically approved
annually by the vote of a majority of the Trust's Board of Trustees who are not
parties to this Agreement or "interested persons" (as defined in Investment
Company Act of 1940 (the "1940 Act")) of any such party, cast in person at a
meeting called for the purpose of voting on such approval and either the vote of
(a) a majority of the outstanding voting securities of the Fund, as defined in
the 1940 Act, or (b) a majority of the Trust's Board of Trustees as a whole.
(6) Notwithstanding the foregoing, this Agreement may be
terminated by either party at any time, without the payment of any penalty, on
sixty (60) days' written notice to the other party, provided that termination by
the Trust is approved by vote of a majority of the Trust's Board of Trustees in
office at the time or by vote of a majority of the outstanding voting securities
of the Fund (as defined by the 1940 Act).
(7) This Agreement will terminate automatically and
immediately in the event of its assignment (as defined in the 1940 Act).
(8) In the event this Agreement is terminated and the
Investment Manager no longer acts as Investment Manager to the Fund, the
Investment Manager reserves the right to withdraw from the Fund the use of the
name "Templeton" or any name misleadingly implying a continuing relationship
between the Fund and the Investment Manager or any of its affiliates.
(9) Except as may otherwise be provided by the 1940 Act,
neither the Investment Manager nor its officers, directors, employees or agents
shall be subject to any liability for any error of judgment, mistake of law, or
any loss arising out of any investment or other act or omission in the
performance by the Investment Manager of its duties under the Agreement or for
any loss or damage resulting from the imposition by any government of exchange
control restrictions which might affect the liquidity of the Fund's assets, or
from acts or omissions of custodians, or securities depositories, or from any
war or political act of any foreign government to which such assets might be
exposed, or for failure, on the part of the custodian or otherwise, timely to
collect payments, except for any liability, loss or damage resulting from
willful misfeasance, bad faith or gross negligence on the Investment Manager's
part or by reason of reckless disregard of the Investment Manager's duties under
this Agreement. It is hereby understood and acknowledged by the Trust that the
value of the investments made for the Fund may increase as well as decrease and
are not guaranteed by the Investment Manager. It is further understood and
acknowledged by the Trust that investment decisions made on behalf of the Fund
by the Investment Manager are subject to a variety of factors which may affect
the values and income generated by the Fund's portfolio securities, including
general economic conditions, market factors and currency exchange rates, and
that investment decisions made by the Investment Manager will not always be
profitable or prove to have been correct.
(10) It is understood that the services of the Investment
Manager are not deemed to be exclusive, and nothing in this Agreement shall
prevent the Investment Manager, or any affiliate thereof, from providing similar
services to other investment companies and other clients, including clients
which may invest in the same types of securities as the Fund, or, in providing
such services, from using information furnished by others. When the Investment
Manager determines to buy or sell the same security for the Fund that the
Investment Manager or one or more of its affiliates has selected for clients of
the Investment Manager or its affiliates, the orders for all such security
transactions shall be placed for execution by methods determined by the
Investment Manager, with approval by the Trust's Board of Trustees, to be
impartial and fair.
(11) This Agreement shall be construed in accordance with the
laws of the State of Delaware, provided that nothing herein shall be construed
as being inconsistent with applicable Federal and state securities laws and any
rules, regulations and orders thereunder.
(12) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(13) Nothing herein shall be construed as constituting
the Investment Manager an agent of the Trust.
(14) It is understood and expressly stipulated that neither
the holders of shares of the Fund nor any Trustee, officer, agent or employee of
the Trust shall be personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON GLOBAL INVESTMENT TRUST
By:/s/JOHN R. KAY
John R. Kay
Vice President
TEMPLETON GLOBAL ADVISORS LIMITED
By:/s/MARK G. HOLOWESKO
Mark G. Holowesko
President
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 7th day of May, 1995 and amended and
restated the 25th day of May, 1995 and the 21st day of December, 1995, between
TEMPLETON GLOBAL INVESTMENT TRUST (hereinafter referred to as the "Trust"), on
behalf of Templeton Greater European Fund (the "Fund"), and TEMPLETON GLOBAL
ADVISORS LIMITED (hereinafter referred to as the "Investment Manager").
In consideration of the mutual agreements herein made, the
Trust on behalf of the Fund and the Investment Manager understand and agree as
follows:
(1) The Investment Manager shall manage the investment and
reinvestment of the Fund's assets consistent with the provisions of the Trust
Instrument of the Trust and the investment policies adopted and declared by the
Trust's Board of Trustees. In pursuance of the foregoing, the Investment Manager
shall make all determinations with respect to the investment of the Fund's
assets and the purchase and sale of its investment securities, and shall take
such steps as may be necessary to implement those determinations. Such
determinations and services shall include determining the manner in which any
voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's investment securities shall be exercised, subject to
guidelines adopted by the Board of Trustees. It is understood that all acts of
the Investment Manager in performing this Agreement are performed by it outside
the United States.
(2) The Investment Manager is not required to furnish any
personnel, overhead items or facilities for the Fund, including trading desk
facilities or daily pricing of the Fund's portfolio.
(3) The Investment Manager shall be responsible for selecting
members of securities exchanges, brokers and dealers (such members, brokers and
dealers being hereinafter referred to as "brokers") for the execution of the
Fund's portfolio transactions consistent with the Trust's brokerage policies
and, when applicable, the negotiation of commissions in connection therewith.
All decisions and placements shall be made in accordance with the following
principles:
A. Purchase and sale orders will usually be placed with
brokers which are selected by the
Investment Manager as able to achieve "best
execution" of such orders. "Best execution" shall
mean prompt and reliable execution at the most
favorable security price, taking into account the
other provisions hereinafter set forth. The
determination of what may constitute best execution
and price in the execution of a securities
transaction by a broker involves a number of
considerations, including, without limitation, the
overall direct net economic result to the Fund
(involving both price paid or received and any
commissions and other costs paid), the efficiency
with which the transaction is effected, the ability
to effect the transaction at all where a large block
is involved, availability of the broker to stand
ready to execute possibly difficult transactions in
the future, and the financial strength and stability
of the broker. Such considerations are judgmental and
are weighed by the Investment Manager in determining
the overall reasonableness of brokerage commissions.
B. In selecting brokers for portfolio transactions, the
Investment Manager shall take into account its past
experience as to brokers qualified to achieve "best
execution," including brokers who specialize in any
foreign securities held by the Fund.
C. The Investment Manager is authorized to allocate
brokerage business to brokers who have provided
brokerage and research services, as such services
are defined in Section 28(e) of the Securities
Exchange Act of 1934 (the "1934 Act"), for the Fund
and/or other accounts, if any, for which the
Investment Manager exercises investment discretion
9as defined in Section 3(a)(35) of the 1934 Act)and,
as to transactions for which fixed minimum
commission rates are not applicable, to cause the
Fund to pay a commission for effecting a securities
transaction in excess of the amount another broker
would have charged for effecting that transaction,
if the Investment Manager determines in good faith
that such amount of commission is reasonable in
relation to the value of the brokerage and research
services provided by such broker, viewed in terms of
either that particular transaction or the Investment
Manager's overall responsibilities with respect to
the Fund and the other accounts, if any, as to which
it exercises investment discretion. In reaching
such determination, the Investment Manager will not
be required to place or attempt to place a specific
dollar value on the research or execution services
of a broker or on the portion of any commission
reflecting either of said services. In demonstrating
that such determinations were made in good faith,
the Investment Manager shall be prepared to show
that all commissions were allocated and paid
for purposes contemplated by the Trust's brokerage
policy; that the research services provide lawful
and appropriate assistance to the Investment Manager
in the performance of its investment decision-making
responsibilities; and that the commissions paid were
within a reasonable range. Whether commissions were
within a reasonable range shall be based on any
available information as to the level of commission
known to be charged by other brokers on comparable
transactions, but there shall be taken into account
the Trust's policies that (i) obtaining a low
commission is deemed secondary to obtaining a
favorable securities price, since it is recognized
that usually it is more beneficial to the Fund to
obtain a favorable price than to pay the lowest
commission; and (ii) the quality, comprehensiveness
and frequency of research studies that are provided
for the Investment Manager are useful to the
Investment Manager in performing its advisory
services under this Agreement. Research services
provided by brokers to the Investment Manager are
considered to be in addition to, and not in lieu of,
services required to be performed by the Investment
Manager under this Agreement. Research furnished by
brokers through which the Fund effects securities
transactions may be used by the Investment Manager
for any of its accounts, and not all research may be
used by the Investment Manager for the Fund. When
execution of portfolio transactions is allocated to
brokers trading on exchanges with fixed brokerage
commission rates, account may be taken of various
services provided by the broker.
D. Purchases and sales of portfolio securities within
the United States other than on a securities exchange
shall be executed with primary market makers acting
as principal, except where, in the judgment of the
Investment Manager, better prices and execution may
be obtained on a commission basis or from other
sources.
E. Sales of the Fund's shares (which shall be deemed to
include also shares of other registered investment
companies which have either the same adviser or an
investment adviser affiliated with the Investment
Manager) by a broker are one factor among others to
be taken into account in deciding to allocate
portfolio transactions (including agency transactions
principal transactions, purchases in underwritings
or tenders in response to tender offers) for the
account of the Fund to that broker; provided that
the broker shall furnish "best execution," as defined
in subparagraph A above, and that such allocation
shall be within the scope of the Trust's policies as
stated above; provided further, that in every
allocation made to a broker in which the sale of
Fund shares is taken into account, there shall be no
increase in the amount of the commissions or other
compensation paid to such broker beyond a reasonable
commission or other compensation determined, as set
forth in subparagraph C above, on the basis of best
execution alone or best execution plus research
services, without taking account of or placing any
value upon such sale of the Trust's shares.
(4) The Fund agrees to pay to the Investment Manager a monthly
fee in dollars at an annual rate of 0.75% of the Fund's average daily net
assets, payable at the end of each calendar month. The Investment Manager may
waive all or a portion of its fees provided for hereunder and such waiver shall
be treated as a reduction in purchase price of its services. The Investment
Manager shall be contractually bound hereunder by the terms of any publicly
announced waiver of its fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
Notwithstanding the foregoing, if the total expenses of the
Fund (including the fee to the Investment Manager) in any fiscal year of the
Trust exceed any expense limitation imposed by applicable State law, the
Investment Manager shall reimburse the Fund for such excess in the manner and to
the extent required by applicable State law. The term "total expenses," as used
in this paragraph, does not include interest, taxes, litigation expenses,
distribution expenses, brokerage commissions or other costs of acquiring or
disposing of any of the Fund's portfolio securities or any costs or expenses
incurred or arising other than in the ordinary and necessary course of the
Fund's business. When the accrued amount of such expenses exceeds this limit,
the monthly payment of the Investment Manager's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the balance
of the Trust's fiscal year if accrued expenses thereafter fall below the limit.
(5) This Agreement is amended and restated as of December 21,
1995, shall continue in effect until July 31, 1996. If not sooner terminated,
this Agreement shall continue in effect for successive periods of 12 months each
thereafter, provided that each such continuance shall be specifically approved
annually by the vote of a majority of the Trust's Board of Trustees who are not
parties to this Agreement or "interested persons" (as defined in Investment
Company Act of 1940 (the "1940 Act")) of any such party, cast in person at a
meeting called for the purpose of voting on such approval and either the vote of
(a) a majority of the outstanding voting securities of the Fund, as defined in
the 1940 Act, or (b) a majority of the Trust's Board of Trustees as a whole.
(6) Notwithstanding the foregoing, this Agreement may be
terminated by either party at any time, without the payment of any penalty, on
sixty (60) days' written notice to the other party, provided that termination by
the Trust is approved by vote of a majority of the Trust's Board of Trustees in
office at the time or by vote of a majority of the outstanding voting securities
of the Fund (as defined by the 1940 Act).
(7) This Agreement will terminate automatically and
immediately in the event of its assignment (as defined in the 1940 Act).
(8) In the event this Agreement is terminated and the
Investment Manager no longer acts as Investment Manager to the Fund, the
Investment Manager reserves the right to withdraw from the Fund the use of the
name "Templeton" or any name misleadingly implying a continuing relationship
between the Fund and the Investment Manager or any of its affiliates.
(9) Except as may otherwise be provided by the 1940 Act,
neither the Investment Manager nor its officers, directors, employees or agents
shall be subject to any liability for any error of judgment, mistake of law, or
any loss arising out of any investment or other act or omission in the
performance by the Investment Manager of its duties under the Agreement or for
any loss or damage resulting from the imposition by any government of exchange
control restrictions which might affect the liquidity of the Fund's assets, or
from acts or omissions of custodians, or securities depositories, or from any
war or political act of any foreign government to which such assets might be
exposed, or for failure, on the part of the custodian or otherwise, timely to
collect payments, except for any liability, loss or damage resulting from
willful misfeasance, bad faith or gross negligence on the Investment Manager's
part or by reason of reckless disregard of the Investment Manager's duties under
this Agreement. It is hereby understood and acknowledged by the Trust that the
value of the investments made for the Fund may increase as well as decrease and
are not guaranteed by the Investment Manager. It is further understood and
acknowledged by the Trust that investment decisions made on behalf of the Fund
by the Investment Manager are subject to a variety of factors which may affect
the values and income generated by the Fund's portfolio securities, including
general economic conditions, market factors and currency exchange rates, and
that investment decisions made by the Investment Manager will not always be
profitable or prove to have been correct.
(10) It is understood that the services of the Investment
Manager are not deemed to be exclusive, and nothing in this Agreement shall
prevent the Investment Manager, or any affiliate thereof, from providing similar
services to other investment companies and other clients, including clients
which may invest in the same types of securities as the Fund, or, in providing
such services, from using information furnished by others. When the Investment
Manager determines to buy or sell the same security for the Fund that the
Investment Manager or one or more of its affiliates has selected for clients of
the Investment Manager or its affiliates, the orders for all such security
transactions shall be placed for execution by methods determined by the
Investment Manager, with approval by the Trust's Board of Trustees, to be
impartial and fair.
(11) This Agreement shall be construed in accordance with the
laws of the State of Delaware, provided that nothing herein shall be construed
as being inconsistent with applicable Federal and state securities laws and any
rules, regulations and orders thereunder.
(12) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(13) Nothing herein shall be construed as constituting
the Investment Manager an agent of the Trust.
(14) It is understood and expressly stipulated that neither
the holders of shares of the Fund nor any Trustee, officer, agent or employee of
the Trust shall be personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON GLOBAL INVESTMENT TRUST
By:/s/JOHN R. KAY////
John R. Kay
Vice President
TEMPLETON GLOBAL ADVISORS LIMITED
By:/s/MARK G. HOLOWESKO
Mark G. Holowesko
President
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 28th day of June, 1996, between
TEMPLETON GLOBAL INVESTMENT TRUST (hereinafter referred to as the "Trust"), on
behalf of Templeton Latin America Fund (the "Fund"), and TEMPLETON INVESTMENT
COUNSEL, INC., (hereinafter referred to as the "Investment Manager").
In consideration of the mutual agreements herein made, the
Trust on behalf of the Fund and the Investment Manager understand and agree as
follows:
(1) The Investment Manager agrees, during the life of this
Agreement, to manage the investment and reinvestment of the Fund's assets
consistent with the provisions of the Trust Instrument of the Trust and the
investment policies adopted and declared by the Trust's Board of Trustees. In
pursuance of the foregoing, the Investment Manager shall make all determinations
with respect to the investment of the Fund's assets and the purchase and sale of
its investment securities, and shall take such steps as may be necessary to
implement those determinations. Such determinations and services shall include
determining the manner in which any voting rights, rights to consent to
corporate action and any other rights pertaining to the Fund's investment
securities shall be exercised, subject to guidelines adopted by the Board of
Trustees.
(2) The Investment Manager is not required to furnish any
personnel, overhead items or facilities for the Fund, including trading desk
facilities or daily pricing of the Fund's portfolio.
(3) The Investment Manager shall be responsible for selecting
members of securities exchanges, brokers and dealers (such members, brokers and
dealers being hereinafter referred to as "brokers") for the execution of the
Fund's portfolio transactions consistent with the Trust's brokerage policies
and, when applicable, the negotiation of commissions in connection therewith.
All decisions and placements shall be made in accordance with
the following principles:
A. Purchase and sale orders will usually be placed with
brokers which are selected by the
Investment Manager as able to achieve "best
execution" of such orders. "Best execution" shall
mean prompt and reliable execution at the most
favorable security price, taking into account the
other provisions hereinafter set forth. The
determination of what may constitute best execution
and price in the execution of a securities
transaction by a broker involves a number of
considerations, including, without limitation, the
overall direct net economic result to the Fund
(involving both price paid or received and any
commissions and other costs paid), the efficiency
with which the transaction is effected, the ability
to effect the transaction at all where a large block
is involved, availability of the broker to stand
ready to execute possibly difficult transactions in
the future, and the financial strength and stability
of the broker. Such considerations are judgmental and
are weighed by the Investment Manager in determining
the overall reasonableness of brokerage commissions.
B. In selecting brokers for portfolio transactions, the
Investment Manager shall take into account its past
experience as to brokers qualified to achieve "best
execution," including brokers who specialize in any
foreign securities held by the Fund.
C. The Investment Manager is authorized to allocate
brokerage business to brokers who
have provided brokerage and research services, as
such services are defined in Section 28(e) of the
Securities Exchange Act of 1934 (the "1934 Act"),
for the Fund and/or other accounts, if any, for
which the Investment Manager exercises investment
discretion (as defined in Section 3(a)(35) of the
1934 Act) and, as to transactions for which fixed
minimum commission rates are not applicable, to
cause the Fund to pay a commission for effecting a
securities transaction in excess of the amount
another broker would have charged for effecting that
transaction, if the Investment Manager determines in
good faith that such amount of commission is
reasonable in relation to the value of the brokerage
and research services provided by such broker,
viewed in terms of either that particular
transaction or the Investment Manager's overall
responsibilities with respect to the Fund and the
other accounts, if any, as to which it exercises
investment discretion. In reaching such
determination, the Investment Manager will not be
required to place or attempt to place a specific
dollar value on the research or execution services
of a broker or on the portion of any commission
reflecting either of said services. In demonstrating
that such determinations were made in good faith,
the Investment Manager shall be prepared to show
that all commissions were allocated and paid for
purposes contemplated by the Trust's brokerage
policy; that the research services provide lawful
and appropriate assistance to the Investment Manager
in the performance of its investment decision-making
responsibilities; and that the commissions paid were
within a reasonable range. Whether commissions were
within a reasonable range shall be based on any
available information as to the level of commission
known to be charged by other brokers on comparable
transactions, but there shall be taken into account
the Trust's policies that (i) obtaining a low
commission is deemed secondary to obtaining a
favorable securities price, since it is recognized
that usually it is more beneficial to the Fund to
obtain a favorable price than to pay the lowest
commission; and (ii) the quality, comprehensiveness
and frequency of research studies that are provided
for the Investment Manager are useful to the
Investment Manager in performing its advisory
services under this Agreement. Research services
provided by brokers to the Investment Manager are
considered to be in addition to, and not in lieu of,
services required to be performed by the Investment
Manager under this Agreement. Research furnished by
brokers through which the Fund effects securities
transactions may be used by the Investment Manager
for any of its accounts, and not all research may be
used by the Investment Manager for the Fund. When
execution of portfolio transactions is allocated to
brokers trading on exchanges with fixed brokerage
commission rates, account may be taken of various
services provided by the broker.
D. Purchases and sales of portfolio securities within
the United States other than on a securities exchange
shall be executed with primary market makers acting
as principal, except where, in the judgment of the
Investment Manager, better prices and execution may
be obtained on a commission basis or from other
sources.
E. Sales of the Fund's shares (which shall be deemed to
include also shares of other registered investment
companies which have either the same adviser or an
investment adviser affiliated with the Investment
Manager) by a broker are one factor among others to
be taken into account in deciding to allocate
portfolio transactions
(including agency transactions, principal
transactions, purchases in underwritings or tenders
in response to tender offers) for the account of the
Fund to that broker; provided that the broker shall
furnish "best execution," as defined in subparagraph
A above, and that such allocation shall be within
the scope of the Trust's policies as stated above;
provided further, that in every allocation made to a
broker in which the sale of Fund shares is taken into
account, there shall be no increase in the amount of
the commissions or other compensation paid to such
broker beyond a reasonable commission or other
compensation determined, as set forth in
subparagraph
C above, on the basis of best execution alone or
best execution plus research services, without
taking account of or placing any value upon such
sale of the Trust's shares.
(4) The Fund agrees to pay to the Investment Manager a monthly
fee in dollars at an annual rate of 1.25% of the Fund's average daily net
assets, payable at the end of each calendar month. The Investment Manager may
waive all or a portion of its fees provided for hereunder and such waiver shall
be treated as a reduction in purchase price of its services. The Investment
Manager shall be contractually bound hereunder by the terms of any publicly
announced waiver of its fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
Notwithstanding the foregoing, if the total expenses of the
Fund (including the fee to the Investment Manager) in any fiscal year of the
Trust exceed any expense limitation imposed by applicable State law, the
Investment Manager shall reimburse the Fund for such excess in the manner and to
the extent required by applicable State law. The term "total expenses," as used
in this paragraph, does not include interest, taxes, litigation expenses,
distribution expenses, brokerage commissions or other costs of acquiring or
disposing of any of the Fund's portfolio securities or any costs or expenses
incurred or arising other than in the ordinary and necessary course of the
Fund's business. When the accrued amount of such expenses exceeds this limit,
the monthly payment of the Investment Manager's fee will be reduced by the
amount of such excess, subject to adjustment month by month during the balance
of the Trust's fiscal year if accrued expenses thereafter fall below the limit.
(5) This Agreement is dated as of the 28th day of June, 1996
and shall continue in effect until April 30, 1998. If not sooner terminated,
this Agreement shall continue in effect for successive periods of 12 months each
thereafter, provided that each such continuance shall be specifically approved
annually by the vote of a majority of the Trust's Board of Trustees who are not
parties to this Agreement or "interested persons" (as defined in Investment
Company Act of 1940 (the "1940 Act")) of any such party, cast in person at a
meeting called for the purpose of voting on such approval and either the vote of
(a) a majority of the outstanding voting securities of the Fund, as defined in
the 1940 Act, or (b) a majority of the Trust's Board of Trustees as a whole.
(6) Notwithstanding the foregoing, this Agreement may be
terminated by either party at any time, without the payment of any penalty, on
sixty (60) days' written notice to the other party, provided that termination by
the Trust is approved by vote of a majority of the Trust's Board of Trustees in
office at the time or by vote of a majority of the outstanding voting securities
of the Fund (as defined by the 1940 Act).
(7) This Agreement will terminate automatically and
immediately in the event of its assignment (as defined in the 1940 Act).
(8) In the event this Agreement is terminated and the
Investment Manager no longer acts as Investment Manager to the Fund, the
Investment Manager reserves the right to withdraw from the Fund the use of the
name "Templeton" or any name misleadingly implying a continuing relationship
between the Fund and the Investment Manager or any of its affiliates.
(9) Except as may otherwise be provided by the 1940 Act,
neither the Investment Manager nor its officers, directors, employees or agents
shall be subject to any liability for any error of judgment, mistake of law, or
any loss arising out of any investment or other act or omission in the
performance by the Investment Manager of its duties under the Agreement or for
any loss or damage resulting from the imposition by any government of exchange
control restrictions which might affect the liquidity of the Fund's assets, or
from acts or omissions of custodians, or securities depositories, or from any
war or political act of any foreign government to which such assets might be
exposed, or for failure, on the part of the custodian or otherwise, timely to
collect payments, except for any liability, loss or damage resulting from
willful misfeasance, bad faith or gross negligence on the Investment Manager's
part or by reason of reckless disregard of the Investment Manager's duties under
this Agreement. It is hereby understood and acknowledged by the Trust that the
value of the investments made for the Fund may increase as well as decrease and
are not guaranteed by the Investment Manager. It is further understood and
acknowledged by the Trust that investment decisions made on behalf of the Fund
by the Investment Manager are subject to a variety of factors which may affect
the values and income generated by the Fund's portfolio securities, including
general economic conditions, market factors and currency exchange rates, and
that investment decisions made by the Investment Manager will not always be
profitable or prove to have been correct.
(10) It is understood that the services of the Investment
Manager are not deemed to be exclusive, and nothing in this Agreement shall
prevent the Investment Manager, or any affiliate thereof, from providing similar
services to other investment companies and other clients, including clients
which may invest in the same types of securities as the Fund, or, in providing
such services, from using information furnished by others. When the Investment
Manager determines to buy or sell the same security for the Fund that the
Investment Manager or one or more of its affiliates has selected for clients of
the Investment Manager or its affiliates, the orders for all such security
transactions shall be placed for execution by methods determined by the
Investment Manager, with approval by the Trust's Board of Trustees, to be
impartial and fair.
(11) This Agreement shall be construed in accordance with the
laws of the State of Delaware, provided that nothing herein shall be construed
as being inconsistent with applicable Federal and state securities laws and any
rules, regulations and orders thereunder.
(12) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(13) Nothing herein shall be construed as constituting
the Investment Manager an agent of the Trust.
(14) It is understood and expressly stipulated that neither
the holders of shares of the Fund nor any Trustee, officer, agent or employee of
the Trust shall be personally liable hereunder, nor shall any resort be had to
other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON GLOBAL INVESTMENT TRUST
By:/s/JOHN R. KAY
John R. Kay
Vice President
TEMPLETON INVESTMENT COUNSEL, INC.
By:/s/CHARLES E. JOHNSON
Charles E. Johnson
Chairman
TEMPLETON GLOBAL INVESTMENT TRUST
700 Central Avenue
St. Petersburg, Florida 33733-8030
Franklin Templeton Distributors, Inc.
P. O. Box 33030
St. Petersburg, Florida 33733-8030
Re: Distribution Agreement dated March 14, 1994
and amended and restated June 27, 1994 and
May 7, 1995
Ladies or Gentlemen:
We are a Delaware business trust operating as an open-end management investment
company or "mutual fund," which is registered under the Investment Company Act
of 1940 (the "1940 Act") and whose shares are registered under the Securities
Act of 1933 (the "1933 Act"). Our company, Templeton Global Investment Trust
(referred to herein as the "Trust"), is comprised of five separate series, each
of which may have one or more classes: Templeton Global Rising Dividends Fund,
Templeton Global Infrastructure Fund, Templeton Americas Government Securities
Fund, Templeton Greater European Fund, and Templeton Latin America Fund (each a
"Fund" and collectively, the "Funds"). We desire to issue our authorized but
unissued shares of beneficial interest (the "Shares") to authorized persons in
accordance with applicable Federal and State securities laws.
You have informed us that your company is registered as a broker-dealer under
the provisions of the Securities Exchange Act of 1934 and that your company is a
member of the National Association of Securities Dealers, Inc. You have
indicated your desire to act as the exclusive selling agent and distributor for
the Shares. We have been authorized to execute and deliver this Distribution
Agreement ("Agreement") to you by a resolution of our Board of Trustees
("Board") passed at a meeting at which a majority of Board members, including a
majority who are not otherwise interested persons of the Trust and who are not
interested persons of our investment adviser, its related organizations or with
you or your related organizations, were present and voted in favor of the said
resolution approving this Agreement.
1. APPOINTMENT OF UNDERWRITER. Upon the execution of this Agreement and
in consideration of the agreements on your part herein expressed and upon the
terms and conditions set forth herein, we hereby appoint you as the exclusive
sales agent for our Shares and agree that we will deliver such Shares as you may
sell. You agree to use your best efforts to promote the sale of Shares, but are
not obligated to sell any specific number of Shares.
However, the Trust and each Fund retains the right to make direct sales
of its Shares without sales charges consistent with the terms of the then
current prospectus and applicable law, and to engage in other legally authorized
transactions in its Shares which do not involve the sale of Shares to the
general public. Such other transactions may include, without limitation,
transactions between the Trust or any Fund or class and its shareholders only,
transactions involving the reorganization of the Trust or any Fund, and
transactions involving the merger or combination of the Trust or any Fund with
another corporation or trust.
2. INDEPENDENT CONTRACTOR. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind us by your actions, conduct or contracts except
that you are authorized to promote the sale of Shares. You may appoint
sub-agents or distribute through dealers or otherwise as you may determine from
time to time, but this Agreement shall not be construed as authorizing any
dealer or other person to accept orders for sale or repurchase on our behalf or
otherwise act as our agent for any purpose.
3. OFFERING PRICE. Shares of a Fund shall be offered for sale at a
price equivalent to the net asset value per share of that Fund and class plus
any applicable percentage of the public offering price as sales commission or as
otherwise set forth in our then current prospectus. On each business day on
which the New York Stock Exchange is open for business, we will furnish you with
the net asset value of the Shares of each available Fund and class which shall
be determined in accordance with our then effective prospectus. All Shares will
be sold in the manner set forth in our then effective prospectus and statement
of additional information, and in compliance with applicable law.
4. COMPENSATION.
(a) SALES COMMISSION. You shall be entitled to charge a sales
commission on the sale or redemption, as appropriate, of each Fund and class of
the Trust's Shares in the amount of any initial, deferred or contingent deferred
sales charge as set forth in the then effective prospectus for that Fund. You
may allow any sub-agents or dealers such commissions or discounts from and not
exceeding the total sales commission as you shall deem advisable, so long as any
such commissions or discounts are set forth in our current prospectus to the
extent required by the applicable Federal and State securities laws. You may
also make payments to sub-agents or dealers from your own resources, subject to
the following conditions: (i) any such payments shall not create any obligation
for or recourse against the Trust or any Fund or class, and (ii) the terms and
conditions of any such payments are consistent with our prospectus and
applicable federal and state securities laws and are disclosed in our prospectus
or statement of additional information to the extent such laws may require.
(b) DISTRIBUTION PLANS. You shall also be entitled to
compensation for your services as provided in any Distribution Plan adopted as
to any Fund and class of the Trust's Shares pursuant to Rule 12b-1 under the
1940 Act.
5. TERMS AND CONDITIONS OF SALES. Shares shall be offered for sale only
in those jurisdictions where they have been properly registered or are exempt
from registration, and only to those groups of people which the Board may from
time to time determine to be eligible to purchase such shares.
6. ORDERS AND PAYMENT FOR SHARES. Orders for Shares shall be directed
to the Trust's shareholder services agent, for acceptance on behalf of the
Trust. At or prior to the time of delivery of any of our Shares you will pay or
cause to be paid to the custodian of the Trust's assets, for our account, an
amount in cash equal to the net asset value of such Shares. Sales of Shares
shall be deemed to be made when and where accepted by the Trust's shareholder
services agent. The Trust's custodian and shareholder services agent shall be
identified in its prospectus.
7. PURCHASES FOR YOUR OWN ACCOUNT. You shall not purchase our Shares
for your own account for purposes of resale to the public, but you may purchase
Shares for your own investment account upon your written assurance that the
purchase is for investment purposes and that the Shares will not be resold
except through redemption by us.
8. SALE OF SHARES TO AFFILIATES. You may sell our Shares at net asset
value to certain of your and our affiliated persons pursuant to the applicable
provisions of the federal securities statutes and rules or regulations
thereunder (the "Rules and Regulations"), including Rule 22d-1 under the 1940
Act, as amended from time to time.
9. ALLOCATION OF EXPENSES. We will pay the expenses:
(a) Of the preparation of the audited and certified
financial statements of our company to be included in
any Post-Effective Amendments ("Amendments") to our
Registration Statement under the 1933 Act or 1940
Act, including the prospectus and statement of
additional information included therein;
(b) Of the preparation, including legal fees, and
printing of all Amendments or supplements filed with
the Securities and Exchange Commission, including the
copies of the prospectuses included in the Amendments
and the first 10 copies of the definitive
prospectuses or supplements thereto, other than those
necessitated by your (including your "Parent's")
activities or Rules and Regulations related to your
activities where such Amendments or supplements
result in expenses which we would not otherwise have
incurred;
(c) Of the preparation, printing and distribution of
any reports or communications which we send to our
existing shareholders; and
(d) Of filing and other fees to Federal and State
securities regulatory authorities necessary to
continue offering our Shares.
You will pay the expenses:
(a) Of printing the copies of the prospectuses and any
supplements thereto and statements of additional
information which are necessary to continue to offer
our Shares;
(b) Of the preparation, excluding legal fees, and
printing of all Amendments and supplements to our
prospectuses and statements of additional information
if the Amendment or supplement arises from your
(including your "Parent's") activities or Rules and
Regulations related to your activities and those
expenses would not otherwise have been incurred by
us;
(c) Of printing additional copies, for use by you as
sales literature, of reports or other
communications
which we have prepared for distribution to our
existing shareholders; and
(d) Incurred by you in advertising, promoting and selling
our Shares.
10. FURNISHING OF INFORMATION. We will furnish to you such information
with respect to each Fund and class of Shares, in such form and signed by such
of our officers as you may reasonably request, and we warrant that the
statements therein contained, when so signed, will be true and correct. We will
also furnish you with such information and will take such action as you may
reasonably request in order to qualify our Shares for sale to the public under
the Blue Sky Laws of jurisdictions in which you may wish to offer them. We will
furnish you with annual audited financial statements of our books and accounts
certified by independent public accountants, with semi-annual financial
statements prepared by us, with registration statements and, from time to time,
with such additional information regarding our financial condition as you may
reasonably request.
11. CONDUCT OF BUSINESS. Other than our currently effective prospectus,
you will not issue any sales material or statements except literature or
advertising which conforms to the requirements of Federal and State securities
laws and regulations and which have been filed, where necessary, with the
appropriate regulatory authorities. You will furnish us with copies of all such
materials prior to their use and no such material shall be published if we shall
reasonably and promptly object.
You shall comply with the applicable Federal and State laws
and regulations where our Shares are offered for sale and conduct your affairs
with us and with dealers, brokers or investors in accordance with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.
12. REDEMPTION OR REPURCHASE WITHIN SEVEN DAYS. If Shares are tendered
to us for redemption or repurchase by us within seven business days after your
acceptance of the original purchase order for such Shares, you will immediately
refund to us the full sales commission (net of allowances to dealers or brokers)
allowed to you on the original sale, and will promptly, upon receipt thereof,
pay to us any refunds from dealers or brokers of the balance of sales
commissions reallowed by you. We shall notify you of such tender for redemption
within 10 days of the day on which notice of such tender for redemption is
received by us.
13. OTHER ACTIVITIES. Your services pursuant to this Agreement
shall not be deemed to be exclusive, and you may render similar services and
act as an underwriter, distributor or dealer for other investment companies in
the offering of their shares.
14. TERM OF AGREEMENT. This Agreement shall become effective on the
date of its execution, and shall remain in effect until July 31, 1995. The
Agreement is renewable annually thereafter, with respect to the Trust or with
respect to each Fund, for successive periods not to exceed one year (a) by a
vote of (i) a majority of the outstanding voting securities of the Trust or each
Fund, or (ii) by a vote of the Board, AND (b) by a vote of a majority of the
members of the Board who are not parties to the Agreement or interested persons
of any parties to the Agreement (other than as members of the Board), cast in
person at a meeting called for the purpose of voting on the Agreement.
This Agreement may at any time be terminated by the Trust or
by any Fund without the payment of any penalty, (i) either by vote of the Board
or by vote of a majority of the outstanding voting securities of the Trust or
any Fund on 90 days' written notice to you; or (ii) by you on 90 days' written
notice to the Trust; and shall immediately terminate with respect to the Trust
and each Fund in the event of its assignment.
15. SUSPENSION OF SALES. We reserve the right at all times to
suspend or limit the public offering of Shares upon two days' written notice to
you.
16. MISCELLANEOUS. This Agreement shall be subject to the laws of the
State of California and shall be interpreted and construed to further promote
the operation of the Trust as an open-end investment company. This Agreement
shall supersede all Distribution Agreements and Amendments previously in effect
between the parties. As used herein, the terms "Net Asset Value," "Offering
Price," "Investment Company," "Open-End Investment Company," "Assignment,"
"Principal Underwriter," "Interested Person," "Parent," "Affiliated Person," and
"Majority of the Outstanding Voting Securities" shall have the meanings set
forth in the 1933 Act or the 1940 Act and the Rules and Regulations thereunder.
Nothing herein shall be deemed to protect you against any liability to us or to
our securities holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties hereunder, or by reason of your reckless disregard of your obligations
and duties hereunder.
If the foregoing meets with your approval, please acknowledge your acceptance by
signing each of the enclosed copies, whereupon this will become a binding
agreement as of the date set forth below.
Very truly yours,
TEMPLETON GLOBAL INVESTMENT TRUST
By:/s/THOMAS M. MISTELE
Accepted:
FRANKLIN TEMPLETON DISTRIBUTORS, INC.
By:/s/PETER D. JONES
DATED: May 7, 1995
CUSTODY AGREEMENT
AGREEMENT dated as of March 14, 1994 and amended and restated
June 27, 1994 and May 7, 1995, between THE CHASE MANHATTAN BANK, N.A. ("Chase"),
having its principal place of business at 1 Chase Manhattan Plaza, New York, New
York 10081, and TEMPLETON GLOBAL INVESTMENT TRUST (the "Trust"), an investment
company registered under the Investment Company Act of 1940 ("Act of 1940"),
having its principal place of business at 700 Central Avenue, St. Petersburg,
Florida 33701.
WHEREAS, the Trust, on behalf of Templeton Global
Infrastructure Fund, Templeton Global Rising Dividends Fund, and Templeton
Americas Government Securities Fund, Templeton Greater European Fund and
Templeton Latin America Fund (each a "Fund", and collectively, the "Funds"),
wishes to appoint Chase as custodian to the securities and assets of each Fund
and Chase is willing to act as custodian under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the Trust and its successors and assigns and
Chase and its successors and assigns, hereby agree as follows:
1. APPOINTMENT AS CUSTODIAN. Chase agrees to act as custodian
for the Funds, as provided herein, in connection with (a) cash ("Cash") received
from time to time from, or for the account of, each Fund for credit to each
Fund's deposit account or accounts administered by Chase, Chase Branches and
Domestic Securities Depositories (as hereinafter defined), and/or Foreign Banks
and Foreign Securities Depositories (as hereinafter defined) (the "Deposit
Account"); (b) all stocks, shares, bonds, debentures, notes, mortgages, or other
obligations for the payment of money and any certificates, receipts, warrants,
or other instruments representing rights to receive, purchase, or subscribe for
the same or evidencing or representing any other rights or interests therein and
other similar property ("Securities") from time to time received by Chase and/or
any Chase Branch, Domestic Securities Depository, Foreign Bank or Foreign
Securities Depository for the account of the Trust (the "Custody Account"); and
(c) original margin and variation margin payments in a segregated account for
futures contracts (the "Segregated Account").
All Cash held in the Deposit Account or in the Segregated
Account in connection with which Chase agrees to act as custodian is hereby
denominated as a special deposit which shall be held in trust for the benefit of
each Fund and to which Chase, Chase Branches and Domestic Securities
Depositories and/or Foreign Banks and Foreign Securities Depositories shall have
no ownership rights, and Chase will so indicate on its books and records
pertaining to the Deposit Account and the Segregated Account. All cash held in
auxiliary accounts that may be carried for the Funds with Chase (including a
Money Market Account, Redemption Account, Distribution Account and Imprest
Account) is not so denominated as a special deposit and title thereto is held by
Chase subject to the claims of creditors.
2. AUTHORIZATION TO USE BOOK-ENTRY SYSTEM, DOMESTIC
SECURITIES DEPOSITORIES, BRANCH OFFICES, FOREIGN BANKS AND FOREIGN SECURITIES
EPOSITORIES. Chase is hereby authorized to appoint and utilize, subject to the
provisions of Sections 4 and 5 hereof:
A. The Book Entry System and The Depository
Trust Fund; and also such other Domestic Securities
Depositories selected by Chase and as to which Chase has
received a certified copy of a resolution of the Trust's Board
of Trustees authorizing deposits therein;
B. Chase's foreign branch offices in the
United Kingdom, Hong Kong, Singapore, and Tokyo, and such
other foreign branch offices of Chase located in countries
approved by the Board of Trustees of the Trust as to which
Chase shall have given prior notice to the Trust;
C. Foreign Banks which Chase shall have
selected, which are located in countries approved by the
Board of Trustees of the Trust, and as to which banks Chase
shall have given prior notice to the Trust; and
D. Foreign Securities Depositories which
Chase shall have selected and as to which Chase has received
a certified copy of a resolution of the Trust's Board of
Trustees authorizing deposits therein; to hold Securities and
Cash at any time owned by each Fund, it being understood
that no such appointment or utilization shall in any way
relieve Chase of its responsibilities as provided for in this
Agreement. Foreign branch offices of Chase appointed and
utilized by Chase are herein referred to as "Chase Branches."
Unless otherwise agreed to in writing, (a) each Chase Branch,
each Foreign Bank and each Foreign Securities Depository
shall be selected by Chase to hold only Securities as to
which the principal trading market or principal location as
to which such Securities are to be presented for payment is
located outside the United States; and (b) Chase and each
Chase Branch, Foreign Bank and Foreign Securities Depository
will promptly transfer or cause to be transferred to Chase,
to be held in the United States, Securities and/or Cash that
are then being held outside the United States upon request of
each Fund and/or of the Securities and Exchange Commission.
Utilization by Chase of Chase Branches, Domestic Securities
Depositories, Foreign Banks and Foreign Securities
Depositories shall be in accordance with provisions as from
time to time amended, of an operating agreement to be entered
into between Chase and the Trust (the "Operating Agreement").
3. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Authorized Persons of the Trust" shall mean such
officers or employees of the Trust or any other person or
persons as shall have been designated by a resolution of the
Board of Trustees of the Trust, a certified copy of which has
been filed with Chase, to act as Authorized Persons hereunder.
Such persons shall continue to be Authorized Persons of the
Trust, authorized to act either singly or together with one or
more other of such persons as provided in such resolution,
until such time as the Trust shall have filed with Chase a
written notice of the Trust supplementing, amending, or
revoking the authority of such persons.
(b) "Book-Entry system" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and its
nominee or nominees.
(c) "Domestic Securities Depository" shall mean The
Depository Trust Company, a clearing agency registered with
the Securities and Exchange Commission, its successor or
successors and its nominee or nominees; and (subject to the
receipt by Chase of a certified copy of a resolution of the
Trust's Board of Trustees specifically approving deposits
therein as provided in Section 2(a) of this Agreement) any
other person authorized to act as a depository under the Act
of 1940, its successor or successors and its nominee or
nominees.
(d) "Foreign Bank" shall mean any banking institution
organized under the laws of a jurisdiction other than the
United States or of any state thereof.
(e) A "Foreign Securities Depository" shall mean any
system for the central handling of securities abroad where all
securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping without physical
delivery of the securities by any Chase Branch or Foreign
Bank.
(f) "Written Instructions" shall mean instructions
in writing signed by Authorized Persons of the Trust giving
such instructions, and/or such other forms of
communications as from time to time shall be agreed upon in
writing between the Trust and Chase.
4. SELECTION OF COUNTRIES IN WHICH SECURITIES MAY BE HELD.
Chase shall not cause
Securities and Cash to be held in any country outside the United States until
the Trust has directed the holding of each Fund's assets in such country. Chase
will be provided with a copy of a resolution of the Trust's Board of Trustees
authorizing such custody in any country outside of the United States, which
resolution shall be based upon, among other factors, the following:
(a) comparative operational efficiencies of
custody;
(b) clearance and settlement and the costs
thereof; and
(c) political and other risks, other than those
risks specifically assumed by Chase.
5. RESPONSIBILITY OF CHASE TO SELECT CUSTODIANS IN INDIVIDUAL
FOREIGN COUNTRIES. The responsibility for selecting the Chase Branch, Foreign
Bank or Foreign Securities Depository to hold each Fund's Securities and Cash
in individual countries authorized by the Trust shall be that of Chase. Chase
generally shall utilize Chase Branches where available. In locations where
there are no Chase Branches providing custodial services, Chase shall select as
its agent a Foreign Bank, which may be an affiliate or subsidiary of Chase. To
facilitate the clearance and settlement of securities transactions, Chase
represents that, subject to the approval of the Trust, it may deposit
Securities in a Foreign Securities Depository in which Chase is a participant.
In situations in which Chase is not a participant in a Foreign Securities
Depository, Chase may, subject to the approval of the Trust, authorize a
Foreign Bank acting as its subcustodian to deposit the Securities in a
Foreign Securities Depository in which the Foreign Bank is a participant.
Notwithstanding the foregoing, such selection by Chase of a Foreign Bank or
Foreign Securities Depository shall not become effective until Chase has been
advised by the Trust that a majority of its Board of Trustees:
(a) Has approved Chase's selection of the particular
Foreign Bank or Foreign Securities Depository, as the case may
be, as consistent with the best interests of the Funds and
their Shareholders; and
(b) Has approved as consistent with the best
interests of the Funds and their Shareholders a written
contract prepared by Chase which will govern the manner in
which such Foreign Bank will maintain each Fund's assets.
6. CONDITIONS ON SELECTION OF FOREIGN BANK OR FOREIGN
SECURITIES DEPOSITORY. Chase shall authorize the holding of Securities and
Cash by a Chase Branch, Foreign Bank or Foreign Securities Depository only:
(a) to the extent that the Securities and Cash are
not subject to any right, charge, security interest, lien or
claim of any kind in favor of any such Foreign Bank or Foreign
Securities Depository, except for their safe custody or
administration; and
(b) to the extent that the beneficial ownership of
Securities is freely transferable without the payment of money
or value other than for safe custody or administration.
7. CHASE BRANCHES AND FOREIGN BANKS NOT AGENTS OF THE TRUST.
Chase Branches, Foreign Banks and Foreign Securities Depositories shall be
subject to the instructions of Chase and/or the Foreign Bank, and not to those
of the Trust. Chase warrants and represents that all such instructions shall
afford protection to the Trust at least equal to that afforded for Securities
held directly by Chase. Any Chase Branch, Foreign Bank or Foreign Securities
Depository shall act solely as agent of Chase or of such Foreign Bank.
8. CUSTODY ACCOUNT. Securities held in the Custody Account
shall be physically segregated at all times from those of any other person or
persons except that (a) with respect to Securities held by Chase Branches, such
Securities may be placed in an omnibus account for the customers of Chase, and
Chase shall maintain separate book entry records for each such omnibus account,
and such Securities shall be deemed for the purpose of this Agreement to be held
by Chase in the Custody Account; (b) with respect to Securities deposited by
Chase with a Foreign Bank, a Domestic Securities Depository or a Foreign
Securities Depository, Chase shall identify on its books as belonging to the
Trust the Securities shown on Chase's account on the books of the Foreign Bank,
Domestic Securities Depository or Foreign Securities Depository; and (c) with
respect to Securities deposited by a Foreign Bank with a Foreign Securities
Depository, Chase shall cause the Foreign Bank to identify on its books as
belonging to Chase, as agent, the Securities shown on the Foreign Bank's account
on the books of the Foreign Securities Depository. All Securities of the Trust
maintained by Chase pursuant to this Agreement shall be subject only to the
instructions of Chase, Chase Branches or their agents. Chase shall only deposit
Securities with a Foreign Bank in accounts that include only assets held by
Chase for its customers.
8a. ESGREGATED ACCOUNT FOR FUTURES CONTRACTS. With respect to
every futures contract purchased, sold or cleared for the Custody Account,
Chase agrees, pursuant to Written Instructions, to:
(a) deposit original margin and variation margin
payments in a segregated account maintained by Chase; and
(b) perform all other obligations attendant to
transactions or positions in such futures contracts, as such
payments or performance may be required by law or the
executing broker.
8b. SEGREGATED ACCOUNT FOR REPURCHASE AGREEMENTS.
With respect to purchases for the Custody Account from banks (including Chase)
or broker-dealers, of United States or foreign government obligations subject to
repurchase agreements, Chase agrees, pursuant to Written Instructions, to:
(a) deposit such securities and repurchase
agreements in a segregated account maintained by Chase; and
(b) promptly show on Chase's records that such
securities and repurchase agreements are being held on
behalf of a Fund and deliver to that Fund a written
confirmation to that effect.
8c. SEGREGATED ACCOUNTS FOR DEPOSITS OF COLLATERAL. Chase
agrees, with respect to (i) cash or high quality debt securities to secure
each Fund's commitments to purchase new issues of debt obligations offered
on a when-issued basis; (ii) cash, U.S. government securities, or irrevocable
letters of credit of borrowers of each Fund's portfolio securities to secure
the loan to them of such securities; and/or (iii) cash, securities or any
other property delivered to secure any other obligations; (all of such items
being hereinafter referred to as "collateral"), pursuant to Written
Instructions, to:
(a) deposit the collateral for each such
obligation in a separate segregated account maintained by
Chase; and
(b) promptly to show on Chase's records that
such collateral is being held on behalf of a Fund and
deliver to that Fund a written confirmation to that effect.
9. DEPOSIT ACCOUNT. Subject to the provisions of this
Agreement, the Trust authorizes Chase to establish and maintain in each
country or other jurisdiction in which the principal trading market for any
Securities is located or in which any Securities are to be presented for
payment, an account or accounts, which may include nostro accounts with
Chase Branches and omnibus accounts of Chase at Foreign Banks, for receipt of
cash in the Deposit Account, in such currencies as directed by Written
Instructions. For purposes of this Agreement, cash so held in any such
account shall be evidenced by separate book entries maintained by
Chase at its office in London and shall be deemed to be Cash held by Chase in
the Deposit Account. Unless Chase receives Written Instructions to the contrary,
cash received or credited by Chase or any other Chase Branch, Foreign Bank or
Foreign Securities Depository for the Deposit Account in a currency other than
United States dollars shall be converted promptly into United States dollars
whenever it is practicable to do so through customary banking channels
(including without limitation the effecting of such conversions at Chase's
preferred rates through Chase, its affiliates or Chase Branches), and shall be
automatically transmitted back to Chase in the United States.
10. SETTLEMENT PROCEDURES. Settlement procedures for
transactions in Securities delivered to, held in, or to be delivered from the
Custody Account in Chase Branches, Domestic Securities Depositories, Foreign
Banks and Foreign Securities Depositories, including receipts and payments of
cash held in any nostro account or omnibus account for the Deposit Account as
described in Section 9, shall be carried out in accordance with the provisions
of the Operating Agreement. It is understood that such settlement procedures may
vary, as provided in the Operating Agreement, from securities market to
securities market, to reflect particular settlement practices in such markets.
Chase shall make or cause the appropriate Chase Branch or
Foreign Bank to move payments of Cash held in the Deposit Account only:
(a) in connection with the purchase of Securities for
the account of each Fund and only against the receipt of such
Securities by Chase or by another appropriate Chase Branch,
Domestic Securities Depository, Foreign Bank or Foreign
Securities Depository, or otherwise as provided in the
Operating Agreement, each such payment to be made at prices
confirmed by Written Instructions, or
(b) in connection with any dividend, interim
dividend or other distribution declared by the Trust, or
(c) as directed by the Trust by Written
Instructions setting forth the name and address of the
person to whom the payment is to be made and the purpose for
which the payment is to be made.Upon the receipt by Chase
of Written Instructions specifying the Securities to be so
transferred or delivered, which instructions shall name the
person or persons to whom transfers or deliveries of such
Securities shall be made and shall indicate the time(s) for
such transfers or deliveries, Securities held in the Custody
Account shall be transferred, exchanged, or delivered by
Chase, any Chase Branch, Domestic Securities Depository,
Foreign Bank, or Foreign Securities Depository, as the case
may be, against payment in Cash or Securities, or
otherwise as provided in the Operating Agreement, only:
(a) upon sale of such Securities for the account of a
Fund and receipt of such payment in the amount shown in a
broker's confirmation of sale of the Securities or other
proper authorization received by Chase before such payment is
made, as confirmed by Written Instructions;
(b) in exchange for or upon conversion into other
Securities alone or other Securities and Cash pursuant to any
plan of merger, consolidation, reorganization,
recapitalization, readjustment, or tender offer;
(c) upon exercise of conversion, subscription,
purchase, or other similar rights represented by such
Securities; or
(d) otherwise as directed by the Trust by Written
Instructions which shall set forth the amount and purpose of
such transfer or delivery. Until Chase receives Written
Instructions to the contrary, Chase shall, and shall cause
each Chase Branch, Domestic Securities Depository, Foreign
Bank and Foreign Securities Depository holding
Securities or Cash to, take the following actions
in accordance with procedures established in the Operating
Agreement:
(a) collect and timely deposit in the Deposit Account
all income due or payable with respect to any Securities and
take any action which may be necessary and proper in
connection with the collection and receipt of such income;
(b) present timely for payment all Securities in the
Custody Account which are called, redeemed or retired or
otherwise become payable and all coupons and other income
items which call for payment upon presentation and to receive
and credit to the Deposit Account Cash so paid for the account
of each Fund except that, if such Securities are convertible,
such Securities shall not be presented for payment until two
business days preceding the date on which such conversion
rights would expire unless Chase previously shall have
received Written Instructions with respect thereto;
(c) present for exchange all Securities in the
Custody Account converted pursuant to their terms into
other Securities;
(d) in respect of securities in the Custody Account,
execute in the name of the Trust such ownership and other
certificates as may be required to obtain payments in respect
thereto, provided that Chase shall have requested and the
Trust shall have furnished to Chase any information necessary
in connection with such certificates;
(e) exchange interim receipts or temporary
Securities in the Custody Account for definitive Securities;
and
(f)receive and hold in the Custody Account all
Securities received as a distribution on Securities held
in the Custody Account as a result of a stock dividend, share
split-up or reorganization, recapitalization, readjustment or
other rearrangement or distribution of rights or similar
Securities issued with respect to any Securities held in the
Custody Account.
11. RECORDS. Chase hereby agrees that Chase and any Chase
Branch or Foreign Bank shall create, maintain, and retain all records
relating to their activities and obligations as custodian for the Trust
under this Agreement in such manner as will meet the obligations of the
Trust under the Act of 1940, particularly Section 31 thereof and Rules
31a-1 and 31a-2 thereunder, and Federal, state and foreign tax laws and other
legal or administrative rules or procedures, in each case as currently in
effect and applicable to the Trust. All records so maintained in connection
with the performance of its duties under this Agreement shall, in the event
of termination of this Agreement, be preserved and maintained by Chase as
required by regulation, and shall be made available to the Trust or its
agent upon request, in accordance with the provisions of Section 19.
Chase hereby agrees, subject to restrictions under applicable
laws, that the books and records of Chase and any Chase Branch pertaining to
their actions under this Agreement shall be open to the physical, on-premises
inspection and audit at reasonable times by the independent accountants
("Accountants") employed by, or other representatives of, the Trust. Chase
hereby agrees that, subject to restrictions under applicable laws, access shall
be afforded to the Accountants to such of the books and records of any Foreign
Bank, Domestic Securities Depository or Foreign Securities Depository with
respect to Securities and Cash as shall be required by the Accountants in
connection with their examination of the books and records pertaining to the
affairs of the Trust. Chase also agrees that as the Trust may reasonably request
from time to time, Chase shall provide the Accountants with information with
respect to Chase's and Chase Branches' systems of internal accounting controls
as they relate to the services provided under this Agreement, and Chase shall
use its best efforts to obtain and furnish similar information with respect to
each Domestic Securities Depository, Foreign Bank and Foreign Securities
Depository holding Securities and Cash.
12. REPORTS. Chase shall supply periodically, upon the
reasonable request of the Trust, such statements, reports, and advices with
respect to Cash in the Deposit Account and the Securities in the Custody Account
and transactions in Securities from time to time received and/or delivered for
or from the Custody Account, as the case may be, as the Trust shall require.
Such statements, reports and advices shall include an identification of the
Chase Branch, Domestic Securities Depository, Foreign Bank and Foreign
Securities Depository having custody of the Securities and Cash, and
descriptions thereof.
13. REGISTRATION OF SECURITIES. Securities in the Custody
Account which are issued or issuable only in bearer form (except such securities
as are held in the Book-Entry System) shall be held by Chase, Chase Branches,
Domestic Securities Depositories, Foreign Banks or Foreign Securities
Depositories in that form. All other Securities in the Custody Account shall be
held in registered form in the name of Chase, or any Chase Branch, the
Book-Entry System, Domestic Securities Depository, Foreign Bank or Foreign
Securities Depository and their nominees, as custodian or nominee.
14. STANDARD OF CARE.
(a) GENERAL. Chase shall assume entire responsibility
for all Securities held in the Custody Account, Cash held in
the Deposit Account, Cash or Securities held in the Segregated
Account and any of the Securities and Cash while in the
possession of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository, or
in the possession or control of any employees, agents or other
personnel of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository; and
shall be liable to the Trust for any loss to the Trust
occasioned by any destruction of the Securities or Cash so
held or while in such possession, by any robbery, burglary,
larceny, theft or embezzlement by any employees, agents or
personnel of Chase or any Chase Branch, Domestic Securities
Depository, Foreign Bank or Foreign Securities Depository,
and/or by virtue of the disappearance of any of the Securities
or Cash so held or while in such possession, with or without
any fault attributable to Chase ("fault attributable to Chase"
for the purposes of this Agreement being deemed to mean any
negligent act or omission, robbery, burglary, larceny, theft
or embezzlement by any employees or agents of Chase or any
Chase Branch, Domestic Securities Depository, Foreign Bank or
Foreign Securities Depository). In the event of Chase's
discovery or notification of any such loss of Securities or
Cash, Chase shall promptly notify the Trust and shall
reimburse the Trust to the extent of the market value of the
missing Securities or Cash as at the date of the discovery of
such loss. The Trust shall not be obligated to establish any
negligence, misfeasance or malfeasance on Chase's part from
which such loss resulted, but Chase shall be obligated
hereunder to make such reimbursement to the Trust after the
discovery or notice of such loss, destruction or theft of such
Securities or Cash. Chase may at its option insure itself
against loss from any cause but shall be under no obligation
to insure for the benefit of the Trust.
(b) COLLECTIONS. All collections of funds or other
property paid or distributed in respect of Securities held in
the Custody Account shall be made at the risk of the Trust.
Chase shall have no liability for any loss occasioned by delay
in the actual receipt of notice by Chase (or by any Chase
Branch or Foreign Bank in the case of Securities or Cash held
outside of the United States) of any payment, redemption or
other transaction regarding Securities held in the Custody
Account or Cash held in the Deposit Account in respect of
which Chase has agreed to take action in the absence of
Written Instructions to the contrary as provided in Section 10
of this Agreement, which does not appear in any of the
publications referred to in Section 16 of this Agreement.
(c) EXCLUSIONS. Notwithstanding any other provision
in this Agreement to the contrary, Chase shall not be
responsible for (i) losses resulting from war or from the
imposition of exchange control restrictions, confiscation,
expropriation, or nationalization of any securities or assets
of the issuer of such securities, or (ii) losses resulting
from any negligent act or omission of the Trust or any of its
affiliates, or any robbery, theft, embezzlement or fraudulent
act by any employee or agent of the Trust or any of its
affiliates. Chase shall not be liable for any action taken in
good faith upon Written Instructions of Authorized Persons of
the Trust or upon any certified copy of any resolution of the
Board of Trustees of the Trust, and may rely on the
genuineness of any such documents which it may in good faith
believe to be validly executed.
(d) LIMITATION ON LIABILITY UNDER SECTION 14(A).
Notwithstanding any other provision in this Agreement to the
contrary, it is agreed that Chase's sole responsibility with
respect to losses under Section 14(a) shall be to pay the
Trust the amount of any such loss as provided in Section 14(a)
(subject to the limitation provided in Section 14(e) of this
Agreement). This limitation does not apply to any liability of
Chase under Section 14(f) of this Agreement.
(e) ANNUAL ADJUSTMENT OF LIMITATION OF LIABILITY. As
soon as practicable after June 1 of every year, the Trust
shall provide Chase with the amount of its total net assets as
of the close of business on such date (or if the New York
Stock Exchange is closed on such date, then in that event as
of the close of business on the next day on which the New York
Stock Exchange is open for business).
It is understood by the parties to this Agreement (1)
that Chase has entered into substantially similar custody
agreements with other Templeton Funds, all of which Funds have
as their investment adviser either the Investment Manager of
Templeton Global Rising Dividends Fund, Templeton Greater
European Fund and Templeton Latin America Fund or the
Investment Manager of Templeton Global Infrastructure Fund or
Templeton Americas Government Securities Fund or companies
which are affiliated with either Investment Manager; and (2)
that Chase may enter into substantially similar custody
agreements with additional mutual funds under Templeton
management which may hereafter be organized. Each of such
custody agreements with each of such other Templeton Funds
contains (or will contain) a "Standard of Care" section
similar to this Section 14, except that the limit of Chase's
liability is (or will be) in varying amounts for each Fund,
with the aggregate limits of liability in all of such
agreements, including this Agreement, amounting to
$150,000,000.
On each June 1, Chase will total the net assets
reported by each one of the Templeton Funds, and will
calculate the percentage of the aggregate net assets of all
the Templeton Funds that is represented by the net asset value
of this Trust. Thereupon Chase shall allocate to this
Agreement with this Trust that proportion of its total of
$150,000,000 responsibility undertaking which is substantially
equal to the proportion which this Trust's net assets bears to
the total net assets of all such Templeton Funds subject to
adjustments for claims paid as follows: all claims previously
paid to this Trust shall first be deducted from its
proportionate allocable share of the $150,000,000 Chase
responsibility, and if the claims paid to this Trust amount to
more than its allocable share of the Chase responsibility,
then the excess of such claims paid to this Trust shall
diminish the balance of the $150,000,000 Chase responsibility
available for the proportionate shares of all of the other
Templeton Funds having similar custody agreements with Chase.
Based on such calculation, and on such adjustment for claims
paid, if any, Chase thereupon shall notify the Trust of such
limit of liability under this Section 14 which will be
available to the Trust with respect to (1) losses in excess of
payment allocations for previous years and (2) losses
discovered during the next year this Agreement remains in
effect and until a new determination of such limit of
responsibility is made on the next succeeding June 1.
(f) OTHER LIABILITY. Independently of Chase's
liability to the Trust as provided in Section 14(a) above (it
being understood that the limitations in Sections 14(d) and
14(e) do not apply to the provisions of this Section 14(f)),
Chase shall be responsible for the performance of only such
duties as are set forth in this Agreement or contained in
express instructions given to Chase which are not contrary to
the provisions of this Agreement. Chase will use and require
the same care with respect to the safekeeping of all
Securities held in the Custody Account, Cash held in the
Deposit Account, and Securities or Cash held in the Segregated
Account as it uses in respect of its own similar property, but
it need not maintain any insurance for the benefit of the
Trust. With respect to Securities and Cash held outside of the
United States, Chase will be liable to the Trust for any loss
to the Trust resulting from any disappearance or destruction
of such Securities or Cash while in the possession of Chase or
any Chase Branch, Foreign Bank or Foreign Securities
Depository, to the same extent it would be liable to the Trust
if Chase had retained physical possession of such Securities
and Cash in New York. It is specifically agreed that Chase's
liability under this Section 14(f) is entirely independent of
Chase's liability under Section 14(a). Notwithstanding any
other provision in this Agreement to the contrary, in the
event of any loss giving rise to liability under this Section
14(f) that would also give rise to liability under Section
14(a), the amount of such liability shall not be charged
against the amount of the limitation on liability provided in
Section 14(d).
(g) COUNSEL; LEGAL EXPENSES. Chase shall be entitled
to the advice of counsel (who may be counsel for the Trust) at
the expense of the Trust, in connection with carrying out
Chase's duties hereunder and in no event shall Chase be liable
for any action taken or omitted to be taken by it in good
faith pursuant to advice of such counsel. If, in the absence
of fault attributable to Chase and in the course of or in
connection with carrying out its duties and obligations
hereunder, any claims or legal proceedings are instituted
against Chase or any Chase Branch by third parties, the Trust
will hold Chase harmless against any claims, liabilities,
costs, damages or expenses incurred in connection therewith
and, if the Trust so elects, the Trust may assume the defense
thereof with counsel satisfactory to Chase, and thereafter
shall not be responsible for any further legal fees that may
be incurred by Chase, provided, however, that all of the
foregoing is conditioned upon the Trust's receipt from Chase
of prompt and due notice of any such claim or proceeding. 15.
EXPROPRIATION INSURANCE. Chase represents that it does not
intend to obtain any
insurance for the benefit of the Trust which protects against the imposition of
exchange control restrictions on the transfer from any foreign jurisdiction of
the proceeds of sale of any Securities or against confiscation, expropriation or
nationalization of any securities or the assets of the issuer of such securities
by a government of any foreign country in which the issuer of such securities is
organized or in which securities are held for safekeeping either by Chase, or
any Chase Branch, Foreign Bank or Foreign Securities Depository in such country.
Chase has discussed the availability of expropriation insurance with the Trust,
and has advised the Trust as to its understanding of the position of the staff
of the Securities and Exchange Commission that any investment company investing
in securities of foreign issuers has the responsibility for reviewing the
possibility of the imposition of exchange control restrictions which would
affect the liquidity of such investment company's assets and the possibility of
exposure to political risk, including the appropriateness of insuring against
such risk. The Trust has acknowledged that it has the responsibility to review
the possibility of such risks and what, if any, action should be taken.
16. PROXY, NOTICES, REPORTS, ETC. Chase shall watch for the
dates of expiration of (a) all purchase or sale rights (including warrants,
puts, calls and the like) attached to or inherent in any of the Securities held
in the Custody Account and (b) conversion rights and conversion price changes
for each convertible Security held in the Custody Account as published in
Telstat Services, Inc., Standard & Poor's Financial Inc. and/or any other
publications listed in the Operating Agreement (it being understood that Chase
may give notice to the Trust as provided in Section 21 as to any change,
addition and/or omission in the publications watched by Chase for these
purposes). If Chase or any Chase Branch, Foreign Bank or Foreign Securities
Depository shall receive any proxies, notices, reports, or other communications
relative to any of the Securities held in the Custody Account, Chase shall, on
its behalf or on behalf of a Chase Branch, Foreign Bank or Foreign Securities
Depository, promptly transmit in writing any such communication to the Trust. In
addition, Chase shall notify the Trust by person-to-person collect telephone
concerning any such notices relating to any matters specified in the first
sentence of this Section 16.
As specifically requested by the Trust, Chase shall execute or
deliver or shall cause the nominee in whose name Securities are registered to
execute and deliver to such person as may be designated by the Trust proxies,
consents, authorizations and any other instruments whereby the authority of the
Trust as owner of any Securities in the Custody Account registered in the name
of Chase or such nominee, as the case may be, may be exercised. Chase shall vote
Securities in accordance with Written Instructions timely received by Chase, or
such other person or persons as designated in or pursuant to the Operating
Agreement.
Chase and any Chase Branch shall have no liability for any
loss or liability occasioned by delay in the actual receipt by them or any
Foreign Bank or Foreign Securities Depository of notice of any payment or
redemption which does not appear in any of the publications referred to in the
first sentence of this Section 16.
17. COMPENSATION. The Trust agrees to pay to Chase from time
to time such compensation for its services pursuant to this Agreement as may be
mutually agreed upon in writing from time to time and Chase's out-of-pocket or
incidental expenses, as from time to time shall be mutually agreed upon by Chase
and the Trust. The Trust shall have no responsibility for the payment of
services provided by any Domestic Securities Depository, such fees being paid
directly by Chase. In the event of any advance of Cash for any purpose made by
Chase pursuant to any Written Instruction, or in the event that Chase or any
nominee of Chase shall incur or be assessed any taxes in connection with the
performance of this Agreement, the Trust shall indemnify and reimburse Chase
therefor, except such assessment of taxes as results from the negligence, fraud,
or willful misconduct of Chase, any Domestic Securities Depository, Chase
Branch, Foreign Bank or Foreign Securities Depository, or as constitutes a tax
on income, gross receipts or the like of any one or more of them. Chase shall
have a lien on Securities in the Custody Account and on Cash in the Deposit
Account for any amount owing to Chase from time to time under this Agreement
upon due notice to the Trust.
18. AGREEMENT SUBJECT TO APPROVAL OF THE TRUST. It is
understood that this Agreement and any amendments shall be subject to the
approval of the Trust.
19. TERM. This Agreement shall remain in effect until
terminated by either party upon 60 days' written notice to the other, sent by
registered mail. Notwithstanding the preceding sentence, however, if at any time
after the execution of this Agreement Chase shall provide written notice to the
Trust, by registered mail, of the amount needed to meet a substantial increase
in the cost of maintaining its present type and level of bonding and insurance
coverage in connection with Chase's undertakings in Section 14(a), (d) and (e)
of this Agreement, said Section 14(a), (d) and (e) of this Agreement shall cease
to apply 60 days after the providing of such notice by Chase, unless prior to
the expiration of such 60 days the Trust agrees in writing to assume the amount
needed for such purpose. Chase, upon the date this Agreement terminates pursuant
to notice which has been given in a timely fashion, shall, and/or shall cause
each Domestic Securities Depository to, deliver the Securities in the Custody
Account, pay the Cash in the Deposit Account, and deliver and pay Securities and
Cash in the Segregated Account to the Trust unless Chase has received from the
Trust 60 days prior to the date on which this Agreement is to be terminated
Written Instructions specifying the name(s) of the person(s) to whom the
Securities in the Custody Account shall be delivered, the Cash in the Deposit
Account shall be paid, and Securities and Cash in the Segregated Account shall
be delivered and paid. Concurrently with the delivery of such Securities, Chase
shall deliver to the Trust, or such other person as the Trust shall instruct,
the records referred to in Section 11 which are in the possession or control of
Chase, any Chase Branch, or any Domestic Securities Depository, or any Foreign
Bank or Foreign Securities Depository, or in the event that Chase is unable to
obtain such records in their original form Chase shall deliver true copies of
such records.
20. AUTHORIZATION OF CHASE TO EXECUTE NECESSARY DOCUMENTS. In
connection with the performance of its duties hereunder, the Trust hereby
authorizes and directs Chase and each Chase Branch acting on behalf of Chase,
and Chase hereby agrees, to execute and deliver in the name of the Trust, or
cause such other Chase Branch to execute and deliver in the name of the Trust,
such certificates, instruments, and other documents as shall be reasonably
necessary in connection with such performance, provided that the Trust shall
have furnished to Chase any information necessary in connection therewith.
21. NOTICES. Any notice or other communication authorized or
required by this Agreement to be given to the parties shall be sufficiently
given (except to the extent otherwise specifically provided) if addressed
and mailed postage prepaid or delivered to it at its office at the address set
forth below:
If to the Trust, then to
Templeton Global Investment Trust
700 Central Avenue, P.O. Box 33030
St. Petersburg, Florida 33733
Attention: Thomas M. Mistele, Secretary
If to Chase, then to
The Chase Manhattan Bank, N.A.
MetroTech Center
Brooklyn, New York 11245
Attention: Global Custody Division Executive
or such other person or such other address as any party shall have furnished
to the other party in writing.
22. NON-ASSIGNABILITY OF AGREEMENT. This Agreement shall
not be assignable by either party hereto; provided, however, that any
corporation into which the Trust or Chase, as the case may be, may be merged
or converted or with which it may be consolidated, or any corporation
succeeding to all or substantially all of the trust business of Chase, shall
succeed to the respective rights and shall assume the respective duties of the
Trust or of Chase, as the case may be, hereunder.
23. GOVERNING LAW. This Agreement shall be governed by
the laws of the State of New York.
THE CHASE MANHATTAN BANK, N.A.
By:/s/LENORE VANDEN HANDEL
TEMPLETON GLOBAL INVESTMENT TRUST
By:/s/THOMAS M. MISTELE
BUSINESS MANAGEMENT AGREEMENT BETWEEN
TEMPLETON GLOBAL INVESTMENT TRUST AND
TEMPLETON GLOBAL INVESTORS, INC.
AGREEMENT dated as of March 14, 1994 and amended June 27,
1994, May 7, 1995 and May 25, 1995 between Templeton Global Investment Trust, a
Delaware business trust which is a registered open-end investment company (the
"Trust"), comprising five series, Templeton Global Rising Dividends Fund,
Templeton Global Infrastructure Fund, Templeton Americas Government Securities
Fund, Templeton Greater European Fund, and Templeton Latin America Fund
(collectively, the "Funds"), and Templeton Global Investors, Inc. ("TGII").
In consideration of the mutual promises herein made, the
parties hereby agree as follows:
(1) TGII agrees, during the life of this Agreement, to
be responsible for:
(a) providing office space, telephone, office equipment
and supplies for the Trust;
(b) paying compensation of the Trust's officers for
services rendered as such;
(c) authorizing expenditures and approving bills for
payment on behalf of the Trust;
(d) supervising preparation of annual and semiannual
reports to Shareholders, notices of dividends,
capital gains distributions and tax credits, and
attending to routine correspondence and other
communications with individual Shareholders;
(e) daily pricing of the Funds' investment portfolios and
preparing and supervising publication of daily
quotations of the bid and asked prices of the Funds'
Shares, earnings reports and other financial data;
(f) monitoring relationships with organizations serving
the Trust, including custodians, transfer agents and
printers;
(g) providing trading desk facilities for the Trust;
(h) supervising compliance by the Trust with
recordkeeping requirements under the Investment
Company Act of 1940 (the "1940 Act") and the rules
and regulations thereunder, with state regulatory
requirements, maintenance of books and records for
the Trust (other than those maintained by the
custodian and transfer agent), preparing and filing
of tax reports other than the Trust's income tax
returns;
(i) monitoring the qualifications of tax deferred
retirement plans providing for investment in Shares
of the Funds; and
(j) providing executive, clerical and secretarial
personnel needed to carry out the above
responsibilities.
(2) The Trust agrees, during the life of this Agreement, to
pay to TGII as compensation for the foregoing a monthly fee equal on an annual
basis to 0.15% of the first $200 million of the aggregate average daily net
assets of the Funds during the month preceding each payment, reduced as follows:
on such net assets in excess of $200 million up to $700 million, a monthly fee
equal on an annual basis to 0.135%; on such net assets in excess of $700 million
up to $1.2 billion, a monthly fee equal on an annual basis to 0.1%; and on such
net assets in excess of $1.2 billion, a monthly fee equal on an annual basis to
0.075%. TGII may waive all or a portion of its fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of its services.
TGII shall be contractually bound hereunder by the terms of any publicly
announced waiver of its fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
(3) This Agreement shall remain in full force and effect
through July 31, 1996 and thereafter from year to year to the extent continuance
is approved annually by the Board of Trustees of the Trust.
(4) This Agreement may be terminated by the Trust at any time
on sixty (60) days' written notice without payment of penalty, provided that
such termination by the Trust shall be directed or approved by the vote of a
majority of the Trustees of the Trust in office at the time or by the vote of a
majority of the outstanding voting securities of the Funds (as defined by the
1940 Act); and shall automatically and immediately terminate in the event of its
assignment (as defined by the 1940 Act).
(5) In the absence of willful misfeasance, bad faith or gross
negligence on the part of TGII, or of reckless disregard of its duties and
obligations hereunder, TGII shall not be subject to liability for any act or
omission in the course of, or connected with, rendering services hereunder.
(6) TGII has advanced for the account of the Funds all
organizational expenses of the Funds, all of which expenses are being deferred
by the Trust and amortized ratably over a five-year period commencing on March
14, 1994; and during the amortization period, the proceeds of any redemption of
the original Shares will be reduced by a pro rata portion of any then
unamortized organizational expenses based on the ratio of the Shares redeemed to
the total initial Shares outstanding immediately prior to the redemption.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and their
respective corporate seals to be hereunto duly affixed and attested.
TEMPLETON GLOBAL INVESTMENT TRUST
By:/s/THOMAS M. MISTELE
Thomas M. Mistele
Secretary
TEMPLETON GLOBAL INVESTORS, INC.
By: /s/JOHN R. KAY
John R. Kay
Vice President
TRANSFER AGENT AGREEMENT BETWEEN
TEMPLETON GLOBAL INVESTMENT TRUST AND
FRANKLIN TEMPLETON INVESTOR SERVICES, INC.
AGREEMENT dated as of March 14, 1994 and amended and restated June 27,
1994, May 7, 1995, August 10, 1995, between TEMPLETON GLOBAL INVESTMENT TRUST, a
registered open-end investment company with offices at 700 Central Avenue, St.
Petersburg, Florida 33701 (the "Trust"), and FRANKLIN TEMPLETON INVESTOR
SERVICES, INC., a registered transfer agent with offices at 700 Central Avenue,
St. Petersburg, Florida 33701 ("FTIS").
W I T N E S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Trust on behalf of Templeton Global Infrastructure Fund, Templeton
Global Rising Dividends Fund, Templeton Americas Government Securities Fund,
Templeton Greater European Fund, and Templeton Latin America Fund (each a
"Fund", and collectively the "Funds") and FTIS agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Declaration of Trust" shall mean the Declaration of
Trust of the Trust as the same may be amended from time to time;
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Trust, duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Trust as indicated in a certificate furnished to FTIS pursuant to Section 4(c)
hereof as may be received by FTIS from time to time;
(c) "Custodian" refers to the custodian and any sub-custodian
of all securities and other property which each Fund may from time to time
deposit, or cause to be deposited or held under the name or account of such
custodian pursuant to the Custody Agreement;
(d) "Oral Instructions" shall mean instructions, other than
written instructions, actually received by FTIS from a person reasonably
believed by FTIS to be an Authorized Person;
(e) "Shares" refers to shares of beneficial interest, par
value $.01 per share, of each Fund; and
(f) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by FTIS to be an Authorized Person and
actually received by FTIS.
2. APPOINTMENT OF FTIS. The Trust on behalf of the Funds hereby
appoints and constitutes FTIS as transfer agent for Shares of each Fund and as
shareholder servicing agent for each Fund, and FTIS accepts such appointment and
agrees to perform the duties hereinafter set forth.
3. COMPENSATION.
(a) Each Fund will compensate or cause FTIS to be compensated
for the performance of its obligations hereunder in accordance with the fees set
forth in the written schedule of fees annexed hereto as Schedule A and
incorporated herein. Schedule A does not include out-of-pocket disbursements of
FTIS for which FTIS shall be entitled to bill each Fund separately. FTIS will
bill each Fund as soon as practicable after the end of each calendar month, and
said billings will be detailed in accordance with Schedule A. Each Fund will
promptly pay to FTIS the amount of such billing.
Out-of-pocket disbursements shall include, but shall not be
limited to, the items specified in the written schedule of out-of-pocket
expenses annexed hereto as Schedule B and incorporated herein. Schedule B may be
modified by FTIS upon not less than 30 days' prior written notice to the Trust.
Unspecified out-of-pocket expenses shall be limited to those out-of-pocket
expenses reasonably incurred by FTIS in the performance of its obligations
hereunder. Reimbursement by each Fund for expenses incurred by FTIS in any month
shall be made as soon as practicable after the receipt of an itemized bill from
FTIS.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A of this Agreement a revised Fee
Schedule.
4. DOCUMENTS. In connection with the appointment of FTIS, each Fund
shall, on or before the date this Agreement goes into effect, but in any case,
within a reasonable period of time for FTIS to prepare to perform its duties
hereunder, deliver or cause to be delivered to FTIS the following documents:
(a) If applicable, specimens of the certificates for
Shares of each Fund;
(b) All account application forms and other documents
relating to Shareholder accounts or to any plan, program or service offered
by each Fund;
(c) A certificate identifying the Authorized Persons and
specimen signatures of Authorized Persons who will sign Written Instructions;
and
(d) All documents and papers necessary under the laws of
Florida, under the Trust's Declaration of Trust, and as may be required for the
due performance of FTIS's duties under this Agreement or for the due performance
of additional duties as may from time to time be agreed upon between the Trust
and FTIS.
5. DISTRIBUTIONS PAYABLE IN SHARES. In the event that the Board of
Trustees of the Trust shall declare a distribution payable in Shares, the Trust
shall deliver or cause to be delivered to FTIS written notice of such
declaration signed on behalf of the Trust by an officer thereof, upon which FTIS
shall be entitled to rely for all purposes, certifying (i) the number of Shares
involved, and (ii) that all appropriate action has been taken.
6. DUTIES OF THE TRANSFER AGENT. FTIS shall be responsible for
administering and/or performing transfer agent functions; for acting as service
agent in connection with dividend and distribution functions; and for performing
shareholder account and administrative agent functions in connection with the
issuance, transfer and redemption or repurchase (including coordination with the
Custodian) of Shares. The operating standards and procedures to be followed
shall be determined from time to time by agreement between the Trust and FTIS.
Without limiting the generality of the foregoing, FTIS agrees to perform the
specific duties listed on Schedule C.
7. RECORDKEEPING AND OTHER INFORMATION. FTIS shall create and
maintain all necessary records in accordance with all applicable laws, rules
and regulations.
8. OTHER DUTIES. In addition, FTIS shall perform such other duties and
functions, and shall be paid such amounts therefor, as may from time to time be
agreed upon in writing between the Trust and FTIS. Such other duties and
functions shall be reflected in a written amendment to Schedule C, and the
compensation for such other duties and functions shall be reflected in a written
amendment to Schedule A.
9. RELIANCE BY TRANSFER AGENT; INSTRUCTIONS.
(a) FTIS will be protected in acting upon Written or Oral
Instructions reasonably believed to have been executed or orally communicated by
an Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from an
officer of the Trust. FTIS will also be protected in processing Share
certificates which it reasonably believes to bear the proper manual or facsimile
signatures of the officers of the Trust and the proper countersignature of FTIS.
(b) At any time FTIS may apply to any Authorized Person of the
Trust's for Written Instructions and may seek advice at the Trust's expense from
legal counsel for the Trust or from its own legal counsel, with respect to any
matter arising in connection with this Agreement, and it shall not be liable for
any action taken or not taken or suffered by it in good faith in accordance with
such Written Instructions or in accordance with the opinion of counsel for the
Trust or for FTIS. Written Instructions requested by FTIS will be provided by
the Trust within a reasonable period of time. In addition, FTIS, or its
officers, agents or employees, shall accept Oral Instructions or Written
Instructions given to them by any person representing or acting on behalf of
either Fund only if said representative is known by FTIS, or its officers,
agents or employees, to be an Authorized Person.
10. ACTS OF GOD, ETC. FTIS will not be liable or responsible for delays
or errors by reason of circumstances beyond its control, including acts of civil
or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown beyond its control, flood or catastrophe, acts of God,
insurrection, war, riots or failure beyond its control of transportation,
communication or power supply.
11. TERM AND TERMINATION.
(a) This Agreement shall be effective as of the date first
written above and shall continue until July 31, 1995 and thereafter shall
continue automatically for successive annual periods ending on July 31st of each
year, provided such continuance is specifically approved at least annually by
(i) the Trust's Board of Trustees or (ii) a vote of a "majority" (as defined in
the Investment Company Act of 1940 (the "1940 Act")) of each Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees who are not "interested persons"
(as defined in the 1940 Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting such approval.
(b) Either party hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than 60 days after the date of receipt of such notice.
In the event such notice is given by the Trust, it shall be accompanied by a
resolution of the Board of Trustees of the Trust, certified by the Secretary of
the Trust, designating a successor transfer agent or transfer agents. Upon such
termination and at the expense of the Trust, FTIS will deliver to such successor
a certified list of Shareholders of the Funds (with names and addresses), an
historical record of the account of each Shareholder and the status thereof, and
all other relevant books, records, correspondence, and other data established or
maintained by FTIS under this Agreement in a form reasonably acceptable to the
Trust, and will cooperate in the transfer of such duties and responsibilities,
including provisions for assistance from FTIS's personnel in the establishment
of books, records and other data by such successor or successors.
12. AMENDMENT. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties.
13. SUBCONTRACTING. The Trust agrees that FTIS may, in its
discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
agent shall not relieve FTIS of its responsibilities hereunder.
14. MISCELLANEOUS.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Trust or FTIS shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Trust:
Templeton Global Investment Trust
700 Central Avenue
St. Petersburg, Florida 33701
To FTIS:
Franklin Templeton Investor Services, Inc.
700 Central Avenue
St. Petersburg, Florida 33701
(b) This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable without the written consent
of the other party.
(c) This Agreement shall be construed in accordance with the
laws of the State of Florida.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers thereunder duly authorized as of
the day and year first above written.
TEMPLETON GLOBAL INVESTMENT TRUST
BY: /s/JOHN R. KAY
John K. Kay
Vice President
FRANKLIN TEMPLETON INVESTOR SERVICES, INC.
BY: /s/THOMAS M. MISTELE
Thomas M. Mistele
Vice President
A-1
Schedule A
FEES
<TABLE>
<CAPTION>
<S> <C>
Shareholder account maintenance (per annum, prorated $15.14 adjusted as of
payable monthly) for Templeton Americas February 1 of each year to
Government Securities Fund reflect changes in the
Department of Labor Consumer
Price Index.
Shareholder account maintenance (per annum, prorated $14.08, adjusted as of February 1 of each year to
payable monthly) for Templeton Growth and Income reflect changes in the Department of Labor Consumer
Fund, Templeton Global Infrastructure Fund, Templeton Price Index.
Greater European Fund and Templeton Latin America Fund
Cash withdrawal program No charge to the Funds.
Retirement Plans No charge to the Funds.
Wire orders or express $15.00 fee may be charged
mailings of redemption proceeds for each wire order and each
express mailing.
</TABLE>
February 1, 1996
Amended Schedule A*
FEES
<TABLE>
<CAPTION>
<S> <C>
Shareholder account maintenance (per annum, $14.77 adjusted as of
prorated payable monthly) for Templeton Americas February 1 of each year to
Government Securities Fund reflect changes in the
Department of Labor Consumer
Price Index.
Shareholder account maintenance (per annum, prorated $13.74, adjusted as of February 1 of each year to
payable monthly) for Templeton Growth & Income Fund, reflect changes in the Department of Labor Consumer
Templeton Global Infrastructure Fund, Templeton Price Index.
Greater European Fund and Templeton Latin America Fund
Cash withdrawal program No charge to the Funds.
Retirement Plans No charge to the Funds.
Wire orders or express mailings of $15.00 fee may be charged for
redemption proceeds each wire order and each express
mailing.
* Amended to reflect the change in Fund name from Templeton Global Rising
Dividends Fund to Templeton Growth & Income Fund.
July 10, 1995
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Funds shall reimburse FTIS monthly for the following out-of-pocket
expenses:
o postage and mailing
o forms
o outgoing wire charges
o telephone
o Federal Reserve charges for check clearance
o if applicable, magnetic tape and freight
o retention of records
o microfilm/microfiche
o stationery
o insurance
o if applicable, terminals, transmitting lines and any expenses
incurred in connection with such terminals and lines
o all other miscellaneous expenses reasonably incurred by FTIS
The Funds agree that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with FTIS. In addition, the Funds will
promptly reimburse FTIS for any other expenses incurred by FTIS as to which the
Funds and FTIS mutually agree that such expenses are not otherwise properly
borne by FTIS as part of its duties and obligations under the Agreement.
C-1
Schedule C
DUTIES
AS TRANSFER AGENT FOR INVESTORS IN THE TRUST, FTIS WILL:
o Record in its transfer record, countersign as transfer agent,
and deliver certificates signed manually or by facsimile, by
the President or a Vice-President and by the Secretary or the
Treasurer of the Trust, in such names and for such number of
authorized but hitherto unissued Shares of the Funds as to
which FTIS shall receive instructions; and
o Transfer on its records from time to time, when presented to
it for that purpose, certificates of said Shares, whether now
outstanding or hereafter issued, when countersigned by a duly
authorized transfer agent, and upon the cancellation of the
old certificates, record and countersign new certificates for
a corresponding aggregate number of Shares and deliver said
new certificates.
AS SHAREHOLDER SERVICE AGENT FOR INVESTORS IN THE FUNDS, FTIS WILL:
o Receive from the Funds, from the Trust's Principal Underwriter
or from a Shareholder, on a form acceptable to FTIS,
information necessary to record sales and redemptions and to
generate sale and/or redemption confirmations;
o Mail sale and/or redemption confirmations using standard forms;
o Accept and process cash payments from investors, and clear
checks which represent payments for the purchase of Shares;
o Requisition Shares in accordance with instructions of the
Principal Underwriter of the Shares of the Funds;
o Produce periodic reports reflecting the accounts receivable
and the paid pending (free stock) items;
o Open, maintain and close Shareholder accounts;
o Establish registration of ownership of Shares in accordance
with generally accepted form;
o Maintain monthly records of (i) issued Shares and (ii) number
of Shareholders and their aggregate Shareholdings classified
according to their residence in each State of the United
States or foreign country;
o Accept and process telephone exchanges for Shares in
accordance with the Funds' Telephone Exchange Privilege as
described in the each Fund's current prospectus;
o Maintain and safeguard records for each Shareholder showing
name(s), address, number of any certificates issued, and
number of Shares registered in such name(s), together with
continuous proof of the outstanding Shares, and dealer
identification, and reflecting all current changes; on
request, provide information as to an investor's qualification
for Cumulative Quantity Discount; and provide all accounts
with confirmation statements reflecting the most recent
transactions, and also provide year-end historical
confirmation statements;
o Provide on request a duplicate set of records for file
maintenance in the Trust's office in St. Petersburg, Florida;
o Out of money received in payment for Share sales, pay to the
Trust's Custodian Account with the Custodian, the net asset
value per Share and pay to the Principal Underwriter its
commission;
o Redeem Shares and prepare and mail liquidation checks;
o Pass upon the adequacy of documents submitted by a Shareholder
or his legal representative to substantiate the transfer of
ownership of Shares from the registered owner to transferees;
o From time to time, make transfers upon the books of the Funds
in accordance with properly executed transfer instructions
furnished to FTIS and make transfers of certificates for such
Shares as may be surrendered for transfer properly endorsed,
and countersign new certificates issued in lieu thereof;
o Upon receipt of proper documentation, place stop transfers,
obtain necessary insurance forms, and reissue replacement
certificates against lost, stolen or destroyed Share
certificates;
o Check surrendered certificates for stop transfer restrictions.
Although FTIS cannot insure the genuineness of certificates
surrendered for cancellation, it will employ all due
reasonable care in deciding the genuineness of such
certificates and the guarantor of the signature(s) thereon;
o Cancel surrendered certificates and record and countersign new
certificates;
o Certify outstanding Shares to auditors;
o In connection with any meeting of Shareholders, upon receiving
appropriate detailed instructions and written materials
prepared by the Funds and proxy proofs checked by the Trust,
print proxy cards; deliver to Shareholders all reports,
prospectuses, proxy cards and related proxy materials of
suitable design for enclosing; receive and tabulate executed
proxies; and furnish a list of Shareholders for the meeting;
o Answer routine correspondence and telephone inquiries about
individual accounts; prepare monthly reports for
correspondence volume and correspondence data necessary for
the Trust's Semi-Annual Report on Form N-SAR;
o Prepare and mail dealer commission statements and checks;
o Maintain and furnish each Fund and its Shareholders with such
information as each Fund may reasonably request for the
purpose of compliance by the Trust with the applicable tax and
securities laws of applicable jurisdictions;
o Mail confirmations of transactions to investors and dealers
in a timely fashion;
o Pay or reinvest income dividends and/or capital gains
distributions to Shareholders of record, in accordance with
the Funds' and/or Shareholder's instructions, provided that:
(a) Each Fund shall notify FTIS in writing
promptly upon declaration of any such
dividend and/or distribution, and in any
event at least forty-eight (48) hours before
the record date;
(b) Such notification shall include the
declaration date, the record date, the
payable date, the rate, and, if applicable,
the reinvestment date and the reinvestment
price to be used; and
(c) Prior to the payable date, each Fund shall
furnish FTIS with sufficient fully and
finally collected funds to make such
distribution.
o Prepare and file annual United States information returns of
dividends and capital gains distributions (Form 1099) and mail
payee copies to Shareholders; report and pay United States
income taxes withheld from distributions made to nonresidents
of the United States; and prepare and mail to Shareholders the
notice required by the U.S. Internal Revenue Code as to
realized capital gains distributed and/or retained, and their
proportionate share of any foreign taxes paid by the Funds;
o Prepare transfer journals;
o Set up wire order trades on file;
o Receive payment for trades and update the trade file;
o Produce delinquency and other trade file reports;
o Provide dealer commission statements and payments thereof for
the Principal Underwriter;
o Sort and print Shareholder information by state, social code,
price break, etc.; and
o Mail promptly the Statement of Additional Information of the
Trust to each Shareholder who requests it, at no cost to the
Shareholder.
In connection with the Trust's Cash Withdrawal Program, FTIS will:
o Make payment of amounts withdrawn periodically by the
Shareholder pursuant to the Program by redeeming Shares, and
confirm such redemptions to the Shareholder; and
o Provide confirmations of all redemptions, reinvestment of
dividends and distributions, and any additional investments in
the Program, including a summary confirmation at the year-end.
In connection with Tax Deferred Retirement Plans involving the Funds,
FTIS will:
o Receive and process applications, accept contributions,
record Shares issued and dividends reinvested;
o Make distributions when properly requested; and
o Furnish reports to regulatory authorities as required.
</TABLE>
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated April 26, 1996 on the
financial statements of Templeton Growth and Income Fund Templeton Global
Infrastructure Fund, Templeton Americas Government Securities Fund, Templeton
Greater European Fund and Templeton Latin America Fund, series of Templeton
Global Investment Trust, referred to therein, which appear in the 1996 Annual
Reports to Shareholders and which are incorporated herein by reference, in
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A, File
No. 33-73244 as filed with the Securities and Exchange Commission.
We also consent to the reference to our firm in the Prospectus under
the caption "Financial Highlights" and in the Statement of Additional
Information under the caption "Independent Accountants".
/s/ McGladrey & Pullen, LLP
New York, New York
July 12, 1996
<PAGE>
DISTRIBUTION PLAN
WHEREAS, Templeton Global Investment Trust (the "Trust") is
registered as an open-end diversified management investment company under the
Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust on behalf of Templeton Greater European
Fund (the "Fund") and Franklin Templeton Distributors, Inc. (the "Selling
Company"), a wholly owned subsidiary of Franklin Resources, Inc. and a
broker-dealer registered under the Securities Exchange Act of 1934, have entered
into a Distribution Agreement pursuant to which the Selling Company will act as
principal underwriter of Shares of the Fund for sale to the public; and
WHEREAS, shares of beneficial interest of the Fund are divided
into classes of shares, one of which is designated Class I;
WHEREAS, the Board of Trustees of the Trust has determined to
adopt this Distribution Plan (the "Plan"), in accordance with the requirements
of the 1940 Act and has determined that there is a reasonable likelihood that
the Plan will benefit the Fund and the holders of Class I Shares.
NOW THEREFORE, the Trust on behalf of the Fund hereby adopts,
with respect to its Class I Shares, the Plan on the following terms and
conditions:
1. The Fund will reimburse the Selling Company for costs and
expenses incurred in connection with the distribution and marketing of the Class
I Shares of the Fund. Such distribution costs and expenses may include: (a)
payments to broker-dealers who provide certain services of value to the Fund's
Class I Shareholders (sometimes referred to as a "trail fee"); (b) reimbursement
of expenses relating to selling and servicing efforts or of organizing and
conducting sales seminars; (c) payments to employees or agents of the Selling
Company who engage in or support distribution of the Class I Shares; (d) payment
of the costs of preparing, printing and distributing prospectuses and reports to
prospective investors and of printing and advertising expenses; (e) payment of
dealer commissions and wholesaler compensation in connection with sales of the
Fund's Class I Shares exceeding $1 million (for which the Trust imposes no sales
charge) and interest or carrying charges in connection therewith; and (f) such
other similar services as the Trust's Board of Trustees determines to be
reasonably calculated to result in the sale of Class I Shares.
The Selling Company will be reimbursed for such costs,
expenses or payments on a monthly basis, subject to a limit of 0.35% per annum
of the average daily net assets of the Fund's Class I Shares. Payments made out
of or charged against the assets of the Class I Shares of the Fund must be in
reimbursement for costs and expenses in connection with any activity which is
primarily intended to result in the sale of the Fund's Class I Shares. The costs
and expenses not reimbursed in any one given month (including costs and expenses
not reimbursed because they exceeded the limit of 0.35% per annum of the average
daily net assets of the Fund's Class I Shares) may be reimbursed in subsequent
months or years.
2. The Plan shall not take effect with respect to the Fund's
Class I Shares until it has been approved by a vote of at least a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Class I
Shares of the Fund. With respect to the submission of the Plan for such a vote,
it shall have been effectively approved with respect to the Fund's Class I
Shares if a majority of the outstanding voting securities of the Class I Shares
of the Fund votes for approval of the Plan.
3. The Plan shall not take effect until it has been approved,
together with any related agreements and supplements, by votes of a majority of
both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust
who are not "interested persons" (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Plan or any agreements
related to it (the "Plan Trustees"), cast in person at a meeting (or meetings)
called for the purpose of voting on the Plan and such related agreements.
4. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in paragraph 3.
5. Any person authorized to direct the disposition of monies
paid or payable by the Class I Shares of the Fund pursuant to the Plan or any
related agreement shall provide to the Trust's Board of Trustees, and the Board
shall review, at least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made.
6. Any agreement related to the Plan shall be in writing and
shall provide: (a) that such agreement may be terminated at any time as to the
Fund's Class I Shares, without payment of any penalty, by vote of a majority of
the Plan Trustees or by vote of a majority of the outstanding voting securities
of the Class I Shares of the Fund, on not more than sixty days' written notice
to any other party to the agreement; and (b) that such agreement shall terminate
automatically in the event of its assignment.
7. The Plan may be terminated at any time, without payment of
any penalty, by vote of a majority of the Plan Trustees, or by vote of a
majority of the outstanding Class I Shares of the Fund.
8. The Plan may be amended at any time by the Trust's Board of
Trustees, provided that (a) any amendment to increase materially the costs which
the Class I Shares of the Fund may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the Class I
Shares of the Fund, and (b) any material amendments of the terms of the Plan
shall become effective only upon approval as provided in paragraph 3 hereof.
9. While the Plan is in effect, the selection and nomination
of Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Fund shall be committed to the discretion of the Trustees who are not interested
persons.
10. The Trust shall preserve copies of the Plan, any related
agreement and any report made pursuant to paragraph 5 hereof, for a period of
not less than six years from the date of the Plan, such agreement or report, as
the case may be, the first two years of which shall be in an easily accessible
place.
11. It is understood and expressly stipulated that neither the
holders of Class I Shares of the Fund nor any Trustee, officer, agent or
employee of the Trust shall be personally liable hereunder, nor shall any resort
be had to other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has executed this Distribution
Plan on this 7th day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
on behalf of TEMPLETON GREATER EUROPEAN FUND
By: /s/JOHN R. KAY
John R. Kay
Vice President
CLASS II DISTRIBUTION PLAN
I. Investment Company: Templeton Global Investment Trust
II. Fund and Class: Templeton Greater European Fund - Class II
Templeton Latin America Fund - Class II
III. Maximum Per Annum Rule 12b-1 Fees for Class II Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.75%
B. Service Fee: 0.25%
PREAMBLE TO CLASS II DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class II shares
(the "Class") of each Fund named above ("Fund"), which Plan shall take effect as
of the date class II shares are first offered (the "Effective Date of the
Plan"). The Plan has been approved by a majority of the Board of Trustees of the
Investment Company (the "Board"), including a majority of the Board members who
are not interested persons of the Investment Company and who have no direct, or
indirect financial interest in the operation of the Plan (the "non-interested
Board members"), cast in person at a meeting called for the purpose of voting on
such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Templeton Galbraith & Hansberger Ltd. (the "Investment Manager") and the
terms of the Underwriting Agreement between the Investment Company and Franklin
Templeton Distributors, Inc. ("FTD"). The Board concluded that the compensation
of the Investment Manager, under the Management Agreement, and of FTD, under the
Underwriting Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to FTD a quarterly fee not to exceed the
above-stated maximum distribution FEE per annum of the Class' average daily net
assets represented by shares of the Class, as may be determined by the Board
from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to FTD for payment to dealers or others, or (ii) directly to
others, an amount not to exceed the above-stated maximum service fee per annum
of the Class' average daily net assets represented by shares of the Class, as
may be determined by the Fund's Board from time to time, as a service fee
pursuant to servicing agreements which have been approved from time to time by
the Board, including the non-interested Board members.
2. (a) FTD shall use the monies paid to it pursuant to Paragraph 1(a)
above to assist in the distribution and promotion of shares of the Class.
Payments made to FTD under the Plan may be used for, among other things, the
printing of prospectuses and reports used for sales purposes, expenses of
preparing and distributing sales literature and related expenses,
advertisements, and other distribution-related expenses, including a pro-rated
portion of FTD's overhead expenses attributable to the distribution of Class
shares, as well as for additional distribution fees paid to securities dealers
or their firms or others who have executed agreements with the Investment
Company, FTD or its affiliates, which form of agreement has been approved from
time to time by the Trustees, including the non-interested trustees. In
addition, such fees may be used to pay for advancing the commission costs to
dealers or others with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include,
among other things, assisting in establishing and maintaining customer accounts
and records; assisting with purchase and redemption requests; arranging for bank
wires; monitoring dividend payments from the Fund on behalf of customers;
forwarding certain shareholder communications from the Fund to customers;
receiving and answering correspondence; and aiding in maintaining the investment
of their respective customers in the Class. Any amounts paid under this
paragraph 2(b) shall be paid pursuant to a servicing or other agreement, which
form of agreement has been approved from time to time by the Board.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, the
Investment Manager, FTD or other parties on behalf of the Fund, the Investment
Manager or FTD make payments that are deemed to be payments by the Fund for the
financing of any activity primarily intended to result in the sale of Class
shares issued by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges which
include payments specified in paragraphs 1 and 2, plus any other payments deemed
to be made pursuant to the Plan under this paragraph, exceed the amount
permitted to be paid pursuant to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., Article III, Section 26(d).
4. FTD shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies reimbursed to it and to others under the
Plan, and shall furnish the Board with such other information as the Board may
reasonably request in connection with the payments made under the Plan in order
to enable the Board to make an informed determination of whether the Plan should
be continued.
5. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Board, including the non-interested Board members, cast in person at a
meeting called for the purpose of voting on the Plan.
6. The Plan, and any agreements entered into pursuant to this Plan, may
be terminated at any time, without penalty, by vote of a majority of the
outstanding voting securities of the Fund or by vote of a majority of the
non-interested Board members, on not more than sixty (60) days' written notice,
or by FTD on not more than sixty (60) days' written notice, and shall terminate
automatically in the event of any act that constitutes an assignment of the
Management Agreement between the Fund and the Investment Manager.
7. The Plan, and any agreements entered into pursuant to this Plan, may
not be amended to increase materially the amount to be spent for distribution
pursuant to Paragraph 1 hereof without approval by a majority of the Fund's
outstanding voting securities.
8. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Board members shall be committed to the discretion of
such non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and FTD as evidenced by their execution
hereof.
Date: May 8, 1995
Templeton Global Investment Trust
By:/s/THOMAS M. MISTELE
Thomas M. Mistele
Franklin Templeton Distributors, Inc.
By:/s/ PETER D. JONES
Peter D. Jones
DISTRIBUTION PLAN
WHEREAS, Templeton Global Investment Trust (the "Trust") is
registered as an open-end diversified management investment company under the
Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust on behalf of Templeton Latin America Fund
(the "Fund") and Franklin Templeton Distributors, Inc. (the "Selling Company"),
a wholly owned subsidiary of Franklin Resources, Inc. and a broker-dealer
registered under the Securities Exchange Act of 1934, have entered into a
Distribution Agreement pursuant to which the Selling Company will act as
principal underwriter of Shares of the Fund for sale to the public; and
WHEREAS, shares of beneficial interest of the Fund are divided
into classes of shares, one of which is designated Class I;
WHEREAS, the Board of Trustees of the Trust has determined to
adopt this Distribution Plan (the "Plan"), in accordance with the requirements
of the 1940 Act and has determined that there is a reasonable likelihood that
the Plan will benefit the Fund and the holders of Class I Shares.
NOW THEREFORE, the Trust on behalf of the Fund hereby adopts,
with respect to its Class I Shares, the Plan on the following terms and
conditions:
1. The Fund will reimburse the Selling Company for costs and
expenses incurred in connection with the distribution and marketing of the Class
I Shares of the Fund. Such distribution costs and expenses may include: (a)
payments to broker-dealers who provide certain services of value to the Fund's
Class I Shareholders (sometimes referred to as a "trail fee"); (b) reimbursement
of expenses relating to selling and servicing efforts or of organizing and
conducting sales seminars; (c) payments to employees or agents of the Selling
Company who engage in or support distribution of the Class I Shares; (d) payment
of the costs of preparing, printing and distributing prospectuses and reports to
prospective investors and of printing and advertising expenses; (e) payment of
dealer commissions and wholesaler compensation in connection with sales of the
Fund's Class I Shares exceeding $1 million (for which the Trust imposes no sales
charge) and interest or carrying charges in connection therewith; and (f) such
other similar services as the Trust's Board of Trustees determines to be
reasonably calculated to result in the sale of Class I Shares.
The Selling Company will be reimbursed for such costs,
expenses or payments on a monthly basis, subject to a limit of 0.35% per annum
of the average daily net assets of the Fund's Class I Shares. Payments made out
of or charged against the assets of the Class I Shares of the Fund must be in
reimbursement for costs and expenses in connection with any activity which is
primarily intended to result in the sale of the Fund's Class I Shares. The costs
and expenses not reimbursed in any one given month (including costs and expenses
not reimbursed because they exceeded the limit of 0.35% per annum of the average
daily net assets of the Fund's Class I Shares) may be reimbursed in subsequent
months or years.
2. The Plan shall not take effect with respect to the Fund's
Class I Shares until it has been approved by a vote of at least a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Class I
Shares of the Fund. With respect to the submission of the Plan for such a vote,
it shall have been effectively approved with respect to the Fund's Class I
Shares if a majority of the outstanding voting securities of the Class I Shares
of the Fund votes for approval of the Plan.
3. The Plan shall not take effect until it has been approved,
together with any related agreements and supplements, by votes of a majority of
both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust
who are not "interested persons" (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Plan or any agreements
related to it (the "Plan Trustees"), cast in person at a meeting (or meetings)
called for the purpose of voting on the Plan and such related agreements.
4. The Plan shall continue in effect so long as such
continuance is specifically approved at least annually in the manner provided
for approval of the Plan in paragraph 3.
5. Any person authorized to direct the disposition of monies
paid or payable by the Class I Shares of the Fund pursuant to the Plan or any
related agreement shall provide to the Trust's Board of Trustees, and the Board
shall review, at least quarterly, a written report of the amounts so expended
and the purposes for which such expenditures were made.
6. Any agreement related to the Plan shall be in writing and
shall provide: (a) that such agreement may be terminated at any time as to the
Fund's Class I Shares, without payment of any penalty, by vote of a majority of
the Plan Trustees or by vote of a majority of the outstanding voting securities
of the Class I Shares of the Fund, on not more than sixty days' written notice
to any other party to the agreement; and (b) that such agreement shall terminate
automatically in the event of its assignment.
7. The Plan may be terminated at any time, without payment of
any penalty, by vote of a majority of the Plan Trustees, or by vote of a
majority of the outstanding Class I Shares of the Fund.
8. The Plan may be amended at any time by the Trust's Board of
Trustees, provided that (a) any amendment to increase materially the costs which
the Class I Shares of the Fund may bear for distribution pursuant to the Plan
shall be effective only upon approval by a vote of a majority of the Class I
Shares of the Fund, and (b) any material amendments of the terms of the Plan
shall become effective only upon approval as provided in paragraph 3 hereof.
9. While the Plan is in effect, the selection and nomination
of Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Fund shall be committed to the discretion of the Trustees who are not interested
persons.
10. The Trust shall preserve copies of the Plan, any related
agreement and any report made pursuant to paragraph 5 hereof, for a period of
not less than six years from the date of the Plan, such agreement or report, as
the case may be, the first two years of which shall be in an easily accessible
place.
11. It is understood and expressly stipulated that neither the
holders of Class I Shares of the Fund nor any Trustee, officer, agent or
employee of the Trust shall be personally liable hereunder, nor shall any resort
be had to other private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has executed this Distribution
Plan on this 7th day of May, 1995.
TEMPLETON GLOBAL INVESTMENT TRUST
on behalf of TEMPLETON LATIN AMERICA FUND
By: /s/JOHN R. KAY
John R. Kay
Vice President
CLASS II DISTRIBUTION PLAN
I. Investment Company: Templeton Global Investment Trust
II. Fund and Class: Templeton Greater European Fund - Class II
Templeton Latin America Fund - Class II
III. Maximum Per Annum Rule 12b-1 Fees for Class II Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.75%
B. Service Fee: 0.25%
PREAMBLE TO CLASS II DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class II shares
(the "Class") of each Fund named above ("Fund"), which Plan shall take effect as
of the date class II shares are first offered (the "Effective Date of the
Plan"). The Plan has been approved by a majority of the Board of Trustees of the
Investment Company (the "Board"), including a majority of the Board members who
are not interested persons of the Investment Company and who have no direct, or
indirect financial interest in the operation of the Plan (the "non-interested
Board members"), cast in person at a meeting called for the purpose of voting on
such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Templeton Galbraith & Hansberger Ltd. (the "Investment Manager") and the
terms of the Underwriting Agreement between the Investment Company and Franklin
Templeton Distributors, Inc. ("FTD"). The Board concluded that the compensation
of the Investment Manager, under the Management Agreement, and of FTD, under the
Underwriting Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to FTD a quarterly fee not to exceed the
above-stated maximum distribution FEE per annum of the Class' average daily net
assets represented by shares of the Class, as may be determined by the Board
from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to FTD for payment to dealers or others, or (ii) directly to
others, an amount not to exceed the above-stated maximum service fee per annum
of the Class' average daily net assets represented by shares of the Class, as
may be determined by the Fund's Board from time to time, as a service fee
pursuant to servicing agreements which have been approved from time to time by
the Board, including the non-interested Board members.
2. (a) FTD shall use the monies paid to it pursuant to Paragraph 1(a)
above to assist in the distribution and promotion of shares of the Class.
Payments made to FTD under the Plan may be used for, among other things, the
printing of prospectuses and reports used for sales purposes, expenses of
preparing and distributing sales literature and related expenses,
advertisements, and other distribution-related expenses, including a pro-rated
portion of FTD's overhead expenses attributable to the distribution of Class
shares, as well as for additional distribution fees paid to securities dealers
or their firms or others who have executed agreements with the Investment
Company, FTD or its affiliates, which form of agreement has been approved from
time to time by the Trustees, including the non-interested trustees. In
addition, such fees may be used to pay for advancing the commission costs to
dealers or others with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include,
among other things, assisting in establishing and maintaining customer accounts
and records; assisting with purchase and redemption requests; arranging for bank
wires; monitoring dividend payments from the Fund on behalf of customers;
forwarding certain shareholder communications from the Fund to customers;
receiving and answering correspondence; and aiding in maintaining the investment
of their respective customers in the Class. Any amounts paid under this
paragraph 2(b) shall be paid pursuant to a servicing or other agreement, which
form of agreement has been approved from time to time by the Board.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, the
Investment Manager, FTD or other parties on behalf of the Fund, the Investment
Manager or FTD make payments that are deemed to be payments by the Fund for the
financing of any activity primarily intended to result in the sale of Class
shares issued by the Fund within the context of Rule 12b-1 under the Act, then
such payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges which
include payments specified in paragraphs 1 and 2, plus any other payments deemed
to be made pursuant to the Plan under this paragraph, exceed the amount
permitted to be paid pursuant to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., Article III, Section 26(d).
4. FTD shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies reimbursed to it and to others under the
Plan, and shall furnish the Board with such other information as the Board may
reasonably request in connection with the payments made under the Plan in order
to enable the Board to make an informed determination of whether the Plan should
be continued.
5. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Board, including the non-interested Board members, cast in person at a
meeting called for the purpose of voting on the Plan.
6. The Plan, and any agreements entered into pursuant to this Plan, may
be terminated at any time, without penalty, by vote of a majority of the
outstanding voting securities of the Fund or by vote of a majority of the
non-interested Board members, on not more than sixty (60) days' written notice,
or by FTD on not more than sixty (60) days' written notice, and shall terminate
automatically in the event of any act that constitutes an assignment of the
Management Agreement between the Fund and the Investment Manager.
7. The Plan, and any agreements entered into pursuant to this Plan, may
not be amended to increase materially the amount to be spent for distribution
pursuant to Paragraph 1 hereof without approval by a majority of the Fund's
outstanding voting securities.
8. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
9. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Board members shall be committed to the discretion of
such non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and FTD as evidenced by their execution
hereof.
Date: May 8, 1995
Templeton Global Investment Trust
By:/s/THOMAS M. MISTELE
Thomas M. Mistele
Franklin Templeton Distributors, Inc.
By:/s/ PETER D. JONES
Peter D. Jones
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GROWTH AND INCOME FUND MARCH 31, 1996 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 021
<NAME> TEMPLETON GROWTH AND INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 12757336
<INVESTMENTS-AT-VALUE> 13818730
<RECEIVABLES> 279809
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 44007
<TOTAL-ASSETS> 14142546
<PAYABLE-FOR-SECURITIES> 114882
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90497
<TOTAL-LIABILITIES> 205379
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12870705
<SHARES-COMMON-STOCK> 1030458
<SHARES-COMMON-PRIOR> 592172
<ACCUMULATED-NII-CURRENT> 52562
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (47494)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1061394
<NET-ASSETS> 13937167
<DIVIDEND-INCOME> 180056
<INTEREST-INCOME> 178031
<OTHER-INCOME> 0
<EXPENSES-NET> 111731
<NET-INVESTMENT-INCOME> 246356
<REALIZED-GAINS-CURRENT> (47494)
<APPREC-INCREASE-CURRENT> 1213077
<NET-CHANGE-FROM-OPS> 1411939
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (208786)
<DISTRIBUTIONS-OF-GAINS> (124139)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 618177
<NUMBER-OF-SHARES-REDEEMED> (208997)
<SHARES-REINVESTED> 29106
<NET-CHANGE-IN-ASSETS> 7983808
<ACCUMULATED-NII-PRIOR> 38177
<ACCUMULATED-GAINS-PRIOR> 124538
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64366
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 236797
<AVERAGE-NET-ASSETS> 7902337
<PER-SHARE-NAV-BEGIN> 10.05
<PER-SHARE-NII> .29
<PER-SHARE-GAIN-APPREC> 1.54
<PER-SHARE-DIVIDEND> (.29)
<PER-SHARE-DISTRIBUTIONS> (.20)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.39
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALED 2.71%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GROWTH AND INCOME FUND MARCH 31, 1996 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 022
<NAME> TEMPLETON GROWTH AND INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 12757336
<INVESTMENTS-AT-VALUE> 13818730
<RECEIVABLES> 279809
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 44007
<TOTAL-ASSETS> 14142546
<PAYABLE-FOR-SECURITIES> 114882
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90497
<TOTAL-LIABILITIES> 205379
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12870705
<SHARES-COMMON-STOCK> 194620
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 52562
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (47494)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1061394
<NET-ASSETS> 13937167
<DIVIDEND-INCOME> 180056
<INTEREST-INCOME> 178031
<OTHER-INCOME> 0
<EXPENSES-NET> 111731
<NET-INVESTMENT-INCOME> 246356
<REALIZED-GAINS-CURRENT> (47494)
<APPREC-INCREASE-CURRENT> 1213077
<NET-CHANGE-FROM-OPS> 1411939
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (23185)
<DISTRIBUTIONS-OF-GAINS> (399)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 199693
<NUMBER-OF-SHARES-REDEEMED> (6858)
<SHARES-REINVESTED> 1785
<NET-CHANGE-IN-ASSETS> 7983808
<ACCUMULATED-NII-PRIOR> 38177
<ACCUMULATED-GAINS-PRIOR> 124538
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64366
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 236797
<AVERAGE-NET-ASSETS> 741939
<PER-SHARE-NAV-BEGIN> 10.19
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 1.41
<PER-SHARE-DIVIDEND> (.29)
<PER-SHARE-DISTRIBUTIONS> (.20)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.33
<EXPENSE-RATIO> 1.90<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALED 3.31%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL INFRASTRUCTURE FUND MARCH 31, 1996 ANNUAL REPORT AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 011
<NAME> TEMPLETON GLOBAL INFRASTRUCTURE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 23619995
<INVESTMENTS-AT-VALUE> 23372522
<RECEIVABLES> 498660
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 45066
<TOTAL-ASSETS> 23916248
<PAYABLE-FOR-SECURITIES> 808609
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 137928
<TOTAL-LIABILITIES> 946537
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23084098
<SHARES-COMMON-STOCK> 2150454
<SHARES-COMMON-PRIOR> 1984085
<ACCUMULATED-NII-CURRENT> 22609
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 110477
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (247473)
<NET-ASSETS> 22969711
<DIVIDEND-INCOME> 462012
<INTEREST-INCOME> 109170
<OTHER-INCOME> 0
<EXPENSES-NET> 494609
<NET-INVESTMENT-INCOME> 76573
<REALIZED-GAINS-CURRENT> 1004586
<APPREC-INCREASE-CURRENT> 1135543
<NET-CHANGE-FROM-OPS> 2216702
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (98398)
<DISTRIBUTIONS-OF-GAINS> (809303)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 953832
<NUMBER-OF-SHARES-REDEEMED> (876366)
<SHARES-REINVESTED> 88903
<NET-CHANGE-IN-ASSETS> 4253184
<ACCUMULATED-NII-PRIOR> 71514
<ACCUMULATED-GAINS-PRIOR> (72292)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 158648
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 504544
<AVERAGE-NET-ASSETS> 20478484
<PER-SHARE-NAV-BEGIN> 9.43
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 1.03
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> (.41)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.04
<EXPENSE-RATIO> 2.32<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE EXPENSE RATIO WITHOUT REIMBURSEMENT EQUALED 2.37%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GLOBAL INFRASTRUCTURE FUND MARCH 31, 1996 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 012
<NAME> TEMPLETON GLOBAL INFRASTRUCTURE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 23619995
<INVESTMENTS-AT-VALUE> 23372522
<RECEIVABLES> 498660
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 45066
<TOTAL-ASSETS> 23916248
<PAYABLE-FOR-SECURITIES> 808609
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 137928
<TOTAL-LIABILITIES> 946537
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23084098
<SHARES-COMMON-STOCK> 138034
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 22609
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 110477
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (247473)
<NET-ASSETS> 22969711
<DIVIDEND-INCOME> 462012
<INTEREST-INCOME> 109170
<OTHER-INCOME> 0
<EXPENSES-NET> 494609
<NET-INVESTMENT-INCOME> 76573
<REALIZED-GAINS-CURRENT> 1004586
<APPREC-INCREASE-CURRENT> 1135543
<NET-CHANGE-FROM-OPS> 2216702
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1342)
<DISTRIBUTIONS-OF-GAINS> (38252)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 149668
<NUMBER-OF-SHARES-REDEEMED> (15813)
<SHARES-REINVESTED> 4179
<NET-CHANGE-IN-ASSETS> 4253184
<ACCUMULATED-NII-PRIOR> 71514
<ACCUMULATED-GAINS-PRIOR> (72292)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 158648
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 504544
<AVERAGE-NET-ASSETS> 726082
<PER-SHARE-NAV-BEGIN> 9.73
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> .73
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> (.41)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.99
<EXPENSE-RATIO> 2.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
Templeton Americas Government Securities Fund March 31, 1996 annual report
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
<SERIES>
<NUMBER> 03
<NAME> TEMPLETON AMERICAS GOVERNMENT SECURITIES FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 3430503
<INVESTMENTS-AT-VALUE> 3450174
<RECEIVABLES> 105311
<ASSETS-OTHER> 44557
<OTHER-ITEMS-ASSETS> 3755
<TOTAL-ASSETS> 3603797
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63624
<TOTAL-LIABILITIES> 63624
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3477258
<SHARES-COMMON-STOCK> 347193
<SHARES-COMMON-PRIOR> 294735
<ACCUMULATED-NII-CURRENT> 20642
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 22602
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19671
<NET-ASSETS> 3540173
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 280232
<OTHER-INCOME> 0
<EXPENSES-NET> 40172
<NET-INVESTMENT-INCOME> 240060
<REALIZED-GAINS-CURRENT> 82947
<APPREC-INCREASE-CURRENT> 123691
<NET-CHANGE-FROM-OPS> 446698
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (219418)
<DISTRIBUTIONS-OF-GAINS> (48915)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 80107
<NUMBER-OF-SHARES-REDEEMED> (52953)
<SHARES-REINVESTED> 25304
<NET-CHANGE-IN-ASSETS> 714112
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (11430)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19280
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 160134
<AVERAGE-NET-ASSETS> 3213582
<PER-SHARE-NAV-BEGIN> 9.59
<PER-SHARE-NII> .75
<PER-SHARE-GAIN-APPREC> .71
<PER-SHARE-DIVIDEND> (.69)
<PER-SHARE-DISTRIBUTIONS> (.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.20
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Without reimbursement the expense ratio is 4.98%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GREATER EUROPEAN FUND MARCH 31, 1996 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 041
<NAME> TEMPLETON GREATER EUROPEAN FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAY-08-1995<F1>
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 5468174
<INVESTMENTS-AT-VALUE> 5696048
<RECEIVABLES> 239217
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 55058
<TOTAL-ASSETS> 5990323
<PAYABLE-FOR-SECURITIES> 205245
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46803
<TOTAL-LIABILITIES> 252048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5573762
<SHARES-COMMON-STOCK> 414655
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 42720
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (106081)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227874
<NET-ASSETS> 5738275
<DIVIDEND-INCOME> 20975
<INTEREST-INCOME> 89093
<OTHER-INCOME> 0
<EXPENSES-NET> 67348
<NET-INVESTMENT-INCOME> 42720
<REALIZED-GAINS-CURRENT> (106081)
<APPREC-INCREASE-CURRENT> 227874
<NET-CHANGE-FROM-OPS> 164513
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 507085
<NUMBER-OF-SHARES-REDEEMED> (92430)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5738275
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24741
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 123846
<AVERAGE-NET-ASSETS> 2593621
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .31
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.39
<EXPENSE-RATIO> 1.85<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>COMMENCEMENT OF OPERATIONS.
<F2>THE EXPENSE RATIO FOR THE TEMPLETON GREATER EUROPEAN FUND WITHOUT
REIMBURSEMENT EQUALED 3.56%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON GREATER EUROPEAN FUND MARCH 31, 1996 ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 042
<NAME> TEMPLETON GREATER EUROPEAN FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAY-08-1995<F1>
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 5468174
<INVESTMENTS-AT-VALUE> 5696048
<RECEIVABLES> 239217
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 55058
<TOTAL-ASSETS> 5990323
<PAYABLE-FOR-SECURITIES> 205245
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46803
<TOTAL-LIABILITIES> 252048
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5573762
<SHARES-COMMON-STOCK> 138616
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 42720
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (106081)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227874
<NET-ASSETS> 5738275
<DIVIDEND-INCOME> 20975
<INTEREST-INCOME> 89093
<OTHER-INCOME> 0
<EXPENSES-NET> 67348
<NET-INVESTMENT-INCOME> 42720
<REALIZED-GAINS-CURRENT> (106081)
<APPREC-INCREASE-CURRENT> 227874
<NET-CHANGE-FROM-OPS> 164513
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 139004
<NUMBER-OF-SHARES-REDEEMED> (388)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5738275
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24741
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 123846
<AVERAGE-NET-ASSETS> 1087242
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.32
<EXPENSE-RATIO> 2.50<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>COMMENCEMENT OF OPERATIONS.
<F2>THE EXPENSE RATIO FOR THE TEMPLETON GREATER EUROPEAN FUND WITHOUT
REIMBURSEMENT EQUALED 4.21%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON LATIN AMERICA FUND MARCH 31, 1996 ANNUAL REPORT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 051
<NAME> TEMPLETON LATIN AMERICA FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAY-08-1995<F1>
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 8499177
<INVESTMENTS-AT-VALUE> 8691720
<RECEIVABLES> 66435
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 72775
<TOTAL-ASSETS> 8830930
<PAYABLE-FOR-SECURITIES> 2270973
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58500
<TOTAL-LIABILITIES> 2329473
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6294566
<SHARES-COMMON-STOCK> 489226
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 13836
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 512
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 192543
<NET-ASSETS> 6501457
<DIVIDEND-INCOME> 26791
<INTEREST-INCOME> 118866
<OTHER-INCOME> 0
<EXPENSES-NET> 89058
<NET-INVESTMENT-INCOME> 56599
<REALIZED-GAINS-CURRENT> 512
<APPREC-INCREASE-CURRENT> 192543
<NET-CHANGE-FROM-OPS> 249654
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (35519)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 601968
<NUMBER-OF-SHARES-REDEEMED> (115755)
<SHARES-REINVESTED> 3013
<NET-CHANGE-IN-ASSETS> 6501457
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44350
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 148733
<AVERAGE-NET-ASSETS> 3111587
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> .51
<PER-SHARE-DIVIDEND> (.10)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.53
<EXPENSE-RATIO> 2.35<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>COMMENCEMENT OF OPERATIONS.
<F2>THE EXPENSE RATIO FOR THE TEMPLETON LATIN AMERICA FUND WITHOUT
REIMBURSEMENT EQUALED 4.02%.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TEMPLETON LATIN AMERICA FUND MARCH 31, 1996 ANNUAL REPORT AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000916488
<NAME> TEMPLETON GLOBAL INVESTMENT TRUST
<SERIES>
<NUMBER> 052
<NAME> TEMPLETON LATIN AMERICA FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAY-08-1996<F1>
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 8499177
<INVESTMENTS-AT-VALUE> 8691720
<RECEIVABLES> 66435
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 72775
<TOTAL-ASSETS> 8830930
<PAYABLE-FOR-SECURITIES> 2270973
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58500
<TOTAL-LIABILITIES> 2329473
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6294566
<SHARES-COMMON-STOCK> 128824
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 13836
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 512
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 192543
<NET-ASSETS> 6501457
<DIVIDEND-INCOME> 26791
<INTEREST-INCOME> 118866
<OTHER-INCOME> 0
<EXPENSES-NET> 89058
<NET-INVESTMENT-INCOME> 56599
<REALIZED-GAINS-CURRENT> 512
<APPREC-INCREASE-CURRENT> 192543
<NET-CHANGE-FROM-OPS> 249654
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7244)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 131412
<NUMBER-OF-SHARES-REDEEMED> (3326)
<SHARES-REINVESTED> 738
<NET-CHANGE-IN-ASSETS> 6501457
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44350
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 148733
<AVERAGE-NET-ASSETS> 875170
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .48
<PER-SHARE-DIVIDEND> (.07)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.49
<EXPENSE-RATIO> 3.00<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>COMMENCEMENT OF OPERATIONS.
<F2>THE EXPENSE RATIO FOR THE TEMPLETON LATIN AMERICA FUND WITHOUT
REIMBURSEMENT EQUALED 4.67%.
</FN>
</TABLE>
