PROSPECTUS & APPLICATION
TEMPLETON REGION FUNDS - ADVISOR CLASS
TEMPLETON GREATER EUROPEAN FUND
TEMPLETON LATIN AMERICA FUND
AUGUST 1, 1998
INVESTMENT STRATEGY: GLOBAL GROWTH
LOGO
FRANKLIN TEMPLETON
Please read this prospectus before investing, and keep it for future reference.
It contains important information, including how the funds invest and the
services available to shareholders.
This prospectus describes Advisor Class shares of Templeton Region Funds, which
are Templeton Greater European Fund ("Greater European Fund") and Templeton
Latin America Fund ("Latin America Fund") (each a "fund" and collectively the
"funds"). Each fund is a diversified series of Templeton Global Investment Trust
(the "Trust"). Each fund currently offers other share classes with different
sales charge and expense structures, which affect performance.
To learn more about the funds and their policies, you may request a copy of the
Trust's Statement of Additional Information ("SAI"), dated August 1, 1998, which
we may amend from time to time. We have filed the SAI with the SEC and have
incorporated it by reference into this prospectus.
For a free copy of the SAI or a larger print version of this prospectus, or to
receive a free copy of the prospectus for the funds' other share classes,
contact your investment representative or call 1-800/DIAL BEN.
MUTUAL FUND SHARES 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. MUTUAL FUND SHARES INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
LIKE ALL MUTUAL FUND SHARES, THE SEC HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
PAGE
TEMPLETON REGION FUNDS
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
STATE, JURISDICTION OR COUNTRY 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.
PAGE
TEMPLETON REGION FUNDS - ADVISOR CLASS
August 1, 1998
When reading this prospectus, you will see certain terms beginning with capital
letters. This means the term is explained in our glossary section.
TABLE OF CONTENTS
ABOUT THE FUNDS
Expense Summary.......................................... 2
Financial Highlights..................................... 3
How Do the Funds Invest Their Assets?.................... 5
What Are the Risks of Investing in the Funds?............ 10
Who Manages the Funds?................................... 12
How Taxation Affects the Funds and Their Shareholders.... 15
How Is the Trust Organized?.............................. 19
ABOUT YOUR ACCOUNT
How Do I Buy Shares?..................................... 20
May I Exchange Shares for Shares of Another Fund?........ 24
How Do I Sell Shares?.................................... 26
What Distributions Might I Receive From the Funds?....... 27
Transaction Procedures and Special Requirements.......... 28
Services to Help You Manage Your Account................. 33
What If I Have Questions About My Account?............... 35
GLOSSARY
Useful Terms and Definitions............................. 35
100 Fountain Parkway
P.O. Box 33030
St. Petersburg, FL 33733-8030
1-800/DIAL BEN(R)
Templeton Region Funds 1
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ABOUT THE FUNDS
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 fund's Advisor Class for
the fiscal year ended March 31, 1998. The funds' actual expenses may vary.
<TABLE>
<CAPTION>
GREATER LATIN
EUROPEAN AMERICA
FUND FUND
<S> <C> <C>
------------------------------------------------------------ ------------- ----------
A. SHAREHOLDER TRANSACTION EXPENSES+
Maximum Sales Charge Imposed on Purchases None None
Exchange Fee (per transaction)* $5.00 $5.00
B. ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (after fee waiver)** 0.19% 1.03%
Rule 12b-1 Fees None None
Other Expenses 1.31% 0.97%
---- ----
Total Fund Operating Expenses
(after fee waiver)** 1.50% 2.00%
===== =====
</TABLE>
C. EXAMPLE
Assume the annual return for the class is 5%, operating expenses are as
described above, and you sell your shares after the number of years shown.
These are the projected expenses for each $1,000 that you invest in the
funds.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
GREATER EUROPEAN FUND $15 $47 $ 82 $179
LATIN AMERICA FUND $20 $63 $108 $233
</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.
Each 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.
*$5.00 fee is only for Market Timers. We process all other exchanges without a
fee.
**For the period shown, each fund's Investment Manager and FT Services had
agreed in advance to limit their respective management and administration fees.
Without this reduction, Greater European Fund's management fees would have been
0.75% and total operating expenses would have been 2.06%; Latin America Fund's
management fees would have been 1.25% and total operating expenses would have
been 2.22%. After July 31, 1999, these arrangements may end at any time upon
notice to the Board.
2 Templeton Region Funds
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FINANCIAL HIGHLIGHTS
This table summarizes each fund's financial history. The information has been
audited by McGladrey & Pullen, LLP, the funds' independent auditors. Their audit
report covering the periods shown below appears in each fund's Annual Report to
Shareholders for the fiscal year ended March 31, 1998. The Annual Report to
Shareholders also includes more information about a fund's performance. For a
free copy, please call Fund Information.
GREATER EUROPEAN FUND - ADVISOR CLASS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------
1998 1997+
---------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net Asset Value, beginning of year............................... $ 12.36 $ 11.56
------- -------
Income from investment operations:
Net investment income.......................................... .56 .07
Net realized and unrealized gains.............................. 2.73 .73
------- -------
Total from investment operations................................. 3.29 .80
------- -------
Less distributions from:
Net investment income.......................................... (.27) --
Net realized gains............................................. (1.08) --
------- -------
Total distributions.............................................. (1.35) --
------- -------
Net Asset Value, end of year..................................... $ 14.30 $ 12.36
======= =======
TOTAL RETURN*.................................................... 28.88% 6.92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's).................................. $ 83 $ 36
Ratios to average net assets:
Expenses....................................................... 1.50% 1.50%**
Expenses, excluding waiver and payments by
affiliate.................................................... 2.06% 1.90%**
Net investment income.......................................... 2.38% 2.56%**
Portfolio turnover rate.......................................... 27.59% 30.58%
Average commission rate paid***.................................. $ .0213 $ .0264
<FN>
*Total return is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities.
+For the period January 2, 1997 (commencement of sales) to March 31, 1997.
</FN>
</TABLE>
Templeton Region Funds 3
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LATIN AMERICA FUND - ADVISOR CLASS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
1998 1997+
--------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
Net Asset Value, beginning of year............................... $ 12.35 $ 10.92
------- -------
Income from investment operations:
Net investment income.......................................... .07 .02
Net realized and unrealized gains.............................. .59 1.41
------- -------
Total from investment operations................................. .66 1.43
------- -------
Less distributions from:
Net investment income.......................................... (.11) --
Net realized gains............................................. (.15) --
------- --------
Total distributions.............................................. (.26) --
------- --------
Net Asset Value, end of year..................................... $ 12.75 $ 12.35
======= =======
TOTAL RETURN*.................................................... 5.43% 13.09%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's).................................. $ 139 $ 71
Ratios to average net assets:
Expenses....................................................... 2.00% 2.00%**
Expenses, excluding waiver and payments by
affiliate.................................................... 2.22% 2.08%**
Net investment income.......................................... .45% .82%**
Portfolio turnover rate.......................................... 45.82% 3.72%
Average commission rate paid***.................................. $ .0003 $ .0003
<FN>
*Total return is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities.
+For the period January 2, 1997 (commencement of sales) to March 31, 1997.
</FN>
</TABLE>
4 Templeton Region Funds
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HOW DO THE FUNDS INVEST THEIR ASSETS?
WHAT ARE THE FUNDS' GOALS?
The investment goal of each fund is long-term capital appreciation. This goal is
fundamental, which means that it may not be changed without shareholder
approval.
WHAT ARE THE FUNDS' INVESTMENT STRATEGIES?
GREATER EUROPEAN FUND
The fund tries to achieve its investment goal by investing, under normal market
conditions, at least 75% of its total assets in equity securities of Greater
European companies.
For purposes of the fund's investments, "GREATER EUROPE" means Western, Central
and Eastern Europe (including Ukraine, Belarus, Latvia, Lithuania and Estonia)
and Russia. Greater European companies include those:
/bullet/ organized under the laws of, or with a principal office in a Greater
European country; or
/bullet/ with their principal equity securities trading market within Greater
Europe; or
/bullet/ that derive 50% or more of their revenues or profits from goods
produced or sold, investments made, or services performed in Greater
Europe or that have 50% or more of their assets situated in Greater
Europe.
The fund may invest the remaining 25% of its total assets in any combination of:
(i) debt securities of Greater European companies or those issued or guaranteed
by Greater European government entities; (ii) equity and debt securities of
issuers domiciled outside Greater Europe; and (iii) short-term and medium-term
debt securities as described below under "Temporary Investments."
LATIN AMERICA FUND
The fund tries to achieve its investment goal by investing at least 65% of its
total assets in the equity and debt securities of Latin America issuers.
For purposes of the fund's investments, "LATIN AMERICA" countries include
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.
Templeton Region Funds 5
PAGE
The fund may invest the remaining 35% of its total assets in any combination of:
(i) equity and debt securities of issuers domiciled outside Latin America; and
(iii) short-term and medium-term debt securities as described below under
"Temporary Investments."
WHAT KINDS OF SECURITIES DO THE FUNDS BUY?
EQUITY SECURITIES generally entitle the holder to participate in a company's
general operating results. These include common stock; preferred stock;
convertible securities; warrants or rights. Currently the funds invest primarily
in common stock.
In selecting these equity securities, each fund's Investment Manager does a
company-by-company analysis, rather than focusing on a specific industry or
economic sector. They concentrate primarily on the market price of a company's
securities relative to their view regarding the company's long-term earnings,
assets and cash flow potential. A company's historical value measures, including
price/earnings ratios, profit margins and liquidation value, will also be
considered.
DEBT SECURITIES represent an obligation of the issuer to repay a loan of money
to it, and generally, provide for the payment of interest. These include bonds,
notes and debentures; commercial paper; time deposits; bankers' acceptances; and
structured investments which are described more fully in the SAI.
Greater European Fund may invest up to 25% of its total assets and Latin America
Fund may invest without limit in debt securities. Each fund may buy both rated
and unrated debt securities. Independent rating organizations rate debt
securities based upon their assessment of the financial soundness of the issuer.
Generally, a lower rating indicates higher risk. At present, each fund does not
intend to invest more than 5% of its total assets in non-investment grade
securities (rated lower than BBB by S&P or Baa by Moody's or, if unrated,
determined by the fund to be of comparable quality). Please see the SAI for more
details on the risks associated with lower-rated securities.
BRADY BONDS. Greater European Fund may invest up to 25% of its total assets and
Latin America Fund may invest without limitation in certain debt securities
referred to as "Brady Bonds." These are public-issue bonds of developing
countries that are created through an exchange of existing commercial bank loans
to sovereign entities for new obligations in connection with a debt
restructuring plan introduced by former U.S. Treasury Secretary, Nicholas F.
Brady (the "Brady Plan"). Brady Plan debt restructurings have been implemented
in a number of countries to date including Argentina, Brazil, Bulgaria, Costa
Rica, Croatia, the Dominican Republic, Ecuador, Ivory Coast, Jordan, the former
6 Templeton Region Funds
PAGE
Yugoslav Republic of Macedonia, Mexico, Nigeria, Panama, Peru, the Philippines,
Poland, Russia, Slovenia, Uruguay, Venezuela, and Vietnam (collectively, the
"Brady Countries").
Brady Bonds, if collateralized, are done so by U.S. Treasury zero coupon bonds
to ensure principal. Since many of the Brady Bonds have been issued relatively
recently, they do not have a long payment history.
In light of the residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by public and private
entities of countries issuing Brady Bonds, investments in Brady Bonds are
generally considered speculative. In addition, many Brady Bonds currently are
rated below investment grade. Investments in Brady Bonds are subject to each
fund's current policy of not investing more than 5% of its total assets in
non-investment grade securities.
DEPOSITARY RECEIPTS. Each fund may also invest in American, European and Global
Depositary Receipts. Depositary Receipts are certificates typically issued by a
bank or trust company that give their holders the right to receive securities
issued by a foreign or domestic corporation.
GENERAL. Each fund may invest in any industry although it will not concentrate
(invest more than 25% of its total assets) in any one industry. Each fund may
invest up to 15% of its total assets in illiquid securities, including up to 10%
of its total assets in restricted securities. Illiquid securities are generally
securities that cannot be sold within seven days in the normal course of
business at approximately the amount at which the fund has valued them.
Restricted securities are generally securities that are subject to restrictions
on their transfer.
Please see the SAI for more details on the types of securities in which the
funds invest.
WHAT ARE SOME OF THE FUNDS' OTHER INVESTMENT STRATEGIES AND PRACTICES?
TEMPORARY INVESTMENTS. When an Investment Manager believes that the securities
trading markets or the economy are experiencing excessive volatility or a
prolonged general decline, or other adverse conditions exist, for example, it
may invest the fund's portfolio in a temporary defensive manner.
Under such circumstances, each fund may invest up to 100% of its total assets in
money market securities denominated in the currency of any nation. These may
include:
Templeton Region Funds 7
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/bullet/ short-term (maturities of less than 12 months) and medium-term
(maturities up to 5 years) securities issued or guaranteed by the U.S.
or a foreign government, their agencies or instrumentalities;
/bullet/ finance company and corporate commercial paper, and other short-term
corporate obligations, rated A by S&P or Prime-1 by Moody's or, if
unrated, determined by the fund to be of comparable quality;
/bullet/ bank obligations (including CDs, time deposits and bankers'
acceptances); and
/bullet/ repurchase agreements with banks and broker-dealers.
REPURCHASE AGREEMENTS. Each fund will generally have a portion of its assets in
cash or cash equivalents for a variety of reasons including waiting for a
special investment opportunity or taking a defensive position. To earn income on
this portion of its assets, the fund may enter into repurchase agreements with
certain banks and broker-dealers. Under a repurchase agreement, the fund agrees
to buy a U.S. government security from one of these issuers and then to sell the
security back to the issuer after a short period of time (generally, less than
seven days) at a higher price. The bank or broker-dealer must transfer to the
fund's custodian securities with an initial value of at least 102% of the dollar
amount invested by the fund in each repurchase agreement.
OPTIONS ON SECURITIES AND SECURITIES INDICES. Each fund may buy and sell options
on securities and securities indices to earn additional income and/or to help
protect its portfolio against market and/or exchange rate movements, although it
presently has no intention of doing so. An option on a security is a contract
that allows the buyer of the option the right to buy or sell a specific security
at a stated price during the option's term. An option on a securities index is a
contract that allows the buyer of the option the right to receive from the
seller cash, in an amount equal to the difference between the index's closing
price and the option's exercise price. The fund will limit the sale of options
on its securities to 15% or less of its total assets. The fund may only buy
options if the total premiums it paid for such options is 5% or less of its
total assets.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because each fund may buy securities
which are valued in currencies other than the U.S. dollar, it may take steps to
help protect its portfolio against adverse changes in foreign currency exchange
rates. To do this, the fund may (1) buy and sell foreign currency at the
prevailing rate in the foreign currency exchange market; (2) enter into forward
foreign currency contracts which are agreements to buy or sell a specific
currency at a set price on a future date (generally within one year); and (3)
buy and sell put and call options on foreign currencies.
FUTURES CONTRACTS. Changes in interest rates, securities prices or foreign
currency valuations may affect the value of each fund's investments. To reduce
its exposure to these factors, the fund may buy and sell financial futures
8 Templeton Region Funds
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contracts, stock and bond index futures contracts, foreign currency futures
contracts and options on any of these contracts. A financial futures contract is
an agreement to buy or sell a specific security or commodity at a specified
future date and price. 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 end of the contract period. A foreign currency
futures contract is an agreement to buy or sell a specific amount of a currency
for a set price on a future date. The fund may not commit more than 5% of its
total assets to initial margin deposits on futures contracts and related
options.
SECURITIES LENDING. To generate additional income, each fund may lend its
portfolio securities to qualified securities dealers or other institutional
investors. Such loans may not exceed 33 1/3% of the value of the fund's total
assets measured at the time of the most recent loan. For each loan the fund must
receive in return collateral with a value at least equal to 100% of the current
market value of the loaned securities.
SHORT-TERM TRADING AND PORTFOLIO TURNOVER. Each fund invests for long-term
capital growth and does not intend to emphasize short-term trading profits. It
is anticipated, therefore, that each fund's annual portfolio turnover rate
generally will be below 50%; although this rate may be higher or lower, in
relation to market conditions. A portfolio turnover rate of less than 50% means
that in a one year period, less than one-half of the fund's portfolio is
changed.
OTHER POLICIES AND RESTRICTIONS. Each fund has a number of additional investment
policies and restrictions that govern its activities. Those that are identified
as "fundamental" may only be changed with shareholder approval. The others may
be changed by the Board alone. For a list of these restrictions and more
information about the fund's investment policies, including those described
above, please see "How Do the Funds Invest Their Assets?" and "Investment
Restrictions" in the SAI.
Generally, the policies and restrictions discussed in this prospectus and in the
SAI apply when the fund makes an investment. In most cases, the fund is not
required to sell a security because circumstances change and the security no
longer meets one or more of the fund's policies or restrictions.
Templeton Region Funds 9
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WHAT ARE THE RISKS OF INVESTING IN THE FUNDS?
GENERAL RISK. There is no assurance that each fund's investment goal will be
met. The fund will seek to spread investment risk by diversifying its
investments but the possibility of losses remains. Generally, if the securities
owned by the fund increase in value, the value of the shares of the fund which
you own will increase. Similarly, if the securities owned by the fund decrease
in value, the value of your shares will also decline. In this way, you
participate in any change in the value of the securities owned by the fund.
FOREIGN SECURITIES RISK. The value of foreign (and U.S.) securities is affected
by general economic conditions and individual company and industry earnings
prospects. While foreign securities may offer significant opportunities for
gain, they also involve additional risks that can increase the potential for
losses in the fund. These risks can be significantly greater for investments in
emerging markets. Investments in Depositary Receipts also involve some or all of
the risks described below.
The political, economic and social structures of some countries in which the
fund invests may be less stable and more volatile than those in the U.S. The
risks of investing in these countries include the possibility of the imposition
of exchange controls, expropriation, restrictions on removal of currency or
other assets, nationalization of assets, and punitive taxes.
There may be less publicly available information about a foreign company or
government than about a U.S. company or public entity. Certain countries'
financial markets and services are less developed than those in the U.S. or
other major economies. As a result, they may not have uniform accounting,
auditing and financial reporting standards and may have less government
supervision of financial markets. Foreign securities markets may have
substantially lower trading volumes than U.S. markets, resulting in less
liquidity and more volatility than experienced in the U.S. Transaction costs on
foreign securities markets are generally higher than in the U.S. The settlement
practices may be cumbersome and result in delays that may affect portfolio
liquidity. The fund may have greater difficulty voting proxies, exercising
shareholder rights, pursuing legal remedies and obtaining judgments with respect
to foreign investments in foreign courts than with respect to domestic issuers
in U.S. courts.
Some of the countries in which the funds may invest such as Russia and certain
Asian and Eastern European countries are considered developing or emerging
markets. Investments in these markets are subject to all of the risks of foreign
investing generally, and have additional and heightened risks due to a lack of
legal, business and social frameworks to support securities markets.
10 Templeton Region Funds
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Emerging markets 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, delays in
settling portfolio transactions and risk of loss arising out of the system of
share registration and custody. Greater European Fund may invest up to 100% of
its total assets in emerging markets, including up to 10% of its total assets in
Russian securities. Latin America Fund may invest up to 100% of its total assets
in emerging markets, including up to 5% of its total assets in Russian
securities. For more information on the risks associated with emerging markets
securities, please see the SAI.
MARKET, CURRENCY, AND INTEREST RATE RISK. General market movements in any
country where a fund has investments are likely to affect the value of the
securities which the fund owns in that country and the fund's share price may
also be affected. The fund's investments may be denominated in foreign
currencies so that changes in foreign currency exchange rates will also affect
the value of what the fund owns, and thus the price of its shares. To the extent
the fund invests in debt securities, changes in interest rates in any country
where the fund is invested will affect the value of the fund's portfolio and,
consequently, its share price. Rising interest rates, which often occur during
times of inflation or a growing economy, are likely to cause the value of a debt
security to decrease, having a negative effect on the value of the fund's
shares. Of course, individual and worldwide stock markets, interest rates and
currency valuations have both increased and decreased, sometimes very
dramatically, in the past. These changes are likely to occur again in the future
at unpredictable times.
CREDIT AND ISSUER RISK. Each fund's investments in debt securities involve
credit risk. This is the risk that the issuer of a debt security will be unable
to make principal and interest payments in a timely manner and the debt security
will go into default. Each fund may invest up to 5% of its total assets in
defaulted debt securities. The purchase of defaulted debt securities involves
significant additional risks, such as the possibility of complete loss of the
investment in the event the issuer does not restructure or reorganize to enable
it to resume paying interest and principal to holders.
DERIVATIVE SECURITIES RISK. Derivative investments are those whose values are
dependent upon the performance of one or more other securities or investments or
indices; in contrast to common stock, for example, whose value is dependent upon
the operations of the issuer. Option transactions, foreign currency exchange
transactions and futures contracts are considered derivative investments. To the
extent a fund enters into these transactions, their success will depend upon the
Investment Manager's ability to predict pertinent market movements. These
securities are subject to the risk that the other party to the transaction may
fail to perform, resulting in losses to the fund.
Templeton Region Funds 11
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WHO MANAGES THE FUNDS?
THE BOARD. The Board oversees the management of the funds and elects their
officers. The officers are responsible for the respective fund's day-to-day
operations. The Board also monitors each fund to ensure no material conflicts
exist among the fund's 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 of Greater European Fund is Global
Advisors. The Investment Manager of Latin America Fund is Investment Counsel.
Global Advisors and Investment Counsel manage the respective fund's assets and
make its investment decisions. The Investment Managers also perform similar
services for other funds. Global Advisors and Investment Counsel 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. Together, Global Advisors,
Investment Counsel and their affiliates manage over $239 billion in assets. The
Templeton organization has been investing globally since 1940. Global Advisors,
Investment Counsel and their affiliates have offices in Argentina, Australia,
Bahamas, Bermuda, Brazil, the British Virgin Islands, Canada, China, Cyprus,
France, Germany, Hong Kong, India, Italy, Japan, Korea, Luxembourg, Mauritius,
the Netherlands, Poland, Russia, Singapore, South Africa, Switzerland, Taiwan,
United Kingdom, U.S. and Vietnam. Please see "Investment Management and Other
Services" and "Miscellaneous Information" in the SAI for information on
securities transactions and a summary of the funds' Code of Ethics.
PORTFOLIO MANAGEMENT.
GREATER EUROPEAN FUND. The team responsible for the day-to-day management of the
fund's portfolio since 1996 is: Mark G. Holowesko, Jeffrey A. Everett, and
Richard Sean Farrington. Mr. Holowesko is President of Global Advisors. He holds
a BA in economics from Holy Cross College and an MBA from Babson College. He is
a Chartered Financial Analyst, Chartered Investment Counselor, and a founding
member of the International Society of Financial Analysts. Prior to joining the
Templeton organization in 1985, Mr. Holowesko worked with RoyWest Trust
Corporation (Bahamas) Limited as an investment analyst. His duties at RoyWest
included managing trust and individual accounts, as well as equity market
research worldwide. Mr. Holowesko is responsible for coordinating equity
research and portfolio management activities worldwide for the Templeton Global
Equity Group. He also manages several mutual funds.
12 Templeton Region Funds
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Mr. Everett is an Executive Vice President of Global Advisors. He holds a BS in
finance from Pennsylvania State University. He is a Chartered Financial Analyst
and a member of the International Society of Financial Analysts and the
Association of Investment Management and Research. Prior to joining the
Templeton organization in 1989, Mr. Everett was an investment officer at First
Pennsylvania Investment Research, a division of First Pennsylvania Corporation,
where he analyzed equity and convertible securities. He also coordinated
research for Centre Square Investment Group, the pension management subsidiary
of First Pennsylvania Corporation. Mr. Everett is responsible for managing
several offshore accounts at Templeton, as well as several mutual funds. His
global research responsibilities encompass industry coverage for real estate and
country responsibilities for Italy and Australia.
Mr. Farrington is a Vice President of Global Advisors. He holds a BA in
economics from Harvard University. Mr. Farrington is a Chartered Financial
Analyst. He has served as the president of the Bahamas Society of Financial
Analysts and is currently on the board of the International Society of Financial
Analysts. He joined the Templeton organization in 1991 and is a research analyst
and portfolio manager. Mr. Farrington's research responsibilities include
industry coverage of non-U.S. electric utilities. He is also responsible for
country coverage of Hong Kong and China.
LATIN AMERICA FUND. The lead portfolio manager since 1997 is Mark R. Beveridge.
Mr. Beveridge is a Senior Vice President of Investment Counsel. 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 non-life insurance and industrial components industries. He
also has country coverage of Argentina.
Howard J. Leonard and Gary R. Clemons have secondary portfolio management
responsibilities for the fund. Mr. Leonard is an Executive Vice President of
Investment Counsel. He holds a BBA in finance/economics from the Temple
University School of Business Administration. Mr. Leonard 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. Mr. Leonard currently manages both institutional and
Templeton Region Funds 13
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mutual fund accounts of global and international mandates. He has research
responsibility for the machinery and engineering industries, and also follows
the following countries: Brazil and Indonesia. Mr. Clemons is a Senior Vice
President of Investment Counsel. He holds a BS from the University of Nevada -
Reno and an MBA from the University of Wisconsin - Madison. He joined Investment
Counsel in 1993. Prior to that time he was a research analyst at 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 industry and country coverage of Colombia and Peru.
MANAGEMENT FEES. During the fiscal year ended March 31, 1998, management fees,
before any advance waiver, totaled 0.75% and operating expenses, before any
advance waiver, totaled 2.06% of the average daily net assets of Greater
European Fund. Under an agreement by Global Advisors to limit its fees, Greater
European Fund paid management fees totaling 0.19% and operating expenses
totaling 1.50%. After July 31, 1999, Global Advisors may end this arrangement at
any time upon notice to the Board.
During the fiscal year ended March 31, 1998, management fees, before any advance
waiver, totaled 1.25% and operating expenses, before any advance waiver, totaled
2.22% of the average daily net assets of Latin America Fund. Under an agreement
by Investment Counsel to limit its fees, Latin America Fund paid management fees
totaling 1.03% and operating expenses totaling 2.00%. After July 31, 1999,
Investment Counsel may end this arrangement at any time upon notice to the
Board.
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 its respective fund's shares as well as shares of other
funds in the Franklin Templeton Group of Funds, when selecting a broker or
dealer. Please see "How Do the Funds Buy Securities for Their Portfolios?" in
the SAI for more information.
ADMINISTRATIVE SERVICES. FT Services provides certain administrative services
and facilities for the Trust. During the fiscal year ended March 31, 1998,
administration fees totaling 0.15% of the average daily net assets of each fund
were paid to FT Services. These fees are included in the amount of total
expenses shown above. Please see "Investment Management and Other Services" in
the SAI for more information.
14 Templeton Region Funds
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HOW TAXATION AFFECTS THE FUNDS AND THEIR SHAREHOLDERS
<TABLE>
<CAPTION>
<S> <C>
Taxation of the Funds' Investments. The funds HOW DOES A FUND EARN INCOME AND GAINS?
invest your money in the stocks, bonds and other A FUND EARNS DIVIDENDS AND INTEREST (THE FUND'S "INCOME") ON
securities that are described in the section "How ITS INVESTMENTS. WHEN THE FUND SELLS A SECURITY FOR A PRICE
Do the Funds Invest Their Assets?" Special tax THAT IS HIGHER THAN IT PAID, IT HAS A GAIN. WHEN THE FUND
rules may apply in determining the income and SELLS A SECURITY FOR A PRICE THAT IS LOWER THAN IT PAID, IT
gains that a fund earns on its investments. These HAS A LOSS. IF THE FUND HAS HELD THE SECURITY FOR MORE THAN
rules may, in turn, affect the amount of ONE YEAR, THE GAIN OR LOSS WILL BE A LONG-TERM CAPITAL GAIN OR
distributions that the funds pay to you. These LOSS. IF THE FUND HAS HELD THE SECURITY FOR ONE YEAR OR LESS,
special tax rules are discussed in the SAI. THE GAIN OR LOSS WILL BE A SHORT-TERM CAPITAL GAIN OR LOSS.
THE FUND'S GAINS AND LOSSES ARE NETTED TOGETHER, AND, IF THE
TAXATION OF THE FUNDS. As series of a regulated FUND HAS A NET GAIN (THE FUND'S "GAINS"), THAT GAIN WILL
investment company, the funds generally pay no GENERALLY BE DISTRIBUTED TO YOU.
federal income tax on the income and gains that
they distribute to you.
</TABLE>
FOREIGN TAXES. Foreign governments may impose taxes on the income and gains from
the funds' investments in foreign stocks and bonds. These taxes will reduce the
amount of a fund's distributions to you, but, depending upon the amount of the
fund's assets that are invested in foreign securities and foreign taxes paid,
may be passed through to you as a foreign tax credit on your income tax return.
The funds may also invest in the securities of foreign companies that are
"passive foreign investment companies" ("PFICs"). These investments in PFICs may
cause the funds to pay income taxes and interest charges. If possible, the funds
will adopt strategies to avoid PFIC taxes and interest charges.
Templeton Region Funds 15
PAGE
TAXATION OF SHAREHOLDERS.
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTIONS. Distributions from the funds, whether you WHAT IS A DISTRIBUTION?
receive them in cash or in additional shares, are generally AS A SHAREHOLDER, YOU WILL RECEIVE YOUR SHARE
subject to income tax. Each fund will send you a statement OF A FUND'S INCOME AND GAINS ON ITS INVESTMENTS
in January that reflects the amount of ordinary dividends, IN STOCKS, BONDS AND OTHER SECURITIES. THE
capital gain distributions and non-taxable distributions you FUND'S INCOME AND SHORT TERM CAPITAL GAINS ARE
received from the fund in the prior year. This statement PAID TO YOU AS ORDINARY DIVIDENDS. THE FUND'S
will include distributions declared in December and paid to LONG-TERM CAPITAL GAINS ARE PAID TO YOU AS
you in January of the current year, but which are taxable as CAPITAL GAIN DISTRIBUTIONS. IF THE FUND PAYS
if paid on December 31 of the prior year. The IRS requires YOU AN AMOUNT IN EXCESS OF ITS INCOME AND
you to report these amounts on your income tax return for GAINS, THIS EXCESS WILL GENERALLY BE TREATED AS
the prior year. Each fund's statement for the prior year A NON-TAXABLE DISTRIBUTION. THESE AMOUNTS,
will tell you how much of your capital gain distribution TAKEN TOGETHER, ARE WHAT WE CALL THE FUND'S
represents 28% rate gain. The remainder of the capital gain DISTRIBUTIONS TO YOU.
distribution represents 20% rate gain.
</TABLE>
DISTRIBUTIONS TO RETIREMENT PLANS. Fund distributions received by your qualified
retirement plan, such as a section 401(k) plan or IRA, are generally
tax-deferred; this means that you are not required to report fund distributions
on your income tax return when paid to your plan, but, rather, when your plan
makes payments to you. Special rules apply to payouts from Roth and Education
IRAs.
DIVIDENDS-RECEIVED DEDUCTION. It is anticipated that no portion of either fund's
distributions will qualify for the corporate dividends-received deduction.
16 Templeton Region Funds
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<TABLE>
<CAPTION>
<S> <C>
REDEMPTIONS AND EXCHANGES. If you redeem your shares or if WHAT IS A REDEMPTION?
you exchange your fund shares for shares in another A REDEMPTION IS A SALE BY YOU TO THE FUND OF SOME OR ALL
Franklin Templeton Fund, you will generally have a gain or OF YOUR SHARES IN THE FUND. THE PRICE PER SHARE YOU
loss that the IRS requires you to report on your income RECEIVE WHEN YOU REDEEM FUND SHARES MAY BE MORE OR LESS
tax return. If you hold your shares for six months or THAN THE PRICE AT WHICH YOU PURCHASED THOSE SHARES. AN
less, any loss you have will be treated as a long-term EXCHANGE OF FUND SHARES FOR SHARES OF ANOTHER FRANKLIN
capital loss to the extent of any capital gain TEMPLETON FUND IS TREATED AS A REDEMPTION OF FUND SHARES
distributions received by you from the fund. All or a AND THEN A PURCHASE OF SHARES OF THE OTHER FUND. WHEN
portion of any loss on the redemption or exchange of your YOU REDEEM OR EXCHANGE YOUR SHARES, YOU WILL GENERALLY
shares will be disallowed by the IRS if you purchase other HAVE A GAIN OR LOSS, DEPENDING UPON WHETHER THE AMOUNT
shares in the fund within 30 days before or after your YOU RECEIVE FOR YOUR SHARES IS MORE OR LESS THAN YOUR
redemption or exchange. COST OR OTHER BASIS IN THE SHARES. CALL FUND INFORMATION
FOR A FREE FRANKLIN TEMPLETON TAX INFORMATION HANDBOOK
U.S. GOVERNMENT OBLIGATION INTEREST. Many states grant IF YOU NEED MORE INFORMATION ON CALCULATING THE GAIN OR
tax-free status to dividends paid from interest earned on LOSS ON THE REDEMPTION OR EXCHANGE OF YOUR SHARES.
direct obligations of the U.S. government, subject to certain
restrictions. Each fund will provide you with information at the end of each
calendar year on the amount of such dividends that may qualify for exemption
from reporting on your individual income tax return.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FOREIGN TAXES. If more than 50% of the value of a fund's assets WHAT IS A FOREIGN TAX CREDIT?
consists of foreign securities, the fund may elect to pass-through A FOREIGN TAX CREDIT IS A TAX CREDIT FOR THE
to you the amount of foreign taxes it paid. If the fund makes this AMOUNT OF TAXES IMPOSED BY A FOREIGN COUNTRY ON
election, your year-end statement will show more taxable income EARNINGS OF A FUND. WHEN A FOREIGN COMPANY IN
than was actually distributed to you. However, you will be WHICH THE FUND INVESTS PAYS A DIVIDEND TO THE
entitled to either deduct your share of such taxes in computing FUND, THE DIVIDEND WILL GENERALLY BE SUBJECT TO
your taxable income or claim a foreign tax credit for such taxes A WITHHOLDING TAX. THE TAXES WITHHELD IN FOREIGN
against your U.S. federal income tax. Your year-end statement, COUNTRIES CREATE CREDITS THAT YOU MAY USE TO
showing the amount of deduction or credit available to you, will OFFSET YOUR U.S. FEDERAL INCOME TAX.
be distributed to you in January along with other shareholder information
records including your fund's IRS Form 1099-DIV.
</TABLE>
The Taxpayer Relief Act of 1997 includes a provision that allows you to claim
these credits directly on your income tax return (IRS Form 1040) and eliminates
the previous requirement that you complete a detailed supporting form. To
qualify, you must have $600 or less in joint return foreign taxes ($300 or less
Templeton Region Funds 17
PAGE
on a single return), all of which are reported to you on IRS Form 1099-DIV or
qualify as passive investment-type income if received from other sources.THIS
SIMPLIFIED PROCEDURE IS AVAILABLE BEGINNING WITH CALENDAR YEAR 1998.
NON-U.S. INVESTORS. Ordinary dividends generally will be subject to U.S. income
tax withholding. Your home country may also tax ordinary dividends, capital gain
distributions and gains arising from redemptions or exchanges of your fund
shares. Fund shares held by the estate of a non-U.S. investor may be subject to
U.S. estate tax. You may wish to contact your tax advisor to determine the U.S.
and non-U.S. tax consequences of your investment in the fund.
STATE TAXES. Ordinary dividends and capital gain distributions that you receive
from a fund, and gains arising from redemptions or exchanges of your fund
shares, will generally be subject to state and local income tax. The holding of
fund shares may also be subject to state and local intangibles taxes. You may
wish to contact your tax advisor to determine the state and local tax
consequences of your investment in the fund.
<TABLE>
<CAPTION>
<S> <C>
BACKUP WITHHOLDING. When you open an account, IRS WHAT IS A BACKUP WITHHOLDING?
regulations require that you provide your taxpayer BACKUP WITHHOLDING OCCURS WHEN A FUND IS REQUIRED
identification number ("TIN"), certify that it is correct, TO WITHHOLD AND PAY OVER TO THE IRS 31% OF YOUR
and certify that you are not subject to backup withholding DISTRIBUTIONS AND REDEMPTION PROCEEDS. YOU CAN
under IRS rules. If you fail to provide a correct TIN or the AVOID BACKUP WITHHOLDING BY PROVIDING THE FUND WITH
proper tax certifications, a fund is required to withhold YOUR TIN, AND BY COMPLETING THE TAX CERTIFICATIONS
31% of all the distributions (including ordinary dividends ON YOUR SHAREHOLDER APPLICATION THAT YOU WERE ASKED
and capital gain distributions), and redemption proceeds TO SIGN WHEN YOU OPENED YOUR ACCOUNT. HOWEVER, IF
paid to you. Each fund is also required to begin backup THE IRS INSTRUCTS THE FUND TO BEGIN BACKUP
withholding on your account if the IRS instructs the fund to WITHHOLDING, IT IS REQUIRED TO DO SO EVEN IF YOU
do so. A fund reserves the right not to open your account, PROVIDED THE FUND WITH YOUR TIN AND THESE TAX
or, alternatively, to redeem your shares at the current net CERTIFICATIONS, AND BACKUP WITHHOLDING WILL REMAIN
asset value, less any taxes withheld, if you fail to provide IN PLACE UNTIL THE FUND IS INSTRUCTED BY THE IRS
a correct TIN, fail to provide the proper tax THAT IT IS NO LONGER REQUIRED.
certifications, or the IRS instructs the fund to begin backup withholding on
your account.
</TABLE>
THIS TAX DISCUSSION IS FOR GENERAL INFORMATION ONLY. PROSPECTIVE INVESTORS
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN THE FUNDS. A MORE COMPLETE
18 Templeton Region Funds
PAGE
DISCUSSION OF THESE RULES AND RELATED MATTERS IS CONTAINED IN THE SECTION
ENTITLED "ADDITIONAL INFORMATION ON DISTRIBUTIONS AND TAXES" IN THE SAI. THE TAX
TREATMENT TO YOU OF DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, FOREIGN TAXES PAID
AND INCOME TAXES WITHHELD IS ALSO DISCUSSED IN A FREE FRANKLIN TEMPLETON TAX
INFORMATION HANDBOOK, WHICH YOU MAY REQUEST BY CONTACTING FUND INFORMATION.
HOW IS THE TRUST ORGANIZED?
Each fund is a diversified series of the Trust, an open-end management
investment company, commonly called a mutual fund. The Trust was organized as a
Delaware business trust on December 21, 1993, and is registered with the SEC. As
of January 2, 1997, Greater European Fund began offering a new class of shares
designated Templeton Greater European Fund - Advisor Class. All shares
outstanding before the offering of Advisor Class shares have been designated
Templeton Greater European Fund - Class I and Templeton Greater European Fund -
Class II. As of January 2, 1997, Latin America Fund began offering a new class
of shares designated Templeton Latin America Fund - Advisor Class. All shares
outstanding before the offering of Advisor Class shares have been designated
Templeton Latin America Fund - Class I and Templeton Latin America Fund - Class
II. Additional series and classes of shares may be offered in the future.
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 any
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 affecting only that class, or
expressly required to be voted on separately by state or federal law. 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.
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. The Trust or a
series of the Trust may hold special meetings, however, for matters requiring
shareholder approval. A meeting may also be called by the Board in its
discretion or 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. In certain circumstances, we are required to help you
communicate with other shareholders about the removal of a Board member.
Templeton Region Funds 19
PAGE
As of May 15, 1998, Charles Schwab & Co. Inc. and Franklin Templeton Fund
Allocator Growth Target Fund each owned of record and beneficially more than 25%
of the outstanding Advisor Class shares of Greater European Fund.
ABOUT YOUR ACCOUNT
HOW DO I BUY SHARES?
OPENING YOUR ACCOUNT
Shares of each fund may be purchased without a sales charge. Please note that as
of January 1, 1998, shares of the funds are not available to retirement plans
through Franklin Templeton's ValuSelect(R) program. Retirement plans in Franklin
Templeton's ValuSelect program before January 1, 1998, however, may continue to
invest in the funds.
To open your account, please follow the steps below. This will help avoid any
delays in processing your request.
1. Read this prospectus carefully.
2. Determine how much you would like to invest. Each fund's minimum
investments are:
/bullet/ To open your account: $5,000,000
/bullet/ To add to your account: $25
We reserve the right to change the amount of these minimums from time to
time or to waive or lower these minimums for certain purchases. Please see
"Minimum Investments" below. We also reserve the right to refuse any order
to buy shares.
3. Carefully complete and sign the enclosed shareholder application,
including the optional shareholder privileges section. By applying for
privileges now, you can avoid the delay and inconvenience of having to send
an additional application to add privileges later. It is important that we
receive a signed application since we will not be able to process any
redemptions from your account until we receive your signed application.
20 Templeton Region Funds
PAGE
4. Make your investment using the table below.
METHOD STEPS TO FOLLOW
- -------------------------- ----------------------------------------
BY MAIL For an initial investment:
Return the application to the respective
fund with your check made payable to that
fund.
For additional investments:
Send a check made payable to the respective
fund. Please include your account number on
the check.
- -------------------------- -------------------------------------------------
BY WIRE 1. Call Shareholder Services or, if that number
is busy, call 1-650/312-2000 collect, to
receive a wire control number and wire
instructions. You need a new wire control
number every time you wire money into your
account. If you do not have a currently
effective wire control number, we will return
the money to the bank, and we will not
credit the purchase to your account.
2. For an initial investment you must also
also return your signed shareholder
application to the respective fund.
IMPORTANT DEADLINES: If we receive your call
before 4:00 p.m. Eastern time and the bank
receives the wired funds and reports the receipt
of wired funds to the fund by 6:00 p.m. Eastern
time, we will credit the purchase to your account
that day. If we receive your call after 4:00 p.m.
or the bank receives the wire after 6:00 p.m.,
we will credit the purchase to your account the
following business day.
- -------------------------------------- ----------------------------------------
THROUGH YOUR DEALER Call your investment representative
- -------------------------------------- ----------------------------------------
MINIMUM INVESTMENTS
To determine if you meet the minimum initial investment requirement of $5
million, the amount of your current purchase is added to the cost or current
value, whichever is higher, of your existing shares in the Franklin Templeton
Funds. At least $1 million of this amount, however, must be invested in Advisor
Class or Class Z shares of any of the Franklin Templeton Funds.
Templeton Region Funds 21
PAGE
The funds may waive or lower their minimum investment requirement for certain
purchases. A lower minimum initial investment requirement applies to purchases
by:
1. Qualified registered investment advisors or certified financial
planners who have clients invested in the Franklin Mutual Series Fund
Inc. on October 31, 1996, or who buy through a broker-dealer or service
agent who has entered into an agreement with Distributors, subject to a
$1,000 minimum initial and $50 minimum subsequent investment
requirement
2. Broker-dealers, registered investment advisors or certified financial
planners who have entered into an agreement with Distributors for
clients participating in comprehensive fee programs, subject to a
$250,000 minimum initial investment requirement or a $100,000 minimum
initial investment requirement for an individual client
3. Officers, trustees, directors and full-time employees of the Franklin
Templeton Funds or the Franklin Templeton Group and their immediate
family members, subject to a $100 minimum initial investment
requirement
4. Each series of the Franklin Templeton Fund Allocator Series, subject to
a $1,000 minimum initial and subsequent investment requirement
5. Governments, municipalities, and tax-exempt entities that meet the
requirements for qualification under Section 501 of the Code, subject
to a $1 million initial investment in Advisor Class or Class Z shares
of any of the Franklin Templeton Funds
No minimum initial investment requirement applies to purchases by:
1. Accounts managed by the Franklin Templeton Group
2. The Franklin Templeton Profit Sharing 401(k) Plan
3. Defined contribution plans such as employer stock, bonus, pension or
profit sharing plans that meet the requirements for qualification under
Section 401 of the Code, including salary reduction plans qualified
under Section 401(k) of the Code, and that (i) are sponsored by an
employer with at least 10,000 employees, or (ii) have plan assets of
$100 million or more
4. Trust companies and bank trust departments initially investing in the
Franklin Templeton Funds 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
22 Templeton Region Funds
PAGE
5. Any other investor, including a private investment vehicle such as a
family trust or foundation, who is a member of a qualified group, if
the group as a whole meets the $5 million minimum investment
requirement. A qualified group is one that:
/bullet/ Was formed at least six months ago,
/bullet/ Has a purpose other than buying fund shares at a discount,
/bullet/ Has more than 10 members,
/bullet/ Can arrange for meetings between our representatives and
group members,
/bullet/ Agrees to include Franklin Templeton Fund sales and other
materials in publications and mailings to its members at
reduced or no cost to Distributors,
/bullet/ Agrees to arrange for payroll deduction or other bulk
transmission of investments to the respective fund, and
/bullet/ Meets other uniform criteria that allow Distributors to
achieve cost savings in distributing shares.
HOW DO I BUY SHARES IN CONNECTION WITH RETIREMENT PLANS?
Your individual or employer-sponsored retirement plan may invest in the funds.
Plan documents are required for all retirement plans. Trust Company can provide
the plan documents for you and serve as custodian or trustee.
Trust Company can provide you with brochures containing important information
about its plans. To establish a Trust Company retirement plan, you will need an
application other than the one included in this prospectus. For a retirement
plan brochure or application, call Retirement Plan Services.
Please consult your legal, tax or retirement plan specialist before choosing a
retirement plan. Your investment representative or advisor can help you make
investment decisions within your plan.
PAYMENTS TO SECURITIES DEALERS
Securities Dealers who initiate and are responsible for purchases of Advisor
Class shares may receive up to 0.25% of the amount invested. The payment is
subject to the sole discretion of Distributors, and is paid by Distributors or
one of its affiliates and not by a fund or its shareholders.
For information on additional compensation payable to Securities Dealers in
connection with the sale of fund shares, please see "How Do I Buy, Sell and
Exchange Shares? - Other Payments to Securities Dealers" in the SAI.
Templeton Region Funds 23
PAGE
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, its investment goal and
policies, and its rules and requirements for exchanges. For example, some
Franklin Templeton Funds do not accept exchanges and some do not offer Advisor
Class shares.
METHOD STEPS TO FOLLOW
- ----------------------------- ------------------------------------------------
BY MAIL 1. Send us signed written instructions
2. Include any outstanding share certificates for
the shares you want to exchange
- ----------------------------- -------------------------------------------------
BY PHONE Call Shareholder Services
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
- ----------------------------- -------------------------------------------------
Please refer to "Transaction Procedures and Special Requirements" for other
important information on how to exchange shares.
EXCHANGE RESTRICTIONS
Please be aware that the following restrictions apply to exchanges:
/bullet/ You must meet the applicable minimum investment amount of the fund
you are exchanging into, or exchange 100% of your fund shares.
/bullet/ You may only exchange shares within the SAME CLASS, except as noted
below.
/bullet/ The accounts must be identically registered. You may, however,
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. Additional
procedures may apply. Please see "Transaction Procedures and Special
Requirements."
/bullet/ 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 Retirement Plan Services for
information on exchanges within these plans.
24 Templeton Region Funds
PAGE
/bullet/ The fund you are exchanging into must be eligible for sale in your
state.
/bullet/ We may modify or discontinue our exchange policy if we give you 60
days' written notice.
/bullet/ Your exchange may be restricted or refused if you have: (i) requested
an exchange out of the fund within two weeks of an earlier exchange
request, (ii) exchanged shares out of the fund more than twice in a
calendar quarter, or (iii) exchanged 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 have
exchanged 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, operations 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.
LIMITED EXCHANGES BETWEEN DIFFERENT CLASSES OF SHARES
If you want to exchange into a fund that does not currently offer an Advisor
Class, you may exchange your Advisor Class shares for Class I shares of that
fund at Net Asset Value. If you do not qualify to buy Advisor Class shares of
Templeton Developing Markets Trust, Templeton Foreign Fund or Templeton Growth
Fund, you may exchange the Advisor Class shares you own for Class I shares of
those funds or of Templeton Institutional Funds, Inc. at Net Asset Value. If you
do so and you later decide you would like to exchange into a fund that offers an
Advisor Class, you may exchange your Class I shares for Advisor Class shares of
that fund. You may also exchange your Advisor Class shares for Class Z shares of
Franklin Mutual Series Fund Inc.
Templeton Region Funds 25
PAGE
HOW DO I SELL SHARES?
You may sell (redeem) your shares at any time.
METHOD STEPS TO FOLLOW
- -------------------------------------------------------------------------------
BY MAIL 1. Send us signed written instructions. If you would like
your redemption proceeds wired to a bank account, your
instructions should include:
/bullet/ The name, address and telephone number of the
bank where you want the proceeds sent
/bullet/ Your bank account number
/bullet/ The Federal Reserve ABA routing number
/bullet/ If you are using a savings and loan or credit
union, the name of the corresponding bank and
the account number
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 other requirements.
- -------------------------------------------------------------------------------
BY PHONE Call Shareholder Services. If you would like your
redemption proceeds wired to a bank account, other than an
escrow account, you must first sign up for the wire feature.
To sign up, send us written instructions, with a signature
guarantee. To avoid any delay in processing, the
instructions should include the items listed in "By Mail"
above.
Telephone requests will be accepted:
/bullet/ 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.
/bullet/ If there are no share certificates issued for the
shares you want to sell or you have already
returned them to the fund
/bullet/ Unless you are selling shares in a Trust Company
retirement plan account
/bullet/ Unless the address on your account was changed by
phone within the last 15 days
If you do not want the ability to redeem by phone
to apply to your account, please let us know.
- -------------------------------------------------------------------------------
THROUGH
YOUR DEALER Call your investment representative
- -------------------------------------------------------------------------------
26 Templeton Region Funds
PAGE
We will send your redemption check within seven days after we receive your
request in proper form. If you would like the check sent to an address other
than the address of record or made payable to someone other than the registered
owners on the account, send us written instructions signed by all account
owners, with a signature guarantee. We are not able to receive or pay out cash
in the form of currency.
The wiring of redemption proceeds is a special service that we make available
whenever possible for redemption requests of $1,000 or more. If we receive your
request in proper form before 4:00 p.m. Eastern time, your wire payment will be
sent the next business day. For requests received in proper form after 4:00 p.m.
Eastern time, the payment will be sent the second business day. By offering this
service to you, the funds are not bound to meet any redemption request in less
than the seven day period prescribed by law. Neither the funds nor their agents
shall be liable to you or any other person if, for any reason, a redemption
request by wire is not processed as described in this section.
If you sell shares you recently purchased with a check or draft, we may delay
sending you the proceeds until your check or draft has cleared, which may take
seven business days or more. 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 Retirement Plan Services.
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 FUNDS DO NOT PAY "INTEREST" OR GUARANTEE ANY
FIXED RATE OF RETURN ON AN INVESTMENT IN THEIR SHARES.
Templeton Region Funds 27
PAGE
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 and you will then receive a portion of the price you paid back in
the form of a taxable 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 same
class of the fund 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. 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 capital gain distributions,
dividend distributions, or both 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 SECTIONS 6 AND 7 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 RESPECTIVE FUND. You may change your distribution option at any time by
notifying us by mail or phone. Please allow at least seven days before the
record date for us to process the new option. For Trust Company retirement
plans, special forms are required to receive distributions in cash.
TRANSACTION PROCEDURES AND SPECIAL REQUIREMENTS
SHARE PRICE
You buy and sell Advisor Class shares at the Net Asset Value per share. The Net
Asset Value we use when you buy or sell shares is the one 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
28 Templeton Region Funds
PAGE
the time we receive the order from your dealer and the time we receive any
required documents.
HOW AND WHEN SHARES ARE PRICED
The funds are open for business each day the NYSE is open. We determine the Net
Asset Value per share as of the close of the NYSE, normally 4:00 p.m. Eastern
time. You can find the prior day's closing Net Asset Value 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
respective fund, determined by the value of the shares of each class. 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.
WRITTEN INSTRUCTIONS
Written instructions must be signed by all registered owners. To avoid any delay
in processing your transaction, they should include:
/bullet/ Your name,
/bullet/ The fund's name,
/bullet/ The class of shares,
/bullet/ A description of the request,
/bullet/ For exchanges, the name of the fund you are exchanging into,
/bullet/ Your account number,
/bullet/ The dollar amount or number of shares, and
/bullet/ A telephone number where we may reach you during the day, or in the
evening if preferred.
JOINT ACCOUNTS. For accounts with more than one registered owner, we accept
written instructions signed by only one owner for certain types of transactions
or account changes. These include transactions or account changes that you could
also make by phone, such as certain redemptions of $50,000 or less, exchanges
between identically registered accounts, and changes to the address of record.
For most other types of transactions or changes, written instructions must be
signed by all registered owners.
Templeton Region Funds 29
PAGE
Please keep in mind that if you have previously told us that you do not want
telephone exchange or redemption privileges on your account, then we can only
accept written instructions to exchange or redeem shares if they are signed by
all registered owners on the account.
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. You should be
able to obtain a signature guarantee from a bank, broker, credit union, savings
association, clearing agency, or securities exchange or association. 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 and to send the certificate and assignment form in separate
envelopes.
TELEPHONE TRANSACTIONS
You may initiate many transactions and changes to your account by phone. Please
refer to the sections of this prospectus that discuss the transaction you would
like to make or call Shareholder Services.
30 Templeton Region Funds
PAGE
When you call, we will request personal or other identifying information to
confirm that instructions are genuine. We may also record calls. 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 us written instructions,
as described elsewhere in this prospectus.
For your protection, we may delay a transaction or not implement one if we are
not reasonably satisfied that the instructions are genuine. If this occurs, we
will not be liable for any loss. We also will not be liable for any loss if we
follow instructions by phone that we reasonably believe are genuine or if you
are unable to execute a transaction by phone.
TRUST COMPANY RETIREMENT PLAN ACCOUNTS. We cannot accept instructions to 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 Retirement Plan Services.
ACCOUNT REGISTRATIONS AND REQUIRED DOCUMENTS
When you open an account, we need you 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, we cannot accept instructions to change owners on the account unless ALL
owners agree in writing, even if the law in your state says otherwise. 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. You should register your account as a trust only if you have a valid
written trust document. This avoids future disputes or possible court action
over who owns the account.
Templeton Region Funds 31
PAGE
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.
TYPE OF ACCOUNT DOCUMENTS REQUIRED
- ------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
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 cannot 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.
IMPORTANT INFORMATION IF YOU HAVE AN INVESTMENT REPRESENTATIVE
If there is a Securities Dealer or other representative of record on your
account, we are authorized: (1) to provide confirmations, account statements and
other information about your account directly to your dealer and/or
representative; and (2) to accept telephone and electronic instructions directly
from your dealer or representative, including instructions to exchange or redeem
your shares. Electronic instructions may be processed through established
electronic trading systems and programs used by the funds. Telephone
instructions directly from your representative will be accepted unless you have
told us that you do not want telephone privileges to apply to your account.
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 $250, or less than $50 for
employee accounts. 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.
32 Templeton Region Funds
PAGE
Before we close your account, we will notify you and give you 30 days to
increase the value of your account to $1,000, or $100 for employee accounts.
These minimums do not apply to IRAs, accounts managed by the Franklin Templeton
Group, the Franklin Templeton Profit Sharing 401(k) Plan, the series of Franklin
Templeton Fund Allocator Series, or certain defined contribution plans that
qualify to buy shares with no minimum initial investment requirement.
SERVICES TO HELP YOU MANAGE YOUR ACCOUNT
AUTOMATIC INVESTMENT PLAN
Our automatic investment plan offers a convenient way to invest in each 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 shareholder 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. Once your plan is established, any
distributions paid by a fund will be automatically reinvested in your account.
You will generally receive your payment by the end of the month in which a
payment is scheduled. When you sell your shares under a systematic withdrawal
plan, it is a taxable transaction.
Templeton Region Funds 33
PAGE
You may discontinue a systematic withdrawal plan, change the amount and schedule
of withdrawal payments, or suspend one payment by notifying us by mail or by
phone 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(R) system (day or night) at
1-800/247-1753 to:
/bullet/ obtain information about your account;
/bullet/ obtain price information about any Franklin Templeton Fund; and
/bullet/ request duplicate statements and deposit slips for Franklin Templeton
accounts.
/bullet/ You will need the fund's code number to use TeleFACTS(R). The code
number is 619 for Greater European Fund, and 618 for Latin America
Fund.
STATEMENTS AND REPORTS TO SHAREHOLDERS
We will send you the following statements and reports on a regular basis:
/bullet/ 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.
/bullet/ Financial reports of the funds 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 reports.
INSTITUTIONAL ACCOUNTS
Additional methods of buying, selling or exchanging shares of each fund may be
available to institutional accounts. Institutional investors may also be
required to complete an institutional account application. For more 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, a fund may not be able to offer these services directly to
you. Please contact your investment representative.
34 Templeton Region Funds
PAGE
WHAT IF I HAVE QUESTIONS ABOUT MY ACCOUNT?
If you have any questions about your account, you may write to Investor Services
at 100 Fountain Parkway, P.O. Box 33030, St. Petersburg, Florida 33733-8030. The
funds and Distributors are also located at this address. Global Advisors is
located at P.O. Box N-7759, Lyford Cay, Nassau, Bahamas. Investment Counsel is
located at 500 East Broward Boulevard, Fort Lauderdale, Florida 33394-3091. 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 Plan Services 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.
<PAGE>
GLOSSARY
USEFUL TERMS AND DEFINITIONS
BOARD - The Board of Trustees of the Trust
CD - Certificate of deposit
CLASS I, CLASS II AND ADVISOR CLASS - Each fund offers three classes of shares,
designated "Class I," "Class II," and "Advisor Class." The three classes have
proportionate interests in the fund's portfolio. They differ, however, primarily
in their sales charge and expense structures.
CODE - Internal Revenue Code of 1986, as amended
DEPOSITARY RECEIPTS - Certificates that give their holders the right to receive
securities (a) of a foreign issuer deposited in a U.S. bank or trust company
(American Depositary Receipts, "ADRs"); or (b) of a foreign or U.S. issuer
Templeton Region Funds 35
PAGE
deposited in a foreign bank or trust company (Global Depositary Receipts, "GDRs"
or European Depositary Receipts, "EDRs").
DISTRIBUTORS - Franklin/Templeton Distributors, Inc., the funds' principal
underwriter. The SAI lists the officers and Board members who are affiliated
with Distributors. See "Officers and Trustees."
FRANKLIN TEMPLETON FUNDS - The U.S. registered mutual funds in the Franklin
Group of Funds(R) and the Templeton Group of Funds except Franklin Valuemark
Funds, Templeton Capital Accumulator Fund, Inc., and Templeton Variable Products
Series Fund
FRANKLIN TEMPLETON GROUP - Franklin Resources, Inc., a publicly owned holding
company, and its various subsidiaries
FRANKLIN TEMPLETON GROUP OF FUNDS - All U.S. registered investment companies in
the Franklin Group of Funds(R) and the Templeton Group of Funds
FT SERVICES - Franklin Templeton Services, Inc., the funds' administrator
GLOBAL ADVISORS - Templeton Global Advisors Limited, Greater European Fund's
investment manager
INVESTMENT COUNSEL - Templeton Investment Counsel, Inc., Latin America Fund's
investment manager
INVESTMENT MANAGER(S) - Global Advisors and Investment Counsel
INVESTOR SERVICES - Franklin/Templeton Investor Services, Inc., the funds'
shareholder servicing and transfer agent
IRA - Individual retirement account or annuity qualified under section 408 of
the Code
IRS - Internal Revenue Service
MARKET TIMERS - Market Timers generally include market timing or asset
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 or whose transactions include
frequent or large exchanges.
MOODY'S - Moody's Investors Service, Inc.
36 Templeton Region Funds
PAGE
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
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 funds. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
TELEFACTS(R) - Franklin Templeton's automated customer servicing system
TRUST COMPANY - Franklin Templeton Trust Company. Trust Company is an affiliate
of Distributors and both are wholly owned subsidiaries of Resources.
WE/OUR/US - Unless the context indicates a different meaning, these terms refer
to the fund(s) and/or Investor Services, Distributors, or other wholly owned
subsidiaries of Resources.
Templeton Region Funds 37
PAGE
INSTRUCTIONS AND IMPORTANT NOTICE
SUBSTITUTE W-9 INSTRUCTIONS INFORMATION
GENERAL. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
OBTAINING A NUMBER. If you do not have a Social Security Number/Taxpayer
Identification Number or you do not know your SSN/TIN, you must obtain Form SS-5
or Form SS-4 from your local Social Security or IRS office and apply for one. If
you have checked the "Awaiting TIN" box and signed the certification,
withholding will apply to payments relating to your account unless you provide a
certified TIN within 60 days.
WHAT SSN/TIN TO GIVE. Please refer to the following guidelines:
<TABLE>
<CAPTION>
ACCOUNT TYPE GIVE SSN OF ACCOUNT TYPE GIVE EMPLOYER ID # OF
--------------------------- -------------- --------------------- --------------------------
<S> <C> <C> <C>
o Individual Individual o Trust, Estate, Trust, Estate, or
or Pension Plan Pension Plan Trust
Trust
--------------------------- -------------- --------------------- --------------------------
o Joint Individual Owner who o Corporation, Corporation,
will be Partnership, or Partnership, or
paying tax other other organization
or organization
first-named
individual
--------------------------- -------------- --------------------- --------------------------
o Unif. Gift/ Minor o Broker nominee Broker nominee
Transfer to Minor
--------------------------- -------------- --------------------- --------------------------
o Sole Proprietor Owner of
business
--------------------------- -------------- --------------------- --------------------------
o 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 An organization exempt from
tax under section 501(a), or an
A financial institution individual retirement plan
A registered dealer in securities An exempt charitable remainder
or commodities registered in trust or a non-exempt trust
the U.S. or a U.S.possession described in section 4947(a)(1)
A real estate investment trust An entity registered at all times
under the Investment Company
A common trust fund operated Act of 1940
by a bank under section 584(a)
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.
20.21/150 (07/97)
PAGE
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.
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.
20.21/150 (07/97)
PAGE
LOGO RESOLUTION SUPPORTING AUTHORITY OF
FRANKLIN TEMPLETON (R) CORPORATE /ASSOCIATION SHAREHOLDER
- ------------------------------------------------------------------------------
INSTRUCTION:
It will be necessary for corporate/association shareholders to provide a
certified copy of a resolution or other certificate of authority supporting the
authority of designated officers of the corporation/association to issue oral
and written instruction on behalf of the corporation/association for the
purchase, sale (redemption), transfer and/or exchange of Franklin Templeton Fund
shares. You may use the following form of resolution or you may prefer to use
your own.
CERTIFIED COPY OF RESOLUTION (Corporation or Association)
The undersigned hereby certifies and affirms that he/she is the duly elected
_______________________ of _______________________ a _______________________
Title Corporate Name Type of Organization
organized under the laws of the State of _________________ and that the
State
following is a true and correct copy of a resolution adopted by the Board of
Directors by unanimous written consent (a copy of which is attached) or at a
meeting duly called and held on ______________________________, 19__.
"RESOLVED, that _____________________________________________
Name of Corporation/Association
(the "Company") is authorized to invest the Company's assets in one or more
investment companies (mutual funds) whose shares are distributed by
Franklin/Templeton Distributors, Inc. ("Distributors"). Each such
investment company, or series thereof, is referred to as a "Franklin
Templeton Fund" or "Fund."
FURTHER RESOLVED, that any (enter number) _________________ of the following
officers of this Company (acting alone, if one, or acting together, if more
than one) is/are authorized to issue oral or written instructions (including
the signing of drafts in the case of draft accessed money fund accounts) on
behalf of the Company for the purchase, sale (redemption), transfer and/or
exchange of Fund shares and to execute any Fund application(s) and
agreements pertaining to Fund shares registered or to be registered to the
Company (referred to as a "Company Instruction"); and, that this authority
shall continue until Franklin/Templeton Investor Services, Inc. ("Investor
Services") receives written notice of revocation or amendment delivered by
registered mail. The Company's officers authorized to act on behalf of the
Company under this resolution are (enter officer titles
only):___________________________________________________________________
(referred to as the "Authorized Officers").
20.32/106 )07/97.1)
PAGE
FURTHER RESOLVED, that Investor Services may rely on the most recently
provided incumbency certificate delivered by the Company to Investor
Services to identify those individuals who are the incumbent Authorized
Officers and that Investor Services shall have no independent duty to
determine if there has been any change in the individuals serving as
incumbent Authorized Officers.
FURTHER RESOLVED, that the Company ("Indemnitor") undertakes and agrees to
indemnify and hold harmless Distributors, each affiliate of Distributors,
each Franklin Templeton Fund and their officers, employees and agents
(referred to hereafter collectively as the "Indemnitees") from and against
any and all liability, loss, suits, claims, costs, damages and expenses of
whatever amount and whatever nature (including without limitation reasonable
attorneys' fees, whether for consultation and advice or representation in
litigation at both the trial and appellate level) any indemnitee may sustain
or incur by reason of, in consequence of, or arising from or in connection
with any action taken or not taken by an Indemnitee in good faith reliance
on a Company Instruction given as authorized under this resolution."
The undersigned further certifies that the below named persons, whose signatures
appear opposite their names, are the incumbent Authorized Officers (as that term
is defined in the above resolution) who have been duly elected to the office
identified beside their name(s) (attach additional list if necessary).
X
Name/title (please print or type) Signature
X
Name/title (please print or type) Signature
X
Name/title (please print or type) Signature
X
Name/title (please print or type) Signature
CERTIFIED FROM MINUTES
X
Signature
- --------------------------------------------------------------------------------
Name/title (please print or type)
CORPORATE SEAL (if appropriate)
20.32/106 (07/97.1)
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FRANKLIN TEMPLETON GROUP OF FUNDS
LITERATURE REQUEST CALL 1-800/DIAL BEN (R) (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.
GLOBAL GROWTH
Franklin Global Health Care Fund
Mutual Discovery Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies 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
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and Income Fund
GLOBAL INCOME
Franklin Global Government Income Fund
Franklin Templeton Gobal Currency Fund
Franklin Templeton Hard Currency Fund
Templeton Americas Government Securities Fund
GROWTH
Franklin Biotechnology Discovery Fund
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 Asset Allocation Fund
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 Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES
Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
INCOME
Franklin Adjustable Rate Securities Fund
Franklin Adjustable U.S. Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
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
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(R)
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
*These funds are now closed to new accounts, with the exception of retirement
plan accounts.
**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.
++Franklin Valuemark and Franklin Templeton Valuemark Income Plus are issued by
Allianz Life Insurance Company of North America or by its wholly owned
subsidiary, Preferred Life Insurance Company of New York, and distributed by
NALAC Financial Plans, LLC.
FGF07/98 [LOGO] Printed on recycled paper TGIT PA 08/98
PAGE
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TEMPLETON REGION FUNDS ADVISOR CLASS BULK RATE
U.S. Postage
100 Fountain Parkway PAID
P.O. Box 33030 Sacramento, CA
St. Petersburg, FL 33733-8030 Permit No. 333
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TGIT PA 08/98 [LOGO] Printed on recycled paper
