Prospectus
TEMPLETON REGION FUNDS
ADVISOR CLASS
INVESTMENT STRATEGY GLOBAL GROWTH
Templeton International Fund
Templeton Latin America Fund
AUGUST 1, 1999
[INSERT FRANKLIN TEMPLETON LOGO (R)]
FRANKLIN(R) TEMPLETON(R)
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.
CONTENTS
THE FUNDS
- -------------------------------------------------------------------------------
[BEGIN CALLOUT]
INFORMATION ABOUT EACH FUND YOU SHOULD KNOW BEFORE INVESTING
[END CALLOUT]
2 Templeton International Fund
10 Templeton Latin America Fund
19 Distributions and Taxes;
Year 2000 Problem
YOUR ACCOUNT
- -------------------------------------------------------------------------------
[BEGIN CALLOUT]
INFORMATION ABOUT QUALIFIED INVESTORS, ACCOUNT TRANSACTIONS AND SERVICES
[END CALLOUT]
21 Qualified Investors
23 Buying Shares
24 Investor Services
26 Selling Shares
28 Account Policies
30 Questions
FOR MORE INFORMATION
- -------------------------------------------------------------------------------
[BEGIN CALLOUT]
Where to learn more about each fund
[END CALLOUT]
Back Cover
TEMPLETON INTERNATIONAL FUND
GOAL AND STRATEGIES
- ------------------------------------------------------------------------------
[INSERT GRAPHIC OF BULLSEYE AND ARROWS]
GOAL The fund's investment goal is long-term capital appreciation.
PRINCIPAL INVESTMENTS Under normal market conditions, the fund will invest at
least 75% of its total assets in the equity securities of companies located in
any developed country outside the U.S. The manager will consider for investment
companies located in the following areas: Western Europe, Australia, Canada, New
Zealand, Hong Kong, Japan and Singapore. At least 65% of the fund's total assets
will be invested in issuers located in at least three countries.
[BEGIN CALLOUT]
The fund invests primarily in a portfolio of equity securities of companies
located in any foreign developed country.
[END CALLOUT]
Equity securities generally entitle the holder to participate in a company's
general operating results. These include common stocks and preferred stocks. The
fund also invests in American, European, and Global Depositary Receipts, which
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 company.
Depending upon current market conditions, the fund generally invests a portion
of its total assets in non-equity securities, including debt securities. 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. The fund may invest a significant portion of its assets in
smaller companies.
The Templeton investment philosophy is "bottom-up," value-oriented and
long-term. In choosing equity investments, the fund's manager will focus on the
market price of a company's securities relative to its evaluation of the
company's long-term earnings, asset value and cash flow potential. A company's
historical value measures, including price/earnings ratio, profit margins, and
liquidation value, will also be considered.
TEMPORARY INVESTMENTS The manager may take a temporary defensive position when
it believes the securities trading markets or the economies of countries where
the fund invests are experiencing excessive volatility or a prolonged general
decline, or other adverse conditions exist. Under these circumstances, the fund
may be unable to pursue its investment goal, because it may not invest or may
invest substantially less in equity securities of companies located in developed
countries outside the U.S.
MAIN RISKS
- ------------------------------------------------------------------------------
[INSERT GRAPHIC OF CHART WITH LINE GOING UP AND DOWN]
STOCKS While this may not be the case in foreign markets, in the U.S., stocks
have historically outperformed other asset classes over the long term (over the
shorter term they tend to go up and down more dramatically). These price
movements may result from factors affecting individual companies, industries or
the securities market as a whole. Value stocks are considered "cheap" relative
to the company's perceived value. They may not increase in value, as anticipated
by the manager, if other investors fail to recognize the company's value and bid
up the price or in markets favoring faster-growing companies.
[BEGIN CALLOUT]
Because the securities the fund holds fluctuate in price, the value of your
investment in the fund will go up and down. This means you could lose money over
short or even extended periods.
[END CALLOUT]
FOREIGN SECURITIES Securities of companies located outside the U.S. may involve
risks that can increase the potential for losses in the fund. Investments in
depositary receipts also involve some or all of the following risks.
COUNTRY. General securities market movements in any country where the fund has
investments are likely to affect the value of the securities the fund owns that
trade in that country. These movements will affect the fund's share price and
fund performance.
The political, economic and social structures of some countries the fund invests
in 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, currency devaluations, foreign ownership limitations,
expropriation, restrictions on removal of currency and other assets,
nationalization of assets, punitive taxes and certain custody and settlement
risks. Foreign securities markets may have substantially lower trading volumes
than U.S. markets, resulting in less liquidity and more volatility than in the
U.S.
COMPANY. Foreign companies are not subject to the same disclosure, accounting,
auditing and financial reporting standards and practices as U.S. companies, and
their securities may not be as liquid as securities of similar U.S. companies.
Foreign stock exchanges, trading systems, brokers and companies generally have
less government supervision and regulation than in the U.S. The fund may have
greater difficulty voting proxies, exercising shareholder rights, including the
right to vote, pursuing legal remedies and obtaining judgments with respect to
foreign investments in foreign courts than with respect to U.S. companies in
U.S. courts.
CURRENCY Many of the fund's investments are denominated in foreign currencies.
Changes in foreign currency exchange rates will affect the value of what the
fund owns and the fund's share price. Generally, when the U.S. dollar rises in
value against a foreign currency, an investment in that country loses value
because that currency is worth fewer U.S. dollars. Devaluation of a currency by
a country's government or banking authority also will have a significant impact
on the value of any securities denominated in that currency. Currency markets
generally are not as regulated as securities markets.
EURO. On January 1, 1999, the European Monetary Union (EMU) introduced a new
single currency, the euro, which will replace the national currency for
participating member countries.
Because this change to a single currency is new and untested, it is not possible
to predict the impact of the euro on the business or financial condition of
European issuers which the fund may hold in its portfolio, and their impact on
fund performance. To the extent the fund holds non-U.S. dollar (euro or other)
denominated securities, it will still be exposed to currency risk due to
fluctuations in those currencies versus the U.S. dollar.
SMALLER COMPANIES Historically, smaller company securities have been more
volatile in price than larger company securities, especially over the short
term. Among the reasons for the greater price volatility are the less certain
growth prospects of smaller companies, the lower degree of liquidity in the
markets for such securities and the greater sensitivity of smaller companies to
changing economic conditions.
Smaller companies may lack depth of management, they may be unable to generate
funds necessary for growth or development or they may be developing or marketing
new products or services which quickly become obsolete or for which markets are
not yet established and may never become established.
Therefore, while smaller companies may offer greater opportunities for capital
growth than larger, more established companies, they also involve greater risks
and should be considered speculative.
ILLIQUID SECURITIES The fund may invest up to 15% of its total assets in
securities with a limited trading market. Such a market can result from
political or economic conditions affecting previously established securities
markets, particularly in emerging market countries.
INTEREST RATE When interest rates rise, debt security prices fall. The opposite
is also true: debt security prices rise when interest rates fall. Generally,
securities with longer maturities are more sensitive to these price changes.
CREDIT There is the possibility that an issuer will be unable to make interest
payments or repay principal. Changes in an issuer's financial strength or in a
security's credit rating may affect its value and, thus, impact the value of
fund shares and fund performance.
YEAR 2000 When evaluating current and potential portfolio positions, Year 2000
is one of the factors the fund's manager considers.
The manager will rely upon public filings and other statements made by companies
about their Year 2000 readiness. Issuers in countries outside the U.S. may be
more susceptible to Year 2000 risks and may not be required to make the same
level of disclosure about Year 2000 readiness as is required in the U.S. The
manager, of course, cannot audit each company and its major suppliers to verify
their Year 2000 readiness.
If a company in which the fund is invested is adversely affected by Year 2000
problems, it is likely that the price of its securities also will be adversely
affected. A decrease in the value of one or more of the fund's portfolio
holdings will have a similar impact on the fund's performance. Please see page
20 for more information.
More detailed information about the fund, its policies (including temporary
investments), and risks can be found in the fund's Statement of Additional
Information (SAI).
[BEGIN CALLOUT]
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.
[END CALLOUT]
PERFORMANCE
- ------------------------------------------------------------------------------
[INSERT GRAPHIC OF A BULL AND A BEAR]
This bar chart and table show the volatility of the fund's returns, which is one
indicator of the risks of investing in the fund. The bar chart shows changes in
the fund's returns from year to year over the past 3 calendar years. The table
shows how the fund's average annual total returns compare to those of a
broad-based securities market index. Of course, past performance cannot predict
or guarantee future results.
ADVISOR CLASS ANNUAL TOTAL RETURNS/1/,/2/
[Insert bar graph]
21.41% 16.36% 5.75%
96 97 98
YEAR
[BEGIN CALLOUT]
Best
Quarter:
Q1 '98
17.21%
Worst
Quarter:
Q3 '98
- -17.97%
[END CALLOUT]
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1998
SINCE
INCEPTION
1 YEAR (5/8/95)
- -------------------------------------------------------------------------------
Templeton International Fund - Advisor Class/2/ 5.75% 11.17%
MSCI Europe Index/3/,/5/ 28.91% 23.42%
MSCI EAFE Index/4/,/5/ 20.33% 9.25%
1. As of June 30, 1999, the fund's year-to-date return was 12.42%.
2. Performance figures reflect a "blended" figure combining the following
methods of calculation: (a) For periods before January 1, 1997, a restated
figure is used based on the fund's Class A performance, excluding the effect of
Class A's maximum initial sales charge and including the effect of the Class A
distribution and service (12b-1) fees; and (b) for periods after January 1,
1997, an actual Advisor Class figure is used reflecting a deduction of all
applicable charges and fees for that class. This blended figure assumes
reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal (MSCI). The unmanaged Morgan Stanley
Capital International(R) (MSCI) Europe Index measures the performance of
securities of approximately 600 companies with market capitalization of
approximately $2 billion located in 15 European countries. It includes
reinvested dividends. One cannot invest directly in an index, nor is an index
representative of the fund's portfolio.
4. Source: Standard & Poor's(R) Micropal. The unmanaged MSCI Europe Australasia
Far East (EAFE) Index tracks the performance of approximately 1000 securities in
20 countries. It includes reinvested dividends. One cannot invest directly in an
index, nor is an index representative of the fund's portfolio.
5. Prior to August 1, 1999, the fund: (a) was named the Templeton Greater
European Fund; (b) invested at least 75% of its total assets in equity
securities of Western, Central and Eastern European companies; and (c)
considered the MSCI Europe Index its benchmark to measure performance against.
Effective August 1, 1999, the fund: (a) changed its name; (b) shifted its focus
to its current strategy; and (c) considers the MSCI EAFE Index its benchmark
index to measure performance against.
FEES AND EXPENSES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF PERCENTAGE SIGN]
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
ADVISOR CLASS
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases None
Exchange fee/1/ $5.00
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
ADVISOR CLASS
- -------------------------------------------------------------------------------
Management fees 0.75%
Distribution and service (12b-1) fees None
Other expenses 0.63%
--------
Total annual fund operating expenses 1.38%
========
1. This fee is only for market timers (see page 29).
EXAMPLE
This example can help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
The example assumes you invest $10,000 for the periods shown and then sell all
of your shares at the end of those periods. The example also assumes your
investment has a 5% return each year and the fund's operating expenses remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$140 $437 $755 $1,657
MANAGEMENT
- --------------------------------------------------------------------------------
[INSERT GRAPHIC OF BRIEFCASE]
Templeton Global Advisors Limited (Global Advisors), P. O. Box N-7759, Lyford
Cay, Nassau, Bahamas, is the fund's investment manager. Together, Global
Advisors and its affiliates manage over $223 billion in assets.
The team responsible for the fund's management is:
MARK G. HOLOWESKO CFA, PRESIDENT OF GLOBAL ADVISORS
Mr. Holowesko has been a manager of the fund since 1996. He joined the Franklin
Templeton Group in 1985.
JEFFREY A. EVERETT CFA, EXECUTIVE VICE PRESIDENT OF GLOBAL ADVISORS
Mr. Everett has been a manager of the fund since 1996. He joined the Franklin
Templeton Group in 1989.
RICHARD SEAN FARRINGTON CFA, SENIOR VICE PRESIDENT OF GLOBAL ADVISORS
Mr. Farrington has been a manager of the fund since 1996. He joined the Franklin
Templeton Group in 1991.
The fund pays Global Advisors a fee for managing the fund's assets and making
its investment decisions. For the fiscal year ended March 31, 1999, the fund
paid 0.75% of its average daily net assets to the manager.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
This table presents the financial performance for Advisor Class since its
inception. This information has been audited by McGladrey & Pullen, LLP.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------
1999 1998 1997/1/
- ----------------------------------------------- ------------- ------------ --------------
<S> <C> <C> <C>
PER SHARE DATA ($)
Net asset value, beginning of year 14.30 12.36 11.56
-----------------------------------------
Net investment income .74 .56 .07
Net realized and unrealized gains(losses) (1.73) 2.73 .73
-----------------------------------------
Total from investment operations (.99) 3.29 .80
-----------------------------------------
Less distributions from:
Net investment income (.25) (.27) --
Net realized gains (.40) (1.08) --
-----------------------------------------
Total distributions (.65) (1.35) --
-----------------------------------------
Net asset value, end of year 12.66 14.30 12.36
============================================
Total return (%)/2/ (6.76) 28.88 6.92
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 265 83 36
Ratios to average net assets: (%)
Expenses 1.38 1.50 1.50/3/
Expenses excluding waiver and payments by
affiliate 1.38 2.06 1.90/3/
Net investment income 2.49 2.38 2.56/3/
Portfolio turnover rate (%) 38.57 27.59 30.58
</TABLE>
1. For the period January 2, 1997 (effective date) to March 31, 1997.
2. Total return is not annualized.
3. Annualized.
TEMPLETON LATIN AMERICA FUND
GOAL AND STRATEGIES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF BULLSEYE AND ARROWS]
GOAL The fund's investment goal is long-term capital appreciation.
PRINCIPAL INVESTMENTS Under normal market conditions, the fund will invest at
least 65% of its total assets in the equity and debt securities of Latin
American companies.
For purposes of the fund's investments, "Latin American" 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. The
fund may make significant investments in securities of issuers located in Brazil
and Mexico.
[BEGIN CALLOUT]
The fund invests primarily in equity securities of Latin American companies.
[END CALLOUT]
Equity securities generally entitle the holder to participate in a company's
general operating results. These include common stocks and preferred stocks. The
fund also invests in American, European, and Global Depositary Receipts, which
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 company.
The fund may invest a significant portion of its assets in smaller companies.
Depending upon current market conditions, the fund generally invests a portion
(up to 35%) of its total assets in non-equity securities, including debt
securities. 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.
The Templeton investment philosophy is "bottom-up," value-oriented and
long-term. In choosing equity investments, the fund's manager will focus on the
market price of a company's securities relative to its evaluation of the
company's long-term earnings, asset value and cash flow potential. A company's
historical value measures, including price/earnings ratio, profit margins, and
liquidation value, will also be considered.
TEMPORARY INVESTMENTS The manager may take a temporary defensive position when
it believes the securities trading markets or the economies of countries where
the fund invests are experiencing excessive volatility or a prolonged general
decline, or other adverse conditions exist. Under these circumstances, the fund
may be unable to pursue its investment goal, because it may not invest or may
invest substantially less in equity securities of Latin American companies.
MAIN RISKS
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF CHART WITH LINE GOING UP AND DOWN]
STOCKS While this may not be the case in foreign markets, in the U.S., stocks
have historically outperformed other asset classes over the long term (over the
shorter term they tend to go up and down more dramatically). These price
movements may result from factors affecting individual companies, industries or
the securities market as a whole. Value stocks are considered "cheap" relative
to the company's perceived value. They may not increase in value, as anticipated
by the manager, if other investors fail to recognize the company's value and bid
up the price or in markets favoring faster-growing companies.
[BEGIN CALLOUT]
Because the securities the fund holds fluctuate in price, the value of your
investment in the fund will go up and down. This means you could lose money over
short or even extended periods.
[END CALLOUT]
FOREIGN SECURITIES Securities of companies located outside the U.S. may involve
risks that can increase the potential for losses in the fund. Investments in
depositary receipts also involve some or all of the following risks.
COUNTRY. General securities market movements in any country where the fund has
investments are likely to affect the value of the securities the fund owns that
trade in that country. These movements will affect the fund's share price and
fund performance.
The political, economic and social structures of some countries the fund invests
in 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, currency devaluations, foreign ownership limitations,
expropriation, restrictions on removal of currency and other assets,
nationalization of assets, punitive taxes and certain custody and settlement
risks.
Because the fund invests a significant amount of its assets in issuers located
in Latin America, it may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
DEVELOPING OR EMERGING MARKETS. The fund's investments in developing or emerging
markets are subject to all of the risks of foreign investing generally, and have
additional heightened risks due to a lack of established legal, political,
business and social frameworks to support securities markets. Some of the
additional significant risks, include:
o Political and social uncertainty (for example, regional conflicts
and risk of war)
o Currency exchange rate volatility
o Pervasiveness of corruption and crime
o Delays in settling portfolio transactions
o Risk of loss arising out of the system of share registration and
custody
o Involves markets that are comparatively smaller and less liquid than
developed markets. While short-term volatility in these markets
can be disconcerting, declines in excess of 50% are not unusual.
o Less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in
the United States
ALL OF THESE FACTORS MAKE DEVELOPING MARKET EQUITY SECURITIES' PRICES GENERALLY
MORE VOLATILE THAN SECURITIES ISSUED IN DEVELOPED MARKETS.
The definition of developing or emerging markets or countries as used by the
fund's manager may differ from the definition of the same terms as used in
managing other Franklin Templeton funds.
COMPANY. Foreign companies are not subject to the same disclosure, accounting,
auditing and financial reporting standards and practices as U.S. companies, and
their securities may not be as liquid as securities of similar U.S. companies.
Foreign stock exchanges, trading systems, brokers and companies generally have
less government supervision and regulation than in the U.S. The fund may have
greater difficulty voting proxies, exercising shareholder rights, including the
right to vote, pursuing legal remedies and obtaining judgments with respect to
foreign investments in foreign courts than with respect to U.S. companies in
U.S. courts. Foreign markets and their participants generally have less
government supervision and regulation than in the U.S.
CURRENCY Many of the fund's investments are denominated in foreign currencies.
Changes in foreign currency exchange rates will affect the value of what the
fund owns and the fund's share price. Generally, when the U.S. dollar rises in
value against a foreign currency, an investment in that country loses value
because that currency is worth fewer U.S. dollars. Devaluation of a currency by
a country's government or banking authority also will have a significant impact
on the value of any securities denominated in that currency. Currency markets
generally are not as regulated as securities markets.
SMALLER COMPANIES Historically, smaller company securities have been more
volatile in price than larger company securities, especially over the short
term. Among the reasons for the greater price volatility are the less certain
growth prospects of smaller companies, the lower degree of liquidity in the
markets for such securities and the greater sensitivity of smaller companies to
changing economic conditions.
Smaller companies may lack depth of management, they may be unable to generate
funds necessary for growth or development or they may be developing or marketing
new products or services which quickly become obsolete or for which markets are
not yet established and may never become established.
Therefore, while smaller companies may offer greater opportunities for capital
growth than larger, more established companies, they also involve greater risks
and should be considered speculative.
ILLIQUID SECURITIES The fund may invest up to 15% of its total assets in
securities with a limited trading market. Such a market can result from
political or economic conditions affecting previously established securities
markets, particularly in emerging market countries.
INTEREST RATE When interest rates rise, debt security prices fall. The opposite
is also true: debt security prices rise when interest rates fall. Generally,
securities with longer maturities are more sensitive to these price changes.
CREDIT There is the possibility that an issuer will be unable to make interest
payments or repay principal. Changes in an issuer's financial strength or in a
security's credit rating may affect its value and, thus, impact the value of
fund shares and fund performance.
YEAR 2000 When evaluating current and potential portfolio positions, Year 2000
is one of the factors the fund's manager considers.
The manager will rely upon public filings and other statements made by companies
about their Year 2000 readiness. Issuers in countries outside the U.S.,
particularly in emerging markets, may be more susceptible to Year 2000 risks and
may not be required to make the same level of disclosure about Year 2000
readiness as is required in the U.S. The manager, of course, cannot audit each
company and its major suppliers to verify their Year 2000 readiness.
If a company in which the fund is invested is adversely affected by Year 2000
problems, it is likely that the price of its securities also will be adversely
affected. A decrease in the value of one or more of the fund's portfolio
holdings will have a similar impact on the fund's performance. Please see page
20 for more information.
More detailed information about the fund, its policies (including temporary
investments), and risks can be found in the fund's Statement of Additional
Information (SAI).
[BEGIN CALLOUT]
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.
[END CALLOUT]
PERFORMANCE
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF A BULL AND A BEAR]
This bar chart and table show the volatility of the fund's returns, which is one
indicator of the risks of investing in the fund. The bar chart shows changes in
the fund's returns from year to year over the past 3 calendar years. The table
shows how the fund's average annual total returns compare to those of a
broad-based securities market index. Of course, past performance cannot predict
or guarantee future results.
ADVISOR CLASS ANNUAL TOTAL RETURNS/1/,/2/
[Insert bar graph]
11.65% 19.03% -42.59%
96 97 98
YEAR
[BEGIN CALLOUT]
Best
Quarter:
Q2 '97
13.27%
Worst
Quarter:
Q3 '98
- -27.36%
[END CALLOUT]
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1998
SINCE
INCEPTION
1 YEAR (5/8/95)
- -------------------------------------------------------------------------------
Templeton Latin America Fund - Advisor Class/2/ -42.59% -7.04%
IFCI Latin American Index/3/ -35.54% 0.14%
1. As of June 30, 1999, the fund's year-to-date return was 34.85%.
2. Performance figures reflect a "blended" figure combining the following
methods of calculation: (a) For periods before January 1, 1997, a restated
figure is used based on the fund's Class A performance, excluding the effect of
Class A's maximum initial sales charge and including the effect of the Class A
distribution and service (12b-1) fees; and (b) for periods after January 1,
1997, an actual Advisor Class figure is used reflecting a deduction of all
applicable charges and fees for that class. This blended figure assumes
reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal (International Finance Corp.). The
unmanaged International Finance Corporation Investables (IFCI) Latin American
Index measures the type of returns foreign portfolio investors might receive
from investing in Latin America. It includes reinvested dividends. All IFC
indices are market capitalization weighted. One cannot invest directly in an
index, nor is an index representative of the fund's portfolio.
FEES AND EXPENSES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF PERCENTAGE SIGN]
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
ADVISOR CLASS
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases None
Exchange fee/1/ $5.00
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
ADVISOR CLASS
- -------------------------------------------------------------------------------
Management fees/2/ 1.25%
Distribution and service (12b-1) fees None
Other expenses 1.43%
---------
Total annual fund operating expenses/2/ 2.68%
=========
1. This fee is only for market timers (see page 29).
2. For the fiscal year ended March 31, 1999, the manager and administrator had
agreed in advance to limit their respective fees. With this reduction,
management fees were 0.57% and total annual fund operating expenses were 2.00%.
The manager may end this arrangement at any time upon notice to the fund's Board
of Trustees.
EXAMPLE
This example can help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
The example assumes you invest $10,000 for the periods shown and then sell all
of your shares at the end of those periods. The example also assumes your
investment has a 5% return each year and the fund's operating expenses remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
$271 $832 $1,420 $3,012
MANAGEMENT
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF BRIEFCASE]
Templeton Investment Counsel, Inc., (Investment Counsel), 500 East Broward
Boulevard, Fort Lauderdale, Florida 33394-3091, is the fund's investment
manager. Together, Investment Counsel and its affiliates manage over $223
billion in assets.
The fund's lead portfolio manager is:
HEIDI S. ANDERSEN CFA, VICE PRESIDENT OF INVESTMENT COUNSEL
Ms. Andersen has been a manager of the fund since March 1999. She joined the
Franklin Templeton Group in 1995.
The following individuals have secondary portfolio management responsibilities:
MARK R. BEVERIDGE CFA, SENIOR VICE PRESIDENT OF INVESTMENT COUNSEL
Mr. Beveridge has been a manager of the fund since 1997. He joined the Franklin
Templeton Group in 1985.
HOWARD J. LEONARD CFA, EXECUTIVE VICE PRESIDENT OF INVESTMENT COUNSEL
Mr. Leonard has been a manager of the fund since 1996. He joined the Franklin
Templeton Group in 1989.
The fund pays Investment Counsel a fee for managing the fund's assets and making
its investment decisions. For the fiscal year ended March 31, 1999, management
fees, before any advance waiver, were 1.25% of the fund's average daily net
assets. Under an agreement by the manager to limit its fees, the fund paid 0.57%
of its average daily net assets to the manager. The manager may end this
arrangement at any time upon notice to the fund's Board of Trustees.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF A DOLLAR BILL]
This table presents the financial performance for Advisor Class since its
inception. This information has been audited by McGladrey & Pullen, LLP.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------------------
1999 1998 1997/1/
- ----------------------------------------------- ------------- ------------ --------------
<S> <C> <C> <C>
PER SHARE DATA ($)
Net asset value, beginning of year 12.75 12.35 10.92
------------- ------------ --------------
Net investment income .31 .07 .02
Net realized and unrealized gains (losses) (4.69) .59 1.41
------------- ------------ --------------
Total from investment operations (4.38) .66 1.43
----------------------------------------
Less distributions from:
Net investment income (.22) (.11) --
Net realized gains (.06) (.15) --
------------- ------------ --------------
Total distributions (.28) (.26) --
------------- ------------ --------------
Net asset value, end of year 8.09 12.75 12.35
------------- ------------ --------------
Total return (%)/2/ (34.37) 5.43 13.09
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 116 139 71
Ratios to average net assets: (%)
Expenses 2.00 2.00 2.00/3/
Expenses excluding waiver and payments by
affiliate 2.68 2.22 2.08/3/
Net investment income 2.46 .45 .82/3/
Portfolio turnover rate (%) 48.34 45.82 3.72
</TABLE>
1. For the period January 2, 1997 (effective date) to March 31, 1997.
2. Total return is not annualized.
3. Annualized.
DISTRIBUTIONS AND TAXES;
YEAR 2000 PROBLEM
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF DOLLAR SIGNS AND STACKS OF COINS]
INCOME AND CAPITAL GAINS DISTRIBUTIONS Each fund intends to pay a dividend at
least annually representing substantially all of its net investment income and
any net realized capital gains. The amount of this distribution will vary and
there is no guarantee the funds will pay dividends.
To receive a distribution, you must be a shareholder on the record date. The
record date for the funds' distributions will vary. Please keep in mind that if
you invest in a fund shortly before the record date of a distribution, any
distribution will lower the value of the fund's shares by the amount of the
distribution and you will receive some of your investment back in the form of a
taxable distribution. If you would like information on upcoming record dates for
the funds' distributions, please call 1-800/DIAL BEN(R).
TAX CONSIDERATIONS In general, fund distributions are taxable to you as either
ordinary income or capital gains. This is true whether you reinvest your
distributions in additional fund shares or receive them in cash. Any capital
gains a fund distributes are taxable to you as long-term capital gains no matter
how long you have owned your shares.
[BEGIN CALLOUT]
BACKUP WITHHOLDING
By law, a fund must withhold 31% of your taxable distributions and proceeds if
you do not provide your correct social security or taxpayer identification
number, or if the IRS instructs the fund to do so.
[END CALLOUT]
Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
When you sell your shares of a fund, you may have a capital gain or loss. For
tax purposes, an exchange of your fund shares for shares of a different Franklin
Templeton Fund is the same as a sale. The individual tax rate on any gain from
the sale or exchange of your shares depends on how long you have held your
shares.
Fund distributions and gains from the sale or exchange of your shares generally
will be subject to state and local income tax. Any foreign taxes a fund pays on
its investments may be passed through to you as a foreign tax credit. Non-U.S.
investors may be subject to U.S. withholding and estate tax. You should consult
your tax advisor about the federal, state, local or foreign tax consequences of
your investment in a fund.
YEAR 2000 PROBLEM Each fund's business operations depend on a worldwide network
of computer systems that contain date fields, including securities trading
systems, securities transfer agent operations and stock market links. Many of
the systems currently use a two digit date field to represent the date, and
unless these systems are changed or modified, they may not be able to
distinguish the Year 1900 from the Year 2000 (commonly referred to as the Year
2000 problem). In addition, the fact that the Year 2000 is a leap year may
create difficulties for some systems.
When the Year 2000 arrives, a fund's operations could be adversely affected if
the computer systems used by the manager, its service providers and other third
parties it does business with are not Year 2000 ready. For example, a fund's
portfolio and operational areas could be impacted, including securities trade
processing, interest and dividend payments, securities pricing, shareholder
account services, reporting, custody functions and others. A fund could
experience difficulties in effecting transactions if any of its foreign
subcustodians, or if foreign broker-dealers or foreign markets are not ready for
Year 2000.
Each fund's manager and its affiliated service providers are making a concerted
effort to take steps they believe are reasonably designed to address their Year
2000 problems. Of course, a fund's ability to reduce the effects of the Year
2000 problem is also very much dependent upon the efforts of third parties over
which the fund and its manager may have no control.
YOUR ACCOUNT
QUALIFIED INVESTORS
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF PENCIL MARKING AN "X"]
The following investors may qualify to buy Advisor Class shares of the funds.
o Qualified registered investment advisors with clients invested in any
series of Franklin Mutual Series Fund Inc. on October 31, 1996, or who
buy through a broker-dealer or service agent who has an agreement with
Franklin Templeton Distributors, Inc. (Distributors). Minimum
investments: $1,000 initial and $50 additional.
o Broker-dealers, registered investment advisors or certified financial
planners who have an agreement with Distributors for clients
participating in comprehensive fee programs. Minimum investments:
$250,000 initial ($100,000 initial for an individual client) and $50
additional.
o Officers, trustees, directors and full-time employees of Franklin
Templeton and their immediate family members. Minimum investments:
$100 initial ($50 for accounts with an automatic investment plan) and
$50 additional.
o Each series of the Franklin Templeton Fund Allocator Series. Minimum
investments: $1,000 initial and $1,000 additional.
[BEGIN CALLOUT]
The FRANKLIN TEMPLETON FUNDS include all of the Franklin Templeton U.S.
registered mutual funds, except Franklin Templeton Variable Insurance Products
Trust, Templeton Capital Accumulator Fund, Inc., and Templeton Variable Products
Series Fund.
[END CALLOUT]
o Governments, municipalities, and tax-exempt entities that meet the
requirements for qualification under section 501 of the Internal
Revenue Code. Minimum investments: $1 million initial investment in
Advisor Class or Class Z shares of any of the Franklin Templeton Funds
and $50 additional.
o Accounts managed by the Franklin Templeton Group. Minimum investments: No
initial minimum and $50 additional.
o The Franklin Templeton Profit Sharing 401(k) Plan. Minimum investments:
No initial or additional minimums.
o Defined contribution plans such as employer stock, bonus, pension or
profit sharing plans that meet the requirements for qualification
under section 401 of the Internal Revenue Code, including salary
reduction plans qualified under section 401(k) of the Internal Revenue
Code, and that are sponsored by an employer (i) with at least 10,000
employees, or (ii) with retirement plan assets of $100 million or
more. Minimum investments: No initial or additional minimums.
o 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. Minimum investments: No
initial or additional minimums.
o Individual investors. Minimum investments: $5 million initial and $50
additional. You may combine all of your shares in the Franklin
Templeton Funds for purposes of determining whether you meet the $5
million minimum, as long as $1 million is in Advisor Class or Class Z
shares of any of the Franklin Templeton Funds.
o Any other investor, including a private investment vehicle such as a
family trust or foundation, who is a member of an established group of
11 or more investors. Minimum investments: $5 million initial and $50
additional. For minimum investment purposes, the group's investments
are added together. The group may combine all of its shares in the
Franklin Templeton Funds for purposes of determining whether it meets
the $5 million minimum, as long as $1 million is in Advisor Class or
Class Z shares of any of the Franklin Templeton Funds. There are
certain other requirements and the group must have a purpose other
than buying fund shares without a sales charge.
Please note that Advisor Class shares of the funds generally are not available
to retirement plans through Franklin Templeton's ValuSelect(R) program.
Retirement plans in the ValuSelect program before January 1, 1998, however, may
invest in the funds' Advisor Class shares.
BUYING SHARES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF A PAPER WITH LINES AND SOMEONE WRITING]
ACCOUNT APPLICATION If you are opening a new account, please complete and sign
the enclosed account application. To save time, you can sign up now for services
you may want on your account by completing the appropriate sections of the
application (see the next page).
BUYING SHARES
<TABLE>
<CAPTION>
- ------------------------------ ------------------------------------------- -------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ------------------------------ ------------------------------------------- -------------------------------------------
<S> <C> <C>
[INSERT GRAPHIC OF HANDS
SHAKING]
Contact your investment representative Contact your investment representative
THROUGH YOUR INVESTMENT
REPRESENTATIVE
- ------------------------------ ------------------------------------------- -------------------------------------------
Make your check payable to the Make your check payable to fund.
[INSERT GRAPHIC OF ENVELOPE] fund. Include your account number on the check.
BY MAIL Mail the check and your signed
application to Investor Services. Fill out the deposit slip from your
account statement. If you do not have
a slip, include a note with your name,
the fund name, and your account number.
Mail the check and deposit slip or
note to nvestor Services.
- ------------------------------ ------------------------------------------- -------------------------------------------
[INSERT GRAPHIC OF THREE Call to receive a wire control number Call to receive a wire control number and
LIGHTNING BOLTS] and wire instructions. wire instructions.
Wire the funds and mail your signed To make a same day wire investment,
application to Investor Services. Please please call us by 1:00 p.m. pacific time
BY WIRE include the wire control number or your and make sure your wire arrives by 3:00
new account number on the application. p.m.
1-800/632-2301
(or 1-650/312-2000 collect) To make a same day wire investment,
please call us by 1:00 p.m. pacific time
and make sure your wire arrives by 3:00
p.m.
- ------------------------------ ------------------------------------------- -------------------------------------------
[INSERT GRAPHIC OF TWO Call Shareholder Services at the number Call Shareholder Services at the number
ARROWS POINTING IN below or send signed written below or our automated TeleFACTS system
OPPOSITE DIRECTIONS] instructions. (Please see page 25 or send signed written instructions.
for information on exchanges.) (Please see page 25 for information on
BY EXCHANGE exchanges.)
- ----------------------------------------------------------- ----------------------------------------------------------
</TABLE>
Franklin Templeton Investor Services P.O. Box 33030,
St. Petersburg, FL 33733-8030
Call toll-free: 1-800/632-2301
(Monday through Friday 5:30 a.m. to 5:00 p.m., pacific time
Saturday 6:30 a.m. to 2:30 p.m., pacific time)
INVESTOR SERVICES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF A PAPER WITH LINES AND SOMEONE WRITING]
AUTOMATIC INVESTMENT PLAN This plan offers a convenient way for you to invest in
a fund by automatically transferring money from your checking or savings account
each month to buy shares. To sign up, complete the appropriate section of your
account application.
DISTRIBUTION OPTIONS You may reinvest distributions you receive from a fund in
an existing account in the same share class of the fund or in Advisor Class or
Class A shares of another Franklin Templeton Fund. To reinvest your
distributions in Advisor Class shares of another Franklin Templeton Fund, you
must qualify to buy that fund's Advisor Class shares. For distributions
reinvested in Class A shares of another Franklin Templeton Fund, initial sales
charges and contingent deferred sales charges (CDSCs) will not apply if you
reinvest your distributions within 365 days. You can also have your
distributions deposited in a bank account, or mailed by check. Deposits to a
bank account may be made by electronic funds transfer.
[BEGIN CALLOUT]
For Franklin Templeton Trust Company retirement plans, special forms may be
needed to receive distributions in cash. Please call 1-800/527-2020 for
information.
[END CALLOUT]
Please indicate on your application the distribution option you have chosen,
otherwise we will reinvest your distributions in the same share class of the
fund.
RETIREMENT PLANS Franklin Templeton offers a variety of retirement plans for
individuals and businesses. These plans require separate applications and their
policies and procedures may be different than those described in this
prospectus. For more information, including a free retirement plan brochure or
application, please call Retirement Plan Services at 1-800/527-2020.
TELEFACTS(R) Our TeleFACTS system offers around-the-clock access to information
about your account or any Franklin Templeton Fund. This service is available
from touch-tone phones at 1-800/247-1753. For a free TeleFACTS brochure, call
1-800/DIAL BEN.
TELEPHONE PRIVILEGES You will automatically receive telephone privileges when
you open your account, allowing you and your investment representative to sell
or exchange your shares and make certain other changes to your account by phone.
For accounts with more than one registered owner, telephone privileges also
allow the funds to accept written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone. For all
other transactions and changes, all registered owners must sign the
instructions.
As long as we take certain measures to verify telephone requests, we will not be
responsible for any losses that may occur from unauthorized requests. Of course,
you can decline telephone exchange or redemption privileges on your account
application.
EXCHANGE PRIVILEGE You can exchange shares between most Franklin Templeton Funds
within the same class. You also may exchange your Advisor Class shares for Class
A shares of a fund that does not currently offer an Advisor Class (without any
sales charge)* or for Class Z shares of Franklin Mutual Series Fund Inc.
[BEGIN CALLOUT]
An EXCHANGE is really two transactions: a sale of one fund and the purchase of
another. In general, the same policies that apply to purchases and sales apply
to exchanges, including minimum investment amounts. Exchanges also have the same
tax consequences as ordinary sales and purchases.
[END CALLOUT]
If you do not qualify to buy Advisor Class shares of Templeton Developing
Markets Trust, Templeton Foreign Fund or Templeton Growth Fund, you also may
exchange your shares for Class A shares of those funds (without any sales
charge)* or for shares of Templeton Institutional Funds, Inc.
Generally exchanges may only be made between identically registered accounts,
unless you send written instructions with a signature guarantee.
Frequent exchanges can interfere with fund management or operations and drive up
costs for all shareholders. To protect shareholders, there are limits on the
number and amount of exchanges you may make (please see "Market Timers" on page
29).
*If you exchange into Class A shares and you later decide you would like to
exchange into a fund that offers an Advisor Class, you may exchange your Class A
shares for Advisor Class shares if you otherwise qualify to buy the fund's
Advisor Class shares.
SYSTEMATIC WITHDRAWAL PLAN This plan allows you to automatically sell your
shares and receive regular payments from your account. Certain terms and
minimums apply. To sign up, complete the appropriate section of your
application.
SELLING SHARES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF A CERTIFICATE]
You can sell your shares at any time.
SELLING SHARES IN WRITING Generally, requests to sell $100,000 or less can be
made over the phone or with a simple letter. Sometimes, however, to protect you
and the funds we will need written instructions signed by all registered owners,
with a signature guarantee for each owner, if:
[BEGIN CALLOUT]
A SIGNATURE GUARANTEE helps protect your account against fraud. You can obtain a
signature guarantee at most banks and securities dealers.
A notary public CANNOT provide a signature guarantee.
[END CALLOUT]
o you are selling more than $100,000 worth of shares
o you want your proceeds paid to someone who is not a registered owner
o you want to send your proceeds somewhere other than the address of
record, or preauthorized bank or brokerage firm account
We also may require a signature guarantee on instructions we receive from an
agent, not the registered owners, or when we believe it would protect the funds
against potential claims based on the instructions received.
SELLING RECENTLY PURCHASED SHARES If you sell shares 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.
REDEMPTION PROCEEDS Your redemption check will be sent within seven days after
we receive your request in proper form. We are not able to receive or pay out
cash in the form of currency. Redemption proceeds may be delayed if we have not
yet received your signed account application.
RETIREMENT PLANS You may need to complete additional forms to sell shares in a
Franklin Templeton Trust Company retirement plan. For participants under age
59 1/2, tax penalties may apply. Call Retirement Plan Services at 1-800/527-2020
for details.
<TABLE>
<CAPTION>
SELLING SHARES
- ----------------------------------- --------------------------------------------
TO SELL SOME OR ALL OF YOUR SHARES
- ----------------------------------- --------------------------------------------
<S> <C>
[INSERT GRAPHIC OF HANDS SHAKING]
THROUGH YOUR INVESTMENT Contact your investment representative
REPRESENTATIVE
- ----------------------------------- --------------------------------------------
[INSERT GRAPHIC OF ENVELOPE] Send written instructions and endorsed share
certificates (if you hold share
certificates) to Investor Services.
Corporate, partnership or trust accounts
BY MAIL may need to send additional documents.
Specify the fund, the account number and the
dollar value or number of shares you wish to
sell. Be sure to include all necessary
signatures and any additional documents, as
well as signature guarantees if required.
A check will be mailed to the name(s) and
address on the account, or otherwise
according to your written instructions.
- ----------------------------------- -------------------------------------------
[INSERT GRAPHIC OF PHONE] As long as your transaction is for $100,000
or less, you do not hold share certificates
and you have not changed your address by
BY PHONE phone within the last 15 days, you can sell
your shares by phone.
1-800/632-2301 A check will be mailed to the name(s) and
address on the account. Written instructions,
with a signature guarantee, are required to
send the check to another address or to make
it payable to another person.
- ----------------------------------- -------------------------------------------
[INSERT GRAPHIC OF THREE You can call or write to have redemption
LIGHTNING BOLTS] proceeds of $1,000 or morewired to a bank or
escrow account. See the policies above for
selling shares by mail or phone.
Before requesting a bank wire, please make
sure we have your bank account information
on file. If we do not have this information,
you will need to send written instructions
BY WIRE with your bank's name and address, your bank
account number, the ABA routing number, and a
signature guarantee.
Requests received in proper form by 1:00 p.m.
pacific time will be wired the next business
day.
- ----------------------------------- --------------------------------------------
[INSERT GRAPHIC OF TWO ARROWS Obtain a current prospectus for the fund you
POINTING IN OPPOSITE DIRECTIONS] are considering.
Call Shareholder Services at the number below
or send signed written instructions. See
BY EXCHANGE the policies above for selling shares by
mail or phone.
If you hold share certificates, you will
need to return them to the fund before your
exchange can be processed.
- ----------------------------------- -------------------------------------------
</TABLE>
Franklin Templeton Investor Services P.O. Box 33030,
St. Petersburg, FL 33733-8030
Call toll-free: 1-800/632-2301
(Monday through Friday 5:30 a.m. to 5:00 p.m., pacific time
Saturday 6:30 a.m. to 2:30 p.m., pacific time)
ACCOUNT POLICIES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF PAPER AND PEN]
CALCULATING SHARE PRICE Each fund calculates the net asset value per share (NAV)
each business day at the close of trading on the New York Stock Exchange
(normally 1:00 p.m. pacific time). The NAV for Advisor Class is calculated by
dividing its net assets by the number of its shares outstanding.
The funds' assets are generally valued at their market value. If market prices
are unavailable, or if an event occurs after the close of the trading market
that materially affects the values, assets may be valued at their fair value. If
a fund holds securities listed primarily on a foreign exchange that trades on
days when the fund is not open for business, the value of your shares may change
on days that you cannot buy or sell shares.
Requests to buy and sell shares are processed at the NAV next calculated after
we receive your request in proper form.
ACCOUNTS WITH LOW BALANCES If the value of your account falls below $250 ($50
for employee accounts) because you sell some of your shares, we may mail you a
notice asking you to bring the account back up to its applicable minimum
investment amount. If you choose not to do so within 30 days, we may close your
account and mail the proceeds to the address of record.
STATEMENTS AND REPORTS You will receive confirmations and account statements
that show your account transactions. You also will receive the funds' financial
reports every six months. To reduce fund expenses, we try to identify related
shareholders in a household and send only one copy of the financial reports. If
you need additional copies, please call 1-800/DIAL BEN.
If there is a dealer or other investment representative of record on your
account, he or she also will receive confirmations, account statements and other
information about your account directly from the fund.
STREET OR NOMINEE ACCOUNTS You may transfer your shares from the street or
nominee name account of one dealer to another, as long as both dealers have an
agreement with Franklin Templeton Distributors, Inc. We will process the
transfer after we receive authorization in proper form from your delivering
securities dealer.
JOINT ACCOUNTS Unless you specify a different registration, accounts with two or
more owners are registered as "joint tenants with rights of survivorship" (shown
as "Jt Ten" on your account statement). To make any ownership changes to a joint
account, all owners must agree in writing, regardless of the law in your state.
MARKET TIMERS The funds may restrict or refuse exchanges by market timers. If
accepted, each exchange by a market timer will be charged $5 by
Franklin/Templeton Investor Services, Inc., the funds' transfer agent. You will
be considered a market timer if you have (i) requested an exchange out of a fund
within two weeks of an earlier exchange request, or (ii) exchanged shares out of
a fund more than twice in a calendar quarter, or (iii) exchanged shares equal to
at least $5 million, or more than 1% of the funds' net assets, or (iv) otherwise
seem to follow a timing pattern. Shares under common ownership or control are
combined for these limits.
ADDITIONAL POLICIES Please note that the funds maintain additional policies and
reserve certain rights, including:
o The funds may refuse any order to buy shares, including any purchase
under the exchange privilege.
o At any time, the funds may change their investment minimums or waive or
lower their minimums for certain purchases.
o The funds may modify or discontinue the exchange privilege on 60 days'
notice.
o You may only buy shares of a fund eligible for sale in your state or
jurisdiction.
o In unusual circumstances, we may temporarily suspend redemptions, or
postpone the payment of proceeds, as allowed by federal securities laws.
o For redemptions over a certain amount, each fund reserves the right to
make payments in securities or other assets of the fund, in the case
of an emergency or if the payment by check or wire would be harmful to
existing shareholders.
o To permit investors to obtain the current price, dealers are responsible
for transmitting all orders to the fund promptly.
DEALER COMPENSATION Qualifying dealers who sell Advisor Class shares may receive
up to 0.25% of the amount invested. This amount is paid by Franklin Templeton
Distributors, Inc. from its own resources.
QUESTIONS
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF QUESTION MARK]
If you have any questions about the funds or your account, you can write to us
at P.O. Box 33030, St. Petersburg, FL 33733-8030. You can also call us at one of
the following numbers. For your protection and to help ensure we provide you
with quality service, all calls may be monitored or recorded.
<TABLE>
<CAPTION>
HOURS (PACIFIC TIME, MONDAY
DEPARTMENT NAME TELEPHONE NUMBER THROUGH FRIDAY)
- ------------------------------------- ---------------------------- ----------------------------------
<S> <C> <C>
Shareholder Services 1-800/632-2301 5:30 a.m. to 5:00 p.m.
6:30 a.m. to 2:30 p.m. (Saturday)
Fund Information 1-800/DIAL BEN 5:30 a.m. to 8:00 p.m.
(1-800/342-5236) 6:30 a.m. to 2:30 p.m. (Saturday)
Retirement Plan Services 1-800/527-2020 5:30 a.m. to 5:00 p.m.
Dealer Services 1-800/524-4040 5:30 a.m. to 5:00 p.m.
Institutional Services 1-800/321-8563 6:00 a.m. to 5:00 p.m.
TDD (hearing impaired) 1-800/851-0637 5:30 a.m. to 5:00 p.m.
</TABLE>
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FRANKLIN TEMPLETON 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, sales 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 Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton International 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
GLOBAL INCOME
Franklin Global Government Income Fund
Franklin Templeton Global Currency Fund
Franklin Templeton Hard Currency Fund
GROWTH
Franklin Aggressive Growth Fund
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 Large Cap Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap Growth Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet
Investment Fund/1/
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund/1/
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FUND ALLOCATOR SERIES
Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
INCOME
Franklin Adjustable U.S. Government Securities Fund
Franklin's AGE High Income Fund
Franklin Bond Fund
Franklin Floating Rate Trust
Franklin Short-Intermediate U.S. Government Securities Fund
Franklin Strategic Income Fund
Franklin U.S. Government Securities Fund
Franklin Federal Money Fund/2/
Franklin Money Fund/2/
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/2/
STATE-SPECIFIC TAX-FREE INCOME
Alabama
Arizona/3/
California/3/
Colorado
Connecticut
Florida/3/
Georgia
Kentucky
Louisiana
Maryland
Massachusetts/4/
Michigan/4/
Minnesota/4/
Missouri
New Jersey
New York/3/
North Carolina
Ohio/4/
Oregon
Pennsylvania
Tennessee/5/
Texas
Virginia
VARIABLE ANNUITIES/6/
Franklin(R) Valuemark(R)
Franklin Templeton Valuemark Income Plus (an immediate
annuity)
1. These funds are now closed to new accounts, with the exception of retirement
plan accounts.
2. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
3. Two or more fund options available: long-term portfolio; portfolio of insured
securities; high yield portfolio (CA); intermediate-term and money market
portfolios (CA and NY).
4. Portfolio of insured municipal securities.
5. The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
6. 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. Franklin Templeton Variable Insurance Products
Trust, formerly Franklin Valuemark Funds, is managed by Franklin Advisers, Inc.
and its Templeton and Franklin affiliates.
07/99
FOR MORE INFORMATION
You can learn more about each fund in the following documents:
ANNUAL/SEMIANNUAL REPORTS TO SHAREHOLDERS
Includes a discussion of recent market conditions and fund strategies, financial
statements, detailed performance information, portfolio holdings, and the
auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI) Contains more information about each
fund, its investments and policies. It is incorporated by reference (is legally
a part of this prospectus).
For a free copy of the current annual/semiannual reports or the SAI, please
contact your investment representative or call us at the number below.
FRANKLIN(R)TEMPLETON(R)
1-800/DIAL BEN(R) (1-800/342-5236)
TDD (Hearing Impaired) 1-800/851-0637
www.franklin-templeton.com
You can also obtain information about each fund by visiting the SEC's Public
Reference Room in Washington, D.C. (phone 1-800/SEC-0330) or by sending your
request and a duplicating fee to the SEC's Public Reference Section, Washington,
D.C. 20549-6009. You can also visit the SEC's Internet site at
http://www.sec.gov.
Investment Company Act file #811-8226 TLGIT PA 08/99
