Prospectus
Templeton Americas Government Securities Fund
INVESTMENT STRATEGY GLOBAL INCOME
AUGUST 1, 1999
[INSERT 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 FUND
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[BEGIN CALLOUT]
INFORMATION ABOUT THE FUND YOU SHOULD KNOW BEFORE INVESTING
[END CALLOUT]
2 Goal and Strategies
6 Main Risks
11 Performance
12 Fees and Expenses
13 Management
15 Distributions and Taxes
17 Financial Highlights
YOUR ACCOUNT
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[BEGIN CALLOUT]
INFORMATION ABOUT SALES CHARGES, ACCOUNT TRANSACTIONS AND SERVICES
[END CALLOUT]
18 Sales Charges
20 Buying Shares
22 Investor Services
25 Selling Shares
27 Account Policies
30 Questions
FOR MORE INFORMATION
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[BEGIN CALLOUT]
WHERE TO LEARN MORE ABOUT THE FUND
[END CALLOUT]
Back Cover
THE FUND
GOAL AND STRATEGIES
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GOAL The fund's principal investment goal is to provide a high level of current
income. Its secondary goal is total return.
PRINCIPAL INVESTMENTS Under normal market conditions, the fund will invest at
least 65% of its total assets in debt securities issued or guaranteed by
government entities of Western Hemisphere countries (located in North, South and
Central America and the surrounding waters). For purposes of the fund's
investments, "government entities" include governments, their agencies and
instrumentalities; government-owned, controlled or sponsored entities (including
central banks located in the Western Hemisphere); and entities organized and
operated for the purpose of restructuring the investment characteristics of
securities issued by any of the entities previously mentioned. Up to 35% of the
fund's total assets may be invested in securities issued by corporations and
financial institutions located in the Western Hemisphere.
[BEGIN CALLOUT]
The fund invests primarily in debt securities issued or guaranteed by government
entities of Western Hemisphere countries.
[END CALLOUT]
The fund's manager will allocate assets based upon its assessment of changing
market, political and economic conditions. The manager will consider various
factors, including its evaluation of interest and currency exchange rate changes
and credit risks.
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 buy both rated and unrated debt securities.
It may invest up to 100% of its total assets in debt securities that are rated
below investment grade. Investment grade securities are rated in one of the top
four ratings categories by independent rating organizations such as Standard &
Poor's Corporation and Moody's Investors Services, Inc. or if unrated,
determined by the fund's manager to be comparable.
INDEXED OR CURRENCY-LINKED SECURITIES. In selecting debt securities, the fund
may include obligations that have been indexed to foreign currency exchange
rates. Indexed obligations generally provide that at maturity the principal
amount is adjusted up or down (but not below zero) to reflect fluctuations in
the exchange rate between two currencies during the period the obligation was
outstanding. In selecting the two currencies, the manager will consider the
correlation, relative yields of various currencies and other factors.
Investments in indexed securities are subject to the risk of loss in the event
that exchange rate movements are not accurately predicted.
BRADY BONDS. The fund may invest in certain debt securities referred to as
"Brady Bonds." These are publicly issued 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, Costa Rica, the Dominican
Republic, Ecuador, Mexico, Panama, Peru, Uruguay and Venezuela.
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.
OTHER DEBT SECURITIES OF GOVERNMENT ENTITIES. The fund may invest in
restructured external debt that has not undergone a Brady-style debt exchange,
and internal government debt such as Mexican Treasury Bills known as
Certificados de Tesoreria ("CETES"), Argentine Bonos del Tesors ("BOTE") and
Bonos de Inversion y Crecimiento-Quinta Serie ("BIC V"), and Venezuelan zero
coupon notes.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The fund may invest without limit
in mortgage-backed securities issued or guaranteed by government entities. It
may invest up to 35% of its total assets in privately issued mortgage-backed and
asset-backed securities.
Mortgage-backed securities represent an ownership interest in mortgage loans
made by banks and other financial institutions to finance purchases of homes,
commercial buildings or other real estate. These mortgage loans may have either
fixed or adjustable interest rates. The individual mortgage loans are packaged
or "pooled" together for sale to investors. As the underlying mortgage loans are
paid off, investors receive principal and interest payments.
The fund will focus on mortgage-backed securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities. The payment of interest and
principal on securities issued by U.S. government agencies generally is
guaranteed either by the full faith and credit of the U.S. government or by the
credit of the agency. The guarantee applies only to the timely repayment of
principal and interest and not to the market prices and yields of the securities
or to the net asset value or performance of the fund, which will vary with
changes in interest rates and other market conditions. The fund may also invest
in collateralized mortgage obligations.
ASSET-BACKED SECURITIES are securities backed by credit card receivables,
automobile, mobile home and recreational vehicle loans and leases, and other
receivables.
DERIVATIVE MORTGAGE-BACKED SECURITIES. The fund may invest up to 25% of its
total assets in these securities consisting primarily (but not exclusively) of
stripped mortgage-backed securities. A stripped mortgage-backed security is
usually structured with two classes, each receiving different proportions of the
interest and principal payments on a pool of mortgage assets. Typically, one
class will receive some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the interest- only or "IO" class), while the other class will
receive all of the principal (the principal-only or "PO" class). The fund may
combine IOs with LIBOR-based inverse floaters (LIBOR being the London interbank
offered rate). These are floating rate instruments with floating or variable
interest rates that move in the opposite direction, usually at an accelerated
speed, to changes in LIBOR.
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 goals, because it may not invest or may
invest substantially less in debt securities issued or guaranteed by government
entities of Western Hemisphere countries.
MAIN RISKS
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INTEREST RATE When interest rates rise, debt security prices fall. The opposite
is also true: debt security prices rise when interest rates fall. In general,
securities with longer maturities are more sensitive to these price changes.
[BEGIN CALLOUT]
Changes in global interest rates affect the prices of the fund's debt
securities. If rates rise, the value of the fund's debt securities will fall and
so too will the fund's share price and fund performance. This means you could
lose money.
[END CALLOUT]
CREDIT There is the possibility that an issuer will be unable to make interest
payments and repay principal. Changes in an issuer's financial strength or in a
security's credit rating may affect a security's value and, thus, impact fund
performance.
LOWER-RATED SECURITIES. Securities rated below investment grade, sometimes
called "junk bonds" generally have more credit risk than higher-rated
securities.
Companies issuing high yield fixed-income securities are not as strong
financially as those issuing securities with higher credit ratings. These
companies are more likely to encounter financial difficulties and are more
vulnerable to changes in the economy, such as a recession or a sustained period
of rising interest rates, that could affect their ability to make interest and
principal payments.
If an issuer stops making interest and/or principal payments, payments on the
securities may never resume. These securities may be worthless and the fund
could lose its entire investment.
The prices of high yield fixed-income securities fluctuate more than
higher-quality securities. Prices are especially sensitive to developments
affecting the company's business and to changes in the ratings assigned by
ratings agencies. Prices often are closely linked with the company's stock
prices and typically rise and fall in response to factors that affect stock
prices. In addition, the entire high yield securities market can experience
sudden and sharp price swings due to changes in economic conditions, stock
market activity, large sustained sales by major investors, a high-profile
default, or other factors.
High yield securities generally are less liquid than higher-quality securities.
Many of these securities do not trade frequently, and when they do their prices
may be significantly higher or lower than expected. At times, it may be
difficult to sell these securities promptly at an acceptable price, which may
limit the fund's ability to sell securities in response to specific economic
events or to meet redemption requests.
MORTGAGE SECURITIES AND ASSET-BACKED SECURITIES Mortgage securities differ from
conventional debt securities because principal is paid back over the life of the
security rather than at maturity. The fund may receive unscheduled prepayments
of principal before the security's maturity date due to voluntary prepayments,
refinancing or foreclosure on the underlying mortgage loans. To the fund this
means a loss of anticipated interest, and a portion of its principal investment
represented by any premium the fund may have paid. Mortgage prepayments
generally increase when interest rates fall.
Mortgage securities also are subject to extension risk. An unexpected rise in
interest rates could reduce the rate of prepayments on mortgage securities and
extend their life. This could cause the price of the mortgage securities and the
fund's share price to fall and would make the mortgage securities more sensitive
to interest rate changes.
Issuers of asset-backed securities may have limited ability to enforce the
security interest in the underlying assets, and credit enhancements provided to
support the securities, if any, may be inadequate to protect investors in the
event of default. Like mortgage securities, asset-backed securities are subject
to prepayment and extension risks.
FOREIGN SECURITIES Securities of companies and governments located outside the
U.S. may involve risks that can increase the potential for losses in the fund.
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.
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 systems of share registration and
custody
o Markets that are comparatively smaller and less liquid than
developed markets. While short-term volatility in these markets
can be disconcerting, declines of more than 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.
o Currency and capital controls
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.
SOVEREIGN DEBT. The debt securities issued or guaranteed by Latin American
governmental entities involve great risk and are considered to be of comparable
quality to high risk, low rated securities and are subject to many of the same
risks as those securities.
Developing market countries, including those in Latin America, are among the
world's largest debtors to commercial banks, other governments, international
financial organizations and other financial institutions. In the past, they
experienced major difficulties in servicing their external debt obligations,
which led to defaults on certain obligations and the restructuring of certain
debt. Many of the same factors that led to the defaults of the past currently
exist. If a default occurs, the fund may have limited legal recourse against the
issuer and guarantor.
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.
ILLIQUID SECURITIES The fund may invest up to 15% of its assets in illiquid
securities. The fund may have difficulty disposing of some securities because
there may be a thin trading market for a particular security at any given time.
Reduced liquidity may have an adverse impact on market price and the fund's
ability to sell particular securities when necessary to meet the fund's
liquidity needs or in response to a specific economic event, such as the
deterioration in the creditworthiness of an issuer. Reduced liquidity in the
secondary market for certain securities also may make it more difficult for the
fund to obtain market quotations based on actual trades for the purpose of
valuing the fund's portfolio.
DIVERSIFICATION The fund is a non-diversified fund. It may invest a greater
portion of its assets in the securities of one issuer than a diversified fund.
The fund may be more sensitive to economic, business, political or other changes
affecting similar issuers or securities, which may result in greater fluctuation
in the value of the fund's shares. The fund, however, intends to meet certain
tax diversification requirements.
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 issuers
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 an issuer 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
13 for more information.
More detailed information about the fund, its policies (including temporary
investments), risks and bond ratings 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
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[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 4 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.
ANNUAL TOTAL RETURNS/1/
[Insert bar graph]
14.17% 15.13% 10.13% 1.02%
95 96 97 98
YEAR
[BEGIN CALLOUT]
Best
Quarter:
Q4 '98
7.66%
Worst
Quarter:
Q3 '98
- -8.08%
[END CALLOUT]
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1998
SINCE
INCEPTION
1 YEAR (6/27/94)
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Templeton Americas Government Securities Fund/2/ -3.27% 7.69%
JP Morgan U.S. Government Bond Index/3/ 10.25% 9.02%
1. Figures do not reflect sales charges. If they did, returns would be lower. As
of June 30, 1999, the fund's year-to-date return was 2.62%.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal. The JP Morgan U.S. Government Bond
Index includes only actively traded fixed-rate bonds with a remaining maturity
of one year or longer. The index measures the total, principal and interest
returns for the U.S. market in U.S. dollars. One cannot invest directly in an
index, nor is an index representative of the fund's portfolio.
FEES AND EXPENSES
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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)
Maximum sales charge (load) as a percentage of offering price 4.25%
Load imposed on purchases 4.25%
Maximum deferred sales charge (load) None/1/
Exchange fee/2/ $5.00
Please see "Sales Charges" on page 18 for an explanation of how and when these
sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management fees/3/ 0.60%
Distribution and service (12b-1) fees/4/ 0.35%
Other expenses 0.64%
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Total annual fund operating expenses/3/ 1.59%
======
1. Except for investments of $1 million or more (see page 18) and purchases by
certain retirement plans without an initial sales charge.
2. This fee is only for market timers (see page 28).
3. For the fiscal year ended March 31, 1999, the manager and administrator had
agreed in advance to limit their respective fees and to assume as their own
expense certain expenses otherwise payable by the fund. With this reduction,
management fees were 0.26% and total annual fund operating expenses were 1.25%.
After July 31, 2000, the manager and administrator may end this arrangement at
any time.
4. Because of the distribution and service (12b-1) fees, over the long term you
may indirectly pay more than the equivalent of the maximum permitted initial
sales charge.
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
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$580/1/ $906 $1,254 $2,234
1. Assumes a contingent deferred sales charge (CDSC) will not apply.
MANAGEMENT
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Templeton Investment Counsel, Inc. (Investment Counsel), 500 East Broward Blvd.,
Ft. Lauderdale, FL 33394, through its Templeton Global Bond Managers division
(Global Bond Managers), is the fund's investment manager. Together, Investment
Counsel and its affiliates manage over $223 billion in assets.
A team from Global Bond Managers is responsible for the day-to-day management of
the fund.
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 0.60% of the fund's average daily net
assets. Under an agreement by the manager to limit its fees, the fund paid 0.26%
of its average daily net assets to the manager. After July 31, 2000, the manager
may end this arrangement at any time upon notice to the fund's Board of
Trustees.
YEAR 2000 PROBLEM The 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, the 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, the 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. The 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.
The 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, the 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.
DISTRIBUTIONS AND TAXES
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[INSERT GRAPHIC OF DOLLAR SIGNS AND STACKS OF COINS]
INCOME AND CAPITAL GAINS DISTRIBUTIONS The fund intends to pay a dividend at
least monthly, on the last business day of the month, representing its net
investment income. Capital gains, if any, may be distributed annually. The
amount of these distribution will vary and there is no guarantee the fund will
pay dividends.
To receive a distribution, you must be a shareholder on the record date. The
record dates for the fund's distributions will vary. Please keep in mind that if
you invest in the 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 fund's 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 the 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, the 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 the 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 the 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 the fund.
FINANCIAL HIGHLIGHTS
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[INSERT GRAPHIC OF A DOLLAR BILL]
This table presents the fund's financial performance for the past five years.
This information has been audited by McGladrey & Pullen, LLP.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
- -----------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995/1/
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA ($)
Net asset value, beginning of year 10.68 10.64 10.20 9.59 10.00
----------------------------------------------------------
Net investment income .74 .73 .74 .75 .30
Net realized and unrealized gains (losses) (1.03) .68 .85 .71 (.43)
----------------------- ----------------------------------
Total from investment operations (.29) 1.41 1.59 1.46 (.13)
----------------------------------------------------------
Dividends from net investment income (.74) (.72) (.77) (.69) (.28)
Distributions from net realized gains (.05) (.65) (.38) (.16) -
-------------- ------------ ------------ -----------------
Total distributions (.79) (1.37) (1.15) (.85) (.28)
----------------------------------------------------------
Net asset value, end of year 9.60 10.68 10.64 10.20 9.59
===========================================================
Total return (%)/2/ (2.54) 14.21 16.23 15.49 (1.33)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 22,269 14,973 5,627 3,540 2,826
Ratios to average net assets: (%)
Expenses 1.25% 1.25% 1.25% 1.25% 1.25%/3/
Expenses excluding waiver and
payments by affiliate 1.59 1.89 2.79 4.98 6.49/3/
Net investment income 7.70 7.11 7.16 7.47 5.07/3/
Portfolio turnover rate (%) 56.32 70.79 275.02 163.57 -
</TABLE>
1. For the period June 27, 1994 (commencement of operations) to March 31, 1995.
2. Total return does not include sales charges, and is not annualized.
3. Annualized.
YOUR ACCOUNT
SALES CHARGES
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[INSERT GRAPHIC OF PERCENTAGE SIGN]
<TABLE>
<CAPTION>
THE SALES CHARGE
MAKES UP THIS % OF WHICH EQUALS THIS % OF
WHEN YOU INVEST THIS AMOUNT THE OFFERING PRICE YOUR NET INVESTMENT
- ---------------------------------------------------------------------------------
<S> <C> <C>
Under $100,000 4.25 4.44
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 2.50 2.56
$500,000 but under $1 million 2.00 2.04
</TABLE>
INVESTMENTS OF $1 MILLION OR MORE If you invest $1 million or more, either as a
lump sum or through our cumulative quantity discount or letter of intent
programs (see page 19), you can buy shares without an initial sales charge.
However, there is a 1% contingent deferred sales charge (CDSC) on any shares you
sell within 12 months of purchase.
The CDSC is based on the current value of the shares being sold or their net
asset value when purchased, whichever is less. There is no CDSC on shares you
acquire by reinvesting your dividends or capital gains distributions.
[BEGIN CALLOUT]
The HOLDING PERIOD FOR THE CDSC begins on the day you buy your shares. Your
shares will age one month on that same date the next month and each following
month.
For example, if you buy shares on the 18th of the month, they will age one month
on the 18th day of the next month and each following month.
[END CALLOUT]
To keep your CDSC as low as possible, each time you place a request to sell
shares we will first sell any shares in your account that are not subject to a
CDSC. If there are not enough of these to meet your request, we will sell the
shares in the order they were purchased. We will use this same method if you
exchange your shares into another Franklin Templeton Fund (please see page 23
for exchange information).
DISTRIBUTION AND SERVICE (12B-1) FEES The fund has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the fund to pay distribution
fees of up to 0.35% per year to those who sell and distribute the fund's shares
and provide other services to shareholders. Because these fees are paid out of
the fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.
SALES CHARGE REDUCTIONS AND WAIVERS
If you qualify for any of the sales charge reductions or waivers below, please
let us know at the time you make your investment to help ensure you receive the
lower sales charge.
QUANTITY DISCOUNTS We offer several ways for you to combine your purchases in
the Franklin Templeton Funds to take advantage of the lower sales charges for
large purchases of fund shares.
[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 CUMULATIVE QUANTITY DISCOUNT - lets you combine all of your shares
in the Franklin Templeton Funds for purposes of calculating the
sales charge. You also may combine the shares of your spouse, and
your children or grandchildren, if they are under the age of 21.
Certain company and retirement plan accounts also may be
included.
o LETTER OF INTENT (LOI) - expresses your intent to buy a stated
dollar amount of shares over a 13-month period and lets you
receive the same sales charge as if all shares had been purchased
at one time. We will reserve a portion of your shares to cover
any additional sales charge that may apply if you do not buy the
amount stated in your LOI.
TO SIGN UP FOR THESE PROGRAMS, COMPLETE THE APPROPRIATE
SECTION OF YOUR ACCOUNT APPLICATION.
REINSTATEMENT PRIVILEGE If you sell shares of a Franklin Templeton Fund, you may
reinvest some or all of the proceeds within 365 days without an initial sales
charge. The proceeds must be reinvested within the same share class, except
proceeds from the sale of Class B shares will be reinvested in Class A shares.
Certain Franklin Templeton Funds offer multiple share classes not offered by
this fund. For purposes of this privilege, the fund's shares are considered
Class A shares.
If you paid a CDSC when you sold your Class A shares, we will credit your
account with the amount of the CDSC paid but a new CDSC will apply. For Class B
shares reinvested in Class A, a new CDSC will not apply, although your account
will not be credited with the amount of any CDSC paid when you sold your Class B
shares.
Proceeds immediately placed in a Franklin Bank Certificate of Deposit (CD) also
may be reinvested without an initial sales charge if you reinvest them within
365 days from the date the CD matures, including any rollover.
This privilege does not apply to shares you buy and sell under our exchange
program. Shares purchased with the proceeds from a money fund may be subject to
a sales charge.
SALES CHARGE WAIVERS Fund shares may be purchased without an initial sales
charge or CDSC by various individuals, institutions and retirement plans or by
investors who reinvest certain distributions and proceeds within 365 days. The
CDSC also may be waived for certain redemptions and distributions. If you would
like information about available sales charge waivers, call your investment
representative or call Shareholder Services at 1-800/632-2301. For information
about retirement plans, you may call Retirement Plan Services at 1-800/527-2020.
A list of available sales charge waivers also may be found in the Statement of
Additional Information (SAI).
GROUP INVESTMENT PROGRAM Allows established groups of 11 or more investors to
invest as a group. For sales charge purposes, the group's investments are added
together. There are certain other requirements and the group must have a purpose
other than buying fund shares at a discount.
BUYING SHARES
- -------------------------------------------------------------------------------
[INSERT GRAPHIC OF A PAPER WITH LINES AND SOMEONE WRITING]
The fund is closed to new investors. If you were a shareholder of record as of
the close of business on June 8, 1999, you may continue to add to your account,
subject to your applicable minimum investment amount, or buy additional shares
through the reinvestment of dividend or capital gain distributions.
MINIMUM INVESTMENTS
<TABLE>
<CAPTION>
MINIMUM INVESTMENTS
- -------------------------------------------------------------------------------
ADDITIONAL
- -------------------------------------------------------------------------------
<S> <C>
Regular accounts $50
- -------------------------------------------------------------------------------
UGMA/UTMA accounts $50
- -------------------------------------------------------------------------------
Retirement accounts (other than IRAs, IRA
rollovers, Education IRAs or Roth IRAs) no minimum
- -------------------------------------------------------------------------------
IRAs, IRA rollovers, Education IRAs or
Roth IRAs $50
- -------------------------------------------------------------------------------
Broker-dealer sponsored wrap account programs $50
- -------------------------------------------------------------------------------
Full-time employees, officers, trustees
and directors of Franklin Templeton
entities, and their immediate family members $50
- -------------------------------------------------------------------------------
</TABLE>
Certain Franklin Templeton Funds offer multiple share classes not offered by
this fund. Please note that for selling or exchanging your shares, or for other
purposes, the fund's shares are considered Class A shares. Before January 1,
1999, the fund's shares were considered Class I shares.
BUYING SHARES
- ------------------------------------ ------------------------------------------
ADDING TO AN ACCOUNT
- ------------------------------------ ------------------------------------------
[INSERT GRAPHIC OF HANDS SHAKING]
THROUGH YOUR INVESTMENT Contact your investment representative
REPRESENTATIVE
- ------------------------------------ ------------------------------------------
Make your check payable to the Templeton
[INSERT GRAPHIC OF ENVELOPE] Americas Government Securities Fund.
Include your account number on the check.
BY MAIL
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
Investor Services.
- ------------------------------------ ------------------------------------------
[INSERT GRAPHIC OF THREE LIGHTNING Call to receive a wire control number and
BOLTS] wire instructions.
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.
BY WIRE
1-800/632-2301
(or 1-650/312-2000 collect)
- ------------------------------------ ------------------------------------------
[INSERT GRAPHIC OF TWO ARROWS Call Shareholder Services at the number
POINTING IN OPPOSITE DIRECTIONS] below orour automated TeleFACTS system, or
send signed written instructions.
BY EXCHANGE
(Please see page 23 for information on
exchanges.)
TeleFACTS(R)
1-800/247-1753
(around-the-clock access)
- ------------------------------------ -----------------------------------------
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 PERSON WITH A HEADSET]
AUTOMATIC INVESTMENT PLAN This plan offers a convenient way for you to invest in
the 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 the fund in
an existing account in the same share class of the fund or another Franklin
Templeton Fund. Initial sales charges and 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.
Please indicate on your application the distribution option you have chosen,
otherwise we will reinvest your distributions in the fund.
[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]
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 fund 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*, generally without paying any additional sales charges.
If you exchange shares held for less than six months, however, you may be
charged the difference between the initial sales charge of the two funds if the
difference is more than 0.25%. If you exchange shares from a money fund, a sales
charge may apply no matter how long you have held the shares.
*Certain Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange
into the fund without any sales charge. Advisor Class shareholders of another
Franklin Templeton Fund also may exchange into the fund without any sales
charge. Advisor Class shareholders who exchange their shares for shares of the
fund and later decide they would like to exchange into another fund that offers
Advisor Class may do so.
[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]
Generally exchanges may only be made between identically registered accounts,
unless you send written instructions with a signature guarantee. Any CDSC will
continue to be calculated from the date of your initial investment and will not
be charged at the time of the exchange. The purchase price for determining a
CDSC on exchanged shares will be the price you paid for the original shares. If
you exchange shares subject to a CDSC into a Class A money fund, the time your
shares are held in the money fund will not count towards the CDSC holding
period.
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
28).
SYSTEMATIC WITHDRAWAL PLAN This plan allows you to automatically sell your
shares and receive regular payments from your account. A CDSC may apply to
withdrawals that exceed certain amounts. 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. Please keep in mind that if you sell all
the shares in your account, your account will be closed and you will not be able
to buy additional fund shares or to reopen your account.
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 fund 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 fund
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.
SELLING SHARES
- ----------------------------------- -------------------------------------------
TO SELL SOME OR ALL OF YOUR SHARES
- ----------------------------------- -------------------------------------------
[INSERT GRAPHIC OF HANDS SHAKING]
THROUGH YOUR INVESTMENT Contact your investment representative
REPRESENTATIVE
- ----------------------------------- -------------------------------------------
[INSERT GRAPHIC OF ENVELOPE] Send written instructions and endorsed
shares certificates (if you hold share
certificates) to Investor Services.
Corporate, partnership or trust accounts
may need to send additional documents.
BY MAIL
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 more wired 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
POINTING IN OPPOSITE DIRECTIONS] you are considering.
Call Shareholder Services at the number
BY EXCHANGE below or our automated TeleFACTS system,
or send signed written instructions. See
the policies above for selling shares by
mail or phone.
TeleFACTS(R) 1-800/247-1753
(around-the-clock access) If you hold share certificates, you will
need to return them to the fund before your
exchange can be processed.
- ----------------------------------- -------------------------------------------
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 The 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 fund's NAV is calculated by dividing its
net assets by the number of its shares outstanding.
[BEGIN CALLOUT]
When you buy shares, you pay the offering price. The offering price is the NAV
plus any applicable sales charge.
When you sell shares, you receive the NAV minus any applicable contingent
deferred sales charge (CDSC).
[END CALLOUT]
The fund's 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
the 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 and UGMA/UTMA 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. You will not
be charged a CDSC if your account is closed for this reason.
STATEMENTS AND REPORTS You will receive confirmations and account statements
that show your account transactions. You also will receive the fund's 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 fund 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 fund's transfer agent. You will
be considered a market timer if you have (i) requested an exchange out of the
fund within two weeks of an earlier exchange request, or (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, 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 fund maintains additional policies and
reserves certain rights, including:
o The fund may refuse any order to buy shares, including any purchase under
the exchange privilege.
o At any time, the fund may change its investment minimums or waive or
lower its minimums for certain purchases.
o The fund 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, the 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 fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
- -------------------------------------------------------------------------------
COMMISSION (%) --
Investment under $100,000 4.00
$100,000 but under $250,000 3.25
$250,000 but under $500,000 2.25
$500,000 but under $1 million 1.85
$1 million or more up to 0.75/1/
12B-1 FEE TO DEALER 0.35
A dealer commission of up to 1% may be paid on NAV purchases by certain
retirement plans/1/ and up to 0.25% on NAV purchases by certain trust companies
and bank trust departments, eligible governmental authorities, and
broker-dealers or others on behalf of clients participating in comprehensive fee
programs. For certain retirement plans that do not qualify to buy shares at NAV
but that qualify to buy shares with a maximum initial sales charge of 4%, a
dealer commission of 3.2% may be paid.
1. During the first year after purchase, dealers may not be eligible to receive
the 12b-1 fee.
QUESTIONS
- -------------------------------------------------------------------------------
[Insert graphic of question mark]
If you have any questions about the fund 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,
DEPARTMENT NAME TELEPHONE NUMBER MONDAY 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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This page intentionally left blank.
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 the fund in the following documents:
ANNUAL/SEMIANNUAL REPORT 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 the 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 report 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 the 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 416 P 08/99
