497 1 gofstkp7.txt GOF STKP-7 SUPPLEMENT DATED JANUARY 1, 2003 TO THE CURRENTLY EFFECTIVE PROSPECTUSES OF EACH OF THE LISTED FUNDS FRANKLIN CAPITAL GROWTH FUND FRANKLIN CUSTODIAN FUNDS, INC. DynaTech Series Growth Series Income Series Utilities Series U.S. Government Securities Series FRANKLIN FEDERAL MONEY FUND FRANKLIN FLOATING RATE TRUST FRANKLIN GLOBAL TRUST Franklin Global Aggressive Growth Fund Franklin Global Growth Fund FRANKLIN GOLD AND PRECIOUS METALS FUND FRANKLIN HIGH INCOME TRUST Franklin's AGE High Income Fund FRANKLIN INVESTORS SECURITIES TRUST Franklin Adjustable U.S. Government Securities Fund Franklin Convertible Securities Fund Franklin Equity Income Fund Franklin Floating Rate Daily Access Fund Franklin Short-Intermediate U.S. Government Securities Fund Franklin Total Return Fund FRANKLIN MANAGED TRUST Franklin Rising Dividends Fund FRANKLIN MONEY FUND FRANKLIN MUTUAL SERIES FUND INC. Mutual Beacon Fund Mutual Discovery Fund Mutual European Fund Mutual Financial Services Fund Mutual Qualified Fund Mutual Shares Fund FRANKLIN REAL ESTATE SECURITIES TRUST Franklin Real Estate Securities Fund FRANKLIN STRATEGIC MORTGAGE PORTFOLIO FRANKLIN STRATEGIC SERIES Franklin Aggressive Growth Fund Franklin Biotechnology Discovery Fund Franklin Blue Chip Fund Franklin Flex Cap Growth Fund Franklin Global Communications Fund Franklin Global Health Care Fund Franklin Large Cap Growth Fund Franklin Natural Resources Fund Franklin Small-Mid Cap Growth Fund Franklin Small Cap Growth Fund II Franklin Strategic Income Fund Franklin Technology Fund Franklin U.S. Long-Short Fund FRANKLIN TEMPLETON FUND ALLOCATOR SERIES Franklin Templeton Conservative Target Fund Franklin Templeton Moderate Target Fund Franklin Templeton Growth Target Fund FRANKLIN TEMPLETON GLOBAL TRUST Franklin Templeton Hard Currency Fund FRANKLIN TEMPLETON INTERNATIONAL TRUST Templeton Foreign Smaller Companies Fund Templeton Global Long-Short Fund Templeton Pacific Growth Fund FRANKLIN TEMPLETON MONEY FUND TRUST Franklin Templeton Money Fund FRANKLIN VALUE INVESTORS TRUST Franklin Balance Sheet Investment Fund Franklin Large Cap Value Fund Franklin MicroCap Value Fund Franklin Small Cap Value Fund TEMPLETON DEVELOPING MARKETS TRUST TEMPLETON GLOBAL INVESTMENT TRUST Templeton International (Ex EM) Fund Templeton Latin America Fund TEMPLETON GLOBAL OPPORTUNITIES TRUST The prospectus is amended as follows: I. YOUR ACCOUNT - SALES CHARGES - CLASS B - RETIREMENT PLANS FOR ALL FUNDS THAT OFFER CLASS B SHARES. "Retirement Plans" under "Your Account - Sales Charges - Class B" is replaced with the following: RETIREMENT PLANS Class B shares are available to retirement plans for which Franklin Templeton Bank & Trust serves as trustee or custodian, excepting DCS Plans. A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing plan that qualifies under section 401(a) of the Internal Revenue Code, including 401(k), money purchase pension, profit sharing and defined benefit plans. An "Employer Sponsored Retirement Plan" is a Qualified Retirement Plan, ERISA covered 403(b) and certain non-qualified deferred compensation arrangements that operate in a similar manner to a Qualified Retirement Plan, such as 457 plans and executive deferred compensation arrangements, but not including employer sponsored IRAs. A "DCS Plan" is an Employer Sponsored Retirement Plan that (i) has contracted for current participant level record keeping with the Defined Contribution Services (DCS) division of Franklin Templeton Investor Services; or (ii) is receiving current DCS services by contracting with the entity identified in DCS promotional material for participant level record keeping related to those DCS services. II. YOUR ACCOUNT - SALES CHARGES - CLASS R FOR ALL FUNDS THAT OFFER CLASS R SHARES. The section "Your Account - Sales Charges - Class R" is replaced with the following: SALES CHARGES - CLASS R With Class R shares, there is no initial sales charge. RETIREMENT PLANS Class R shares are available to the following investors: o Employer Sponsored Retirement Plans that are not DCS Plans; o DCS Plans with assets less than $10 million; o Investors who open a Franklin Templeton IRA Rollover with less than $1 million other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO, or a rollover of assets from a same employer sponsored Franklin Templeton money purchase plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan; and o Any trust or plan established as part of a qualified tuition program under Section 529 of the Internal Revenue Code of 1986, as amended. A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing plan that qualifies under section 401(a) of the Internal Revenue Code, including 401(k), money purchase pension, profit sharing and defined benefit plans. An "Employer Sponsored Retirement Plan" is a Qualified Retirement Plan, ERISA covered 403(b) and certain non-qualified deferred compensation arrangements that operate in a similar manner to a Qualified Retirement Plan, such as 457 plans and executive deferred compensation arrangements, but not including employer sponsored IRAs. A "DCS Plan" is an Employer Sponsored Retirement Plan that (i) has contracted for current participant level record keeping with the Defined Contribution Services (DCS) division of Franklin Templeton Investor Services; or (ii) is receiving current DCS services by contracting with the entity identified in DCS promotional material for participant level record keeping related to those DCS services. MAXIMUM PURCHASE AMOUNT The maximum lump sum amount you may invest in Class R share IRA Rollovers is $999,999. We place any investment of $1 million or more in Class A shares since Class A's annual expenses are lower. There is no maximum purchase amount for Qualified plans. CDSC Except for Employer Sponsored Retirement Plans that (i) are DCS Plans; (ii) have contracted with a Distributor's affiliate for plan trustee services; or (iii) first purchases fund shares after January 1, 2003, there is a 1% contingent deferred sales charge (CDSC) on any Class R shares sold within 18 months of purchase. The CDSC is applied at the plan level based on initial investment for Employer Sponsored Retirement Plans. The way we calculate the CDSC is the same for each class (please see below). DISTRIBUTION AND SERVICE (12B-1) FEES Class R has a distribution plan, sometimes known as a Rule 12b-1 plan, that allows the Fund to pay distribution and other fees of up to 0.50% per year for the sale of Class R shares and for services provided to shareholders. Because these fees are paid out of Class R'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. III. Buying Shares - Minimum Investments FOR ALL FUNDS The first four items in the table under "MINIMUM INVESTMENTS" under the section "BUYING SHARES" are replaced with the following: MINIMUM INVESTMENTS ------------------------------------------------------------------------------ INITIAL ADDITIONAL ------------------------------------------------------------------------------ Regular accounts $1,000 $50 ------------------------------------------------------------------------------ Automatic investment plans $50 ($25/1 for a $50 ($25/1 for a Coverdell Education Coverdell Education Savings Plan) Savings Plan) ------------------------------------------------------------------------------ UGMA/UTMA accounts $100 $50 ------------------------------------------------------------------------------ Employer sponsored no minimum no minimum/3 retirement plans/2 ------------------------------------------------------------------------------ 1. Effective July 1, 2003, the $25 minimum investment will increase to $50. 2. Does not apply to Franklin Floating Rate Trust 3. Effective July 1, 2003, there will be a $25 minimum investment. IV. INVESTORS SERVICES - AUTOMATIC INVESTMENT PLAN FOR ALL FUNDS The last sentence under "AUTOMATIC INVESTMENT PLAN" in the "INVESTORS SERVICES" section is replaced with the following: If you are opening a new account, please include the minimum initial investment of $50 ($25/1 for a Coverdell Education Savings Plan) with your application. 1. Effective July 1, 2003, the $25 minimum investment will increase to $50. V. INVESTOR SERVICES - RETIREMENT PLANS FOR ALL FUNDS The callout is replaced with the following: ------------------------------------------------------------------------------- For retirement plans for which Franklin Templeton Bank & Trust is the trustee or custodian, special forms may be needed to receive distributions in cash. Please call 1-800/527-2020 for information. VI. INVESTOR SERVICES - DISTRIBUTION OPTIONS FOR ALL FUNDS THAT OFFER CLASS B AND/OR CLASS C AND/OR CLASS R SHARES The footnote to the section is replaced with the following: *Class B and C shareholders may reinvest their distributions in Class A shares of any Franklin Templeton money fund. DCS Plans may direct distributions to Class A shares if Class R shares are not offered by that fund. VII. INVESTOR SERVICES - EXCHANGE PRIVILEGE FOR ALL FUNDS THAT OFFER CLASS R SHARES The paragraph beginning with "For ValuSelect plans..." under "EXCHANGE PRIVILEGE" in the "INVESTOR SERVICES" section is replaced with the following: DCS Plans may exchange Class R shares for Class A shares of another Franklin Templeton fund if that fund does not offer Class R shares. VIII. DEALER COMPENSATION TABLE FOR THE FOLLOWING FUNDS: TEMPLETON GLOBAL BOND FUND, FRANKLIN'S AGE HIGH INCOME FUND, FRANKLIN TOTAL RETURN FUND, FRANKLIN STRATEGIC INCOME FUND, FRANKLIN STRATEGIC MORTGAGE PORTFOLIO, U.S. GOVERNMENT SECURITIES SERIES, INCOME SERIES, AND UTILITIES SERIES The first five items under "COMMISSION" in the "CLASS A" column of the table under the section "DEALER COMPENSATION" are replaced with the following: CLASS A ------------------------------------------------------------------------------- Commission (%) -- Investment under $100,000 4.00 $100,000 but under $250,000 2.80 $250,000 but under $500,000 2.00 $500,000 but under $1 million 1.60 IX. FOOTNOTES TO THE DEALER COMPENSATION TABLE FOR ALL FUNDS, EXCEPT FRANKLIN FEDERAL MONEY FUND, FRANKLIN MONEY FUND AND FRANKLIN TEMPLETON MONEY FUND THE FOOTNOTES TO THE DEALER COMPENSATION TABLE ARE REVISED AS FOLLOWS: A. ADD THE FOLLOWING SENTENCE TO FOOTNOTE 1: For purchases at NAV where Distributors did not pay a prepaid commission, dealers may start to receive the 12b-1 fee at the time of purchase. B. ADD THE FOLLOWING SENTENCE TO THE FOOTNOTE TO CLASS C COMMISSION: For purchases at NAV, Distributors will not pay a prepaid commission. C. ADD THE FOLLOWING SENTENCE TO THE FOOTNOTE TO CLASS C 12B-1 FEE TO DEALER: For purchases at NAV where Distributors did not pay a prepaid commission, dealers may start to receive the 12b-1 fee at the time of purchase. D. REVISE THE LAST SENTENCE TO THE FOOTNOTE TO CLASS R: Dealers may be eligible to receive the full 0.50% 12b-1 fee starting at the time of purchase if Distributors did not pay a prepaid commission. Please keep this supplement for future reference