Definitive Materials Filed by Investment Companies. (497)
June 04 2013 - 3:49PM
Edgar (US Regulatory)
GOF SA-2 06/13
SUPPLEMENT DATED JUNE
4, 2013
TO THE CURRENTLY
EFFECTIVE STATEMENT OF ADDITIONAL INFORMATION
OF
EACH OF THE LISTED
FUNDS
Franklin Custodian
Funds
Franklin Income Fund
Franklin
Investors Securities Trust
Franklin Balanced Fund
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Total Return Fund
Franklin Strategic
Series
Franklin Strategic Income Fund
Franklin Templeton
Global Trust
Franklin Templeton Hard Currency Fund
Franklin Templeton
International Trust
Franklin Templeton
Global Allocation Fund
Templeton
Developing Markets Trust
Templeton Funds
Templeton Foreign
Fund
Templeton World Fund
Templeton Global
Investment Trust
Templeton Emerging
Markets Balanced Fund
Templeton Emerging
Markets Small Cap Fund
Templeton Frontier
Markets Fund
Templeton Global
Balanced Fund
Templeton Global
Smaller Companies Fund
Templeton Growth
Fund, Inc.
Templeton Income
Trust
Templeton Emerging
Markets Bond Fund
Templeton Global Bond
Fund
Templeton Global
Total Return Fund
Templeton
International Bond Fund
Templeton
Institutional Funds
Emerging Markets Series
The Statement of additional information is amended as
follows:
I. For the Franklin Income Fund and Franklin Balanced Fund,
the Section entitled “
Goals, Strategies and Risks
–
Additional
Strategies
” is amended to reflect that each Fund may invest up to 15% of
its assets in equity-linked notes.
II. For the Franklin Strategic Income Fund, the Section
entitled “
Goals, Strategies and Risks
–
Additional Strategies
” is
amended to reflect that the Fund may invest in credit default swaps.
III. For the Franklin Strategic Income Fund, the Section
entitled “
Goals, Strategies and Risks
–
Additional Strategies
” is
amended to reflect that the Fund may invest in currency swaps for hedging
purposes.
IV. For the Franklin Strategic Income Fund, Franklin Total
Return Fund, Franklin Low Duration Total Return, Franklin Templeton Global
Allocation Fund, Franklin Real Return Fund, Franklin Templeton Hard Currency
Fund, Templeton Global Bond Fund, Templeton International Bond Fund, Templeton
Global Total Return Fund, Templeton Emerging Markets Balanced Fund, Templeton
Global Balanced Fund and Templeton Emerging Markets Bond Fund, the section
entitled Section entitled “
Goals, Strategies and Risks
–
Additional
Strategies
” is amended to reflect that each Fund may invest in inflation
indexed swaps.
V. For the Franklin Templeton Global Allocation Fund,
Templeton Developing Markets Trust, Emerging Market Series, Templeton Emerging
Markets Small Cap Fund and Templeton Emerging Markets Balanced Fund, the
section entitled “
Goals, Strategies and Risks
–
Additional Strategies
”
is amended to reflect that each Fund may invest up to 10% of its net assets in
participatory notes.
VI. For the Templeton Frontier Markets Fund, the section
entitled “
Goals, Strategies and Risks
–
Additional Strategies
” is
amended to reflect that the Fund may invest up to 20% of its net assets in
participatory notes.
VII. For the Templeton World Fund and Templeton Foreign Fund,
the Section entitled “
Goals, Strategies and Risks
–
Additional
Strategies
” is amended to reflect that each Fund may invest in exchange
traded equity options.
VIII. For the Templeton Global Smaller Companies Fund, the
Section entitled “
Goals, Strategies and Risks
–
Derivative
Instruments - Options
” is amended to add the following:
Closing out options (exchange traded options).
As the writer of an option, if the Fund wants to terminate its obligation, the
Fund may effect a “closing purchase transaction” by buying an option of the
same series as the option previously written. The effect of the purchase is
that the clearing corporation will cancel the Fund’s position. However, a
writer may not effect a closing purchase transaction after being notified of
the exercise of an option. Likewise, the buyer of an option may recover all or
a portion of the premium that it paid by effecting a “closing sale transaction”
by selling an option of the same series as the option previously purchased and
receiving a premium on the sale. There is no guarantee that either a closing
purchase or a closing sale transaction may be made at a time desired by the
Fund. Closing transactions allow the Fund to terminate its positions in written
and purchased options. The Fund will realize a profit from a closing
transaction if the price of the transaction is less than the premium received
from writing the original option (in the case of written options) or is more
than the premium paid by the Fund to buy the option (in the case of purchased
options). For example, increases in the market price of a call option sold by a
Fund will generally reflect increases in the market price of the underlying
reference instrument. As a result, any loss resulting from a closing
transaction on a written call option is likely to be offset in whole or in part
by appreciation of the underlying instrument owned by the Fund.
IX. For the Franklin Strategic Income Fund, Franklin Total
Return Fund, Franklin Low Duration Total Return, Franklin Templeton Global
Allocation Fund, Franklin Real Return Fund, Franklin Templeton Hard Currency
Fund, Templeton Global Bond Fund, Templeton International Bond Fund, Templeton
Global Total Return Fund, Templeton Emerging Markets Balanced Fund, Templeton
Global Balanced Fund and Templeton Emerging Markets Bond Fund, the section
entitled “
Goals, Strategies and Risks
–
Derivative Instruments – Swap
Agreements
” is amended to add the following:
Inflation Index Swaps.
An inflation index swap is a
contract between two parties, whereby one party makes payments based on the
cumulative percentage increase in an index that serves as a measure of
inflation (typically, the Consumer Price Index) and the other party makes a
regular payment based on a compounded
fixed rate. Each
party’s payment obligation under is determined by reference to a specified
“notional” amount of money. Typically, an inflation index swap has payment
obligations netted and exchanged upon maturity. The value of an inflation
index swap is expected to change in response to changes in the rate of
inflation. If inflation increases at a faster rate than anticipated at the
time the swap is entered into, the swap will increase in value. Similarly, if
inflation increases at a rate slower than anticipated at the time the swap is
entered into, the swap will decrease in value.
Risks of Swaps
. The use of swap transactions is a
highly specialized activity, which involves investment techniques and risks
different from those associated with ordinary portfolio securities
transactions. Whether the Fund will be successful in using swap agreements to
achieve its investment goal depends on the ability of the investment manager
correctly to predict which types of investments are likely to produce greater
returns. If the investment manager, in using swap agreements, is incorrect in
its forecasts of market values, interest rates, inflation, currency exchange
rates or other applicable factors, the investment performance of the Fund will
be less than its performance would have been if it had not used the swap
agreements.
X. For the Templeton Global Balanced Fund, the "Management
and Other Services – Ownership of Fund shares" section beginning on page
55 revised by adding the following:
Portfolio Manager
|
Dollar Range of Fund Shares Beneficially
Owned
|
Michael Hasenstab
|
Over $1,000,000
|
XI. For the Franklin Strategic Income Fund, the
"Management and Other Services – Ownership of Fund shares" section
beginning on page 55 revised by adding the following:
Portfolio Manager
|
Dollar Range of Fund Shares Beneficially
Owned
|
Eric Takaha
|
Over $1,000,000
|
XII. For the Templeton Global Total Return Fund, the "Management
and Other Services – Ownership of Fund shares" section beginning on page
55 revised by adding the following:
Portfolio Manager
|
Dollar Range of Fund Shares Beneficially
Owned
|
Sonal Desai
|
Over $1,000,000
|
XIII. For the Templeton Growth Fund, the "Management
and Other Services – Ownership of Fund shares" section beginning on page
55 revised by adding the following:
Portfolio Manager
|
Dollar Range of Fund Shares Beneficially
Owned
|
Norman Boersma
|
Over $1,000,000
|
Please keep this supplement
for future reference
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