" Franklin Templeton Investment Funds

PROSPECTUS

Socie¤ te¤ d’investissementa' capital variableIncorporated in LuxembourgDecember, 2005

F rank l i n T emp l e t on I n ve s tmen t F und sSocie¤te¤ d’investissement a' capital variable

Registered office: 26, boulevard Royal, L-2449 Luxembourg

Grand Duchy of LuxembourgR.C.S. Luxembourg B 35 177

Offerof separate classes (‘‘Classes’’) of shares (‘‘Shares’’) of no par value of Franklin Templeton InvestmentFunds (the ‘‘Company’’), each linked to one of the following sub-funds (the ‘‘Funds’’) of the Company, atthe published offer price for the Shares of the relevant Fund:^ Franklin Aggressive Growth Fund^ Franklin Biotechnology Discovery Fund^ Franklin European Growth Fund^ Franklin European Small-Mid Cap Growth Fund^ Franklin Global Growth Fund^ Franklin Global Real Estate (Euro) Fund^ Franklin Global Real Estate (USD) Fund^ Franklin Global Small-Mid Cap Growth Fund^ Franklin High Yield Fund^ Franklin High Yield (Euro) Fund^ Franklin Income Fund^ Franklin India Fund^ Franklin Technology Fund^ Franklin U.S. Equity Fund^ Franklin U.S. Government Fund^ Franklin U.S. Growth Fund^ Franklin U.S. Ultra Short Bond Fund^ Franklin U.S. Small-Mid Cap Growth Fund^ Franklin U.S. Total Return Fund^ Franklin Mutual Beacon Fund^ Franklin Mutual European Fund^ Franklin Mutual Global Discovery Fund^ Franklin Templeton Global Growth and Value Fund^ Franklin Templeton Japan Fund^ Templeton Asian Bond Fund^ Templeton Asian Growth Fund^ Templeton BRIC Fund^ Templeton China Fund^ Templeton Eastern Europe Fund^ Templeton Emerging Markets Fund^ Templeton Emerging Markets Bond Fund^ Templeton Euro Liquid Reserve Fund^ Templeton Euroland Fund^ Templeton Euroland Bond Fund^ Templeton European Fund^ Templeton European Total Return Fund^ Templeton Global Fund^ Templeton Global (Euro) Fund^ Templeton Global Balanced Fund^ Templeton Global Bond Fund^ Templeton Global Bond (Euro) Fund^ Templeton Global Equity Income Fund^ Templeton Global Income Fund^ Templeton Global Smaller Companies Fund^ Templeton Global Total Return Fund^ Templeton Growth (Euro) Fund^ Templeton Japan Fund^ Templeton Korea Fund^ Templeton Latin America Fund^ Templeton Thailand Fund^ Templeton U.S. Dollar Liquid Reserve Fund^ Templeton U.S. Value Fund

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Franklin Templeton Investment FundsIMPORTANT: If you are in any doubt about the contents of this Prospectus, you should consult yourbank, stockbroker, solicitor, accountant or other financial adviser. No one is authorised to give anyinformation other than that contained in this Prospectus, or in any of the documents referred to herein.

^ The Directors of the Company, whose names appear in section ‘‘Board of Directors and OtherOfficers’’, are responsible for the information contained in this Prospectus. To the best of the knowledgeand belief of the Directors (who have taken all reasonable care to ensure that such is the case) theinformation contained in this Prospectus is in accordance with the facts and does not omit anythinglikely to affect the import of such information. The Board of Directors accepts responsibility accordingly.

^ The Company does not have any debentures, loans, borrowings or indebtedness in the nature ofliabilities under acceptances or acceptance credits, mortgage hire purchase commitments, guarantees orother material contingent liabilities.

^ Statements made in this Prospectus are based on the laws and practice currently in force in the GrandDuchy of Luxembourg, and are subject to changes in those laws and practice.

^ This Prospectus does not constitute an offer to anyone or solicitation by anyone in any jurisdiction inwhich such offer or solicitation is not lawful or in which the person making such offer or solicitation isnot qualified to do so.

^ The Company is not registered in the United States of America under the Investment Company Act of1940. The Shares of the Company have not been registered in the United States of America under theSecurities Act of 1933. The Shares made available under this offer may not be directly or indirectlyoffered or sold in the United States of America or any of its territories or possessions or areas subject toits jurisdiction or to or for the benefit of nationals or residents thereof, unless pursuant to an exemptionfrom registration requirements available under the U.S. law, any applicable statute, rule or interpretation.Applicants for Shares may be required to declare that they are not a U.S. Person and are not applying forShares on behalf of any U.S. Person.

The term ‘‘U.S. Person’’ shall mean any person that is a United States person within the meaning ofRegulation S under the United States Securities Act of 1933, as the definition of such term may bechanged from time to time by legislation, rules, regulations or judicial or administrative agencyinterpretations.

^ The Company is a recognised collective investment scheme under section 264 of the Financial ServicesMarkets Act 2000 of the United Kingdom.

^ The Company may apply for registration of the Company’s Shares in various other legal jurisdictionsworldwide.

^ The distribution of this Prospectus and the offering of the Shares may be restricted in certain otherjurisdictions. It is the responsibility of any persons wishing to make application for Shares pursuant tothis Prospectus to inform themselves of and to observe all applicable laws and regulations of any relevantjurisdictions. Attention of Investors is also drawn on the fixed amount which may be levied ontransactions by local paying agent and correspondant banks established in certain jurisdiction such asItaly. Prospective subscribers for Shares should make themselves aware of the legal requirements withrespect to such application and of any applicable taxes in the countries of their respective citizenship,residence or domicile.

^ The Company is registered on the official list of collective investment undertakings pursuant to Part Iof the Luxembourg law of December 20, 2002 relating to collective investment undertakings, asamended (the ‘‘Law relating to collective investment undertakings’’). The Company qualifies as anUndertaking for Collective Investment in Transferable Securities (‘‘UCITS’’) under the European CouncilDirective 85/611/EEC of December 20, 1985, as amended.

^ It has obtained recognition for marketing its Shares in the following European countries (in addition tothe Grand Duchy of Luxembourg): Austria, Belgium, Czech Republic, the Republic of Cyprus, Estonia,Finland, France, Germany, Gibraltar, Ireland, Italy, Latvia, the Netherlands, Norway, Poland, Portugal,

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Spain, Sweden, Switzerland and the United Kingdom. The registration of the Shares of the Company inany jurisdiction does not require any authority to approve or disapprove the adequacy or accuracy of thisProspectus or the securities portfolios held by the Company. Any statement to the contrary isunauthorised and unlawful.

^ The most recent audited annual and unaudited semi-annual reports of the Company, which areavailable at the registered office of the Company, form an integral part of this Prospectus.

^ The distribution of this Prospectus in some jurisdictions may require the translation of this Prospectusinto the languages specified by the regulatory authorities of those jurisdictions. In case of inconsistencybetween the translated and the English version of this Prospectus, the English version shall prevail.

Summary of Main FeaturesThe information set out under this heading is a summary of the principal features of the Company andshould be read in conjunction with the full text of this Prospectus.

StructureThe Company is incorporated in Luxembourg under the laws of the Grand Duchy of Luxembourg as asocie¤te¤ anonyme and qualifies as a socie¤te¤ d’investissement a' capital variable (‘‘SICAV’’).

The Board of Directors may authorise the creation of additional Funds in the future with differentinvestment objectives, subject to the amendment of the Prospectus.

Investment ObjectiveThe Company aims to provide investors with a choice of Funds investing in a wide range of transferablesecurities and other permitted assets on a worldwide basis and featuring a diverse array of investmentobjectives, including capital growth and income. The overall objective of the Company is to seek tominimise investment exposure through diversification and to provide Shareholders with the benefit of aportfolio managed by Franklin Templeton Investments according to its successful time-tested investmentselection methods.

The FundsShares are offered or in issue in the following Funds, Classes and currencies:

Classes inBase Alternative alternative Hedged

Franklin Templeton Investment Funds currency Classes currencies currencies Classes

Franklin Aggressive Growth Fund USD A (acc) USD+B (acc) USD+I (acc) USD GBP A (dis) GBP+N (acc) USD

Franklin Biotechnology Discovery Fund USD A (acc)+B (acc)+I (acc)+N (acc)Franklin European Growth Fund EUR A (acc)+I (acc)+N (acc)Franklin European Small-Mid Cap Growth Fund EUR A (acc) EUR+I (acc)EUR+N (acc) EUR USD B (acc) USDFranklin Global Growth Fund USD A (acc)+N (acc)Franklin Global Real Estate (Euro) Fund EUR A (acc) EUR +I (acc) EUR+N (acc) EUR GBP A (dis) GBPFranklin Global Real Estate (USD) Fund USD A (acc) +A (dis) +B (dis) +N (acc) +N (dis)

+I (acc) +I (dis) +C (dis)Franklin Global Small-Mid Cap Growth Fund USD A (acc)+B (acc)+N (acc)Franklin High Yield Fund USD A (acc)+A (dis)+B (dis)+C (acc)+I (dis)

+N (acc)Franklin High Yield (Euro) Fund EUR A (acc)+A (dis)+I (acc)+I (dis)+N (acc)Franklin Income Fund USD A (dis)+B (dis)+C (acc)+C (dis)+I (acc)

+N (acc)Franklin India Fund USD A (acc) USD+B (acc) USD+C (acc) USD EUR A (acc) EUR+I (acc) EUR+

+N (acc) USD+I (acc) USD N (acc) EURGBP A (dis) GBP

Franklin Technology Fund USD A (acc) USD+B (acc) USD+N (acc) USD EUR N (acc) EURFranklin U.S. Equity Fund USD A (acc) USD+B (acc) USD+C (acc) USD EUR A (acc) EUR+I (acc) EUR A (acc)

+I (acc) USD+N (acc) USD +N (acc) EUR EUR-HGFranklin U.S. Government Fund USD A (dis)+AX (acc)+B (acc)+B (dis)+C (acc)

+I (dis)+N (acc)+N (dis)Franklin U.S. Growth Fund USD A (acc)+B (acc)+C (acc)+I (acc)+N (acc)Franklin U.S. Ultra Short Bond Fund USD A (dis)+AX (acc)+B (acc)+B (dis)+C (dis)

+I (acc)+N (dis)Franklin U.S. Small-Mid Cap Growth Fund USD A (acc)+B (acc)+C (acc)+N (acc)Franklin U.S. Total Return Fund USD A (acc)+A (dis)+B (acc)+B (dis)+C (dis)

+I (acc)+N (dis)Franklin Mutual Beacon Fund USD A (acc) USD+A (dis) USD+B (acc) USD EUR A (acc) EUR+N (acc) EUR

+C (acc) USD+I (acc) USD+N (acc) USDFranklin Mutual European Fund EUR A (acc) EUR +A (dis) EUR+C (acc) EUR USD A (acc) USD+B (acc) USD

+I (acc) EUR +N (acc) EUR +C (acc) USD+N (acc) USDGBP A (dis) GBP

Franklin Mutual Global Discovery Fund USD A (acc) USD+B (acc) USD+C (acc) USD EUR A (acc) EUR+I(acc) EUR+I (acc) USD+N (acc) USD +N (acc) EUR

GBP A (dis) GBP

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Classes inBase Alternative alternative Hedged

Franklin Templeton Investment Funds currency Classes currencies currencies Classes

Franklin Templeton Global Growth and Value Fund USD A (acc)+B (acc)+C (acc)+I (acc)+N (acc)Franklin Templeton Japan Fund YEN A (acc) YEN EUR A (acc) EUR+I (acc) EUR+

N (acc) EURUSD A (acc) USD+C (acc) USD

+I (acc) USDTempleton Asian Bond Fund USD A (acc) USD+A (dis) USD+B (dis) USD EUR A (acc) EUR+N (acc) EUR

+N (acc) USD+N (dis) USD+I (acc) USD+C(dis) USD

Templeton Asian Growth Fund USD A (acc) USD+A (dis) USD+C (acc) USD EUR A (dis) EUR+A (acc) EUR+I (acc) USD+N (acc) USD +I (acc) EUR

GBP A (dis) GBPTempleton BRIC Fund USD A (acc) USD+B (acc) USD+C (acc) USD GBP A (dis) GBP

+N (acc) USD+I (acc) USD EUR A (acc) EUR+N (acc) EURTempleton China Fund USD A (acc) USD+I (acc) USD+N (acc) USD GBP A (dis) GBPTempleton Eastern Europe Fund EUR A (acc) EUR+A (dis) EUR+C (acc) EUR GBP A (dis) GBP

+I (acc) EUR+N (acc) EUR USD A (acc) USD+C (acc) USDTempleton Emerging Markets Fund USD A (acc) USD+A (dis) USD+B (acc) USD EUR N (acc) EUR

+C (acc) USD+I (acc) USD +N (acc) USDTempleton Emerging Markets Bond Fund USD A (dis) USD+B (dis) USD+C (acc) USD EUR A (dis) EUR

+I (acc) USD+N (acc) USDTempleton Euro Liquid Reserve Fund EUR A (acc)+A (dis)+N (acc)Templeton Euroland Fund EUR A (acc)+A (dis)+C (acc)+N (acc)+I (acc)Templeton Euroland Bond Fund EUR A (dis)+N (acc)+I (acc)Templeton European Fund EUR A (acc) EUR+A (dis) EUR+C (acc) EUR USD A (acc) USD+A (dis) USD

+I (acc) EUR+N (acc) EUR +N (acc) USDTempleton European Total Return Fund EUR A (acc) EUR+A (dis) EUR+C (acc) EUR GBP A (dis) GBP

+N (acc) EUR+I (acc) EUR USD A (dis) USD+C (dis) USDTempleton Global Fund USD A (acc)+A (dis)+B (acc)+C (acc)+I (acc)

+N (acc)Templeton Global (Euro) Fund EUR A (acc)+A (dis)+I (acc)+N (acc)Templeton Global Balanced Fund USD A (acc) USD+A (dis) USD+B (acc) USD EUR A (acc) EUR+N (acc) EUR

+C (dis) USDTempleton Global Bond Fund USD A (dis) USD+AX (acc) USD+B (dis) USD EUR A (acc) EUR+A (dis) EUR

+C (dis) USD+I (acc) USD+N (acc) USD +I (acc) EURGBP A (dis) GBP

Templeton Global Bond (Euro) Fund EUR A (acc)+A (dis)+I (acc)+N (acc)Templeton Global Equity Income Fund USD A (acc) USD+A (dis) USD+B (dis) USD EUR A (acc) EUR

+C (dis) USD+N (acc) USD+I (acc) USDTempleton Global Income Fund USD A (acc) USD+A (dis) USD+B (dis) USD EUR A (acc) EUR

+C (dis) USD+N (acc) USD+I (acc) USDTempleton Global Smaller Companies Fund USD A (acc) USD+A (dis) USD+I (acc) USD EUR C (acc) EUR

+N (acc) USDTempleton Global Total Return Fund USD A (acc) USD+A (dis) USD+B (acc) USD EUR A (dis) EUR

+B (dis) USD+C (dis) USD+I (acc) USD+N (acc) USD

Templeton Growth (Euro) Fund EUR A (acc) EUR+A (dis) EUR+I (acc) EUR USD I (dis) USD+I (dis)+N (acc) EUR CHF I (dis) CHF

Templeton Japan Fund USD A (acc)+N (acc)Templeton Korea Fund USD A (acc)+N (acc)Templeton Latin America Fund USD A (acc) USD+A (dis) USD+I (acc) USD GBP A (dis) GBP

+N (acc) USDTempleton Thailand Fund USD A (acc)+N (acc)Templeton U.S. Dollar Liquid Reserve Fund USD A (acc)+A (dis)+B (dis)+C (acc)+N (acc)Templeton U.S. Value Fund USD A (acc)+B (acc)+N (acc)+C (acc)+I (acc)

The Board of Directors of the Company may decide to offer or issue in any Fund any of the existing Classof Shares which terms and conditions are more fully described in the section ‘‘Classes of Shares SalesCharge Structure’’, including Alternative currency Class of Shares in any other currency than the Fundbase currency as well as Hedged Class of Shares. Shareholders will be informed of the issue of suchShares upon publication of the net asset value per Shares of such Class of Shares as described under thesection ‘‘Publication of Share Prices’’.

Types of SharesThe Board of Directors has resolved that no additional Shares in physical bearer form will be issued. Theprovisions set forth in this Prospectus in relation to physical bearer Shares are applicable as long asbearer Shares are in issue. All Shares are issued in registered form. Registered Shares are issued inuncertificated form unless certificates are requested. Shares can be either distribution Shares oraccumulation Shares : Class A (distribution) Shares and Class A (accumulation) Shares (abbreviated to‘‘Class A (dis) Shares’’ and ‘‘Class A (acc) Shares’’, respectively; together abbreviated to ‘‘Class A Shares’’),Class AX (accumulation) Shares (abbreviated to ‘‘Class AX (acc)Shares’’), Class B (distribution) Sharesand Class B (accumulation) Shares (abbreviated to ‘‘Class B (dis) Shares’’ and ‘‘Class B (acc) Shares’’,respectively; together abbreviated to ‘‘Class B Shares’’), Class C (accumulation) Shares and Class C(distribution) Shares (abbreviated to ‘‘Class C (acc) Shares’’ and ‘‘C (dis) Shares’’, respectively; togetherabbreviated to ‘‘Class C Shares’’), Class I (distribution) Shares and Class I (accumulation) Shares(abbreviated to ‘‘Class I (dis) Shares’’ and ‘‘Class I (acc) Shares’’, respectively; together abbreviated to

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‘‘Class I Shares’’) and Class N (distribution) Shares and Class N (accumulation) Shares (abbreviated to‘‘Class N (dis) Shares’’ and ‘‘Class N (acc) Shares’’, respectively; together abbreviated to ‘‘Class N Shares’’).Class A Shares, Class AX Shares, Class I Shares and Class N Shares may be available through clearingsystems linked through Clearstream Banking S.A. (‘‘Clearstream’’) or Euroclear. The Classes of Sharesmainly differ in the types of charges, which are imposed on them and in their dividend policy. Furtherdetails of these Classes of Shares and the charges relating to them are set out in the Section ‘‘Classes ofShares Sales Charge Structure’’. In certain limited circumstances, other Classes of Shares may also beoffered in certain Funds, as described in that Section.

Before investing in a specific Share Class of any Fund, Investors should ensure that such Class best suitstheir needs and should consider the local tax implications subject to their personal circumstances andlocal tax laws. Investors are recommended to contact a tax advisor or their financial advisor for furtherinformation.

Purchase of SharesThe Company has appointed Templeton Global Advisors Limited to act as Principal Distributor toorganise and oversee the marketing and distribution of Shares. The Principal Distributor may engagesub-distributors, intermediaries, dealers and/or professional investors (who may be affiliates of FranklinTempleton Investments and who may receive part of the maintenance charges). The Principal Distributorhas therefore appointed Franklin Templeton International Services S.A. to act as the Company’sDistribution Controller to monitor the appointment and activities of the sub-distributors.

Moreover, the Board of Directors of the Company decided that, when required by the relevant legal,regulatory and/or tax environment applicable to some particular countries where the shares of theCompany are or will be offered, the duties of organising and overseeing the marketing and distributionof shares, or the distribution of shares itself, currently dedicated on a worldwide basis to the PrincipalDistributor of the Company, may be allocated to such other entities (who may be affiliates of FranklinTempleton Investments) directly appointed by the Company from time to time.

Subject to the provisions of the agreement in place with the Company, such other parties may in turnengage sub-distributors, intermediaries, dealers and/or professional investors (who may be affiliates ofFranklin Templeton Investments). Notwithstanding the foregoing, Franklin Templeton InternationalServices S.A. will continue to act as the Company’s Distribution Controller to monitor the appointmentand activities of the sub-distributors, intermediaries, dealers and/or professional investors mentionedabove.

For the avoidance of doubt, investors subscribing through such other parties (or through sub-distributors, intermediaries, dealers and/or professional investors appointed by such other parties) willnot be charged with additional fees and expenses.

Whenever applicable, all references through the prospectus relating to the Principal Distributor shouldtherefore also read as references to such other parties appointed by the Company.

The minimum initial investment in the Shares of each Fund is USD 5,000 (or USD 2,500 in the case ofexchanges see ‘‘Exchange of Shares’’, and USD 5,000,000 for Class I Shares (except for the Class I (dis)Shares of the Franklin U.S. Government Fund which has a minimum initial investment of USD1,000,000) see ‘‘Classes of Shares ^ Sales Charge Structure’’) or the equivalent in any other freelyexchangeable currency, except for investment made by professional nominees. Such minimuminvestment amounts may be waived in whole or in part by the Board of Directors, by the PrincipalDistributor or by the Distribution Controller. Existing holders of Shares in any Fund may add to theirholdings in that Fund provided the minimum increase for any subscription is USD 1,000 or theequivalent in any other freely exchangeable currency. Lower minimum investment amounts may applyto Regular Savings Plans and Systematic Withdrawal Plans.

Calculation of Share Prices and Valuation DayThe prices at which Shares of the relevant Classes can be subscribed for, redeemed or exchanged in eachClass are calculated on each Valuation Day by reference to the net asset value of the Class concerned and

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are available on the following Valuation Day. A Valuation Day for all Funds is any day on which the NewYork Stock Exchange (NYSE) is open or any full day on which banks in Luxembourg are open fornormal business (other than during a suspension of normal dealing).

ListingAll Classes of Shares are or will be listed on the Luxembourg Stock Exchange. The Board of Directorsmay decide to make application to list the Shares of any Class on any other recognised stockexchange.

Class A Shares, Class AX (acc) Shares, Class I Shares and Class N Shares (if available) have been acceptedfor clearance by Clearstream or Morgan Guaranty Trust Company of New York, Brussels office, as theoperator of the Euroclear system (‘‘Euroclear’’). Clearstream and Euroclear each hold securities for theircustomers and facilitate the clearance and settlement of securities transactions by electronic book-entrytransfer between their respective customers. Clearstream and Euroclear have established an electronicbridge between their two systems across which their respective customers may settle trades with eachother.

Class A Shares, Class AX (acc) Shares, Class I Shares (if available) and Class N Shares held throughClearstream and Euroclear are, or will be, issued in global form and registered in the name of, and heldby, the common depository of Clearstream and Euroclear.

Conversions of Shares in registered form to global certificate form will be rounded down to the nearestwhole Share. If the costs involved exceed the value of the payment, cheques for the residual balance offractional Shares will normally not be issued.

Class B Shares and Class C Shares are not accepted for clearance by a clearing system approved by theLuxembourg Stock Exchange, such as Clearstream and Euroclear, due to the contingent deferred salescharge structure applicable to such Shares. However, the Company may in its discretion not issue eitherClass B Shares or Class C Shares if such Shares are held by the investor under a global certificate.Accordingly, pursuant to governing measure No: 158 of the Luxembourg Stock Exchange, dated August24, 1995 and implemented on September 1, 1995, the settlement procedures to be followed in respect ofsuch Class B Shares and Class C Shares are as follows:

^ As soon as the trade in the relevant Shares has been agreed as a stock exchange transaction, the seller’sintermediary must forward the relevant Share certificate or confirmation statement accompanied by aShare transfer form in respect of such Shares agreed to be sold, executed by or on behalf of the seller, tothe purchaser’s intermediary. Share transfer forms may be obtained from the Transfer Agent.

^ The Share certificate or confirmation statement in respect of the Shares sold must reach the purchaser’sintermediary within three Luxembourg bank business days following the trade date to enable thepurchaser’s intermediary to ensure that the settlement proceeds will be paid on the agreed value date andto verify with the Transfer Agent that the Shares are in good order for transfer. The date on which theShares were initially acquired will then be confirmed by the Transfer Agent to the purchaser’sintermediary, in order to ascertain that the attention of the purchaser is duly drawn to the rates of anycontingent deferred sales charge applicable to these Shares when redeemed afterwards (as more fullydescribed under ‘‘Classes of Shares ^ Sales Charge Structure’’).

^ After verification, the purchaser’s intermediary must forward the Share certificate or confirmationstatement in respect of the Shares sold together with the executed Share transfer form and theappropriate registration instructions to the Transfer Agent.

^ The Transfer Agent will then make the necessary changes to the register of Shareholders, cancel the oldShare certificate, if applicable, and issue a new Share certificate or confirmation statement in the name ofthe purchaser (and of the seller in respect of any balance of Shares held by the seller). The new Sharecertificate or confirmation statement will be sent by the Transfer Agent by mail to the purchaser, or if sorequested, to the purchaser’s intermediary or to any other designated agent, at the address set out in theregistration instructions.

Investors are informed that the above procedures may result in the settlement of trades taking longer

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than the settlement period, which is customary in Luxembourg (three Luxembourg bank business days).Any registration problems, which may occur, are to be solved between the seller and the purchaser, inaccordance with governing measure No: 158 of the Luxembourg Stock Exchange.

How to ApplyInvestors wishing to purchase Shares should send a duly completed application form to the TransferAgent or any authorised Share Distributor containing the information stated in section ‘‘Procedure forApplication’’. Subsequent purchases of Shares may additionally be made in the forms as more fullydescribed in the section ‘‘Procedure for Application’’.

Complete applications for Shares (other than for Hedged Classes of Shares) received and acceptedby the Transfer Agent or by a duly authorised Share Distributor on a Valuation Day before theNew York Stock Exchange closing time or before the equivalent in Luxembourg time on ValuationDays when the New York Stock Exchange is closed for normal business (usually 10:00 pm CET)will be dealt with on that day on the basis of the net asset value per Share of the relevant Classcalculated on that day.

Complete applications for Shares (other than for Hedged Classes of Shares) received and acceptedby the Transfer Agent or by a duly authorised Share Distributor on a Valuation Day after the NewYork Stock Exchange closing time or after the equivalent in Luxembourg time on Valuation Dayswhen the New York Stock Exchange is closed for normal business (usually 10:00 pm CET) willnormally be dealt with on the basis of the net asset value per Share of the relevant Class calculatedon the next Valuation Day.

Complete applications for Shares in Hedged Classes received and accepted by the Transfer Agentor by a duly authorised Share Distributor on a Valuation Day five hours before the New YorkStock Exchange closing time or before the equivalent in Luxembourg time on Valuation Dayswhen the New York Stock Exchange is closed for normal business (usually 5:00 pm CET) will bedealt with on that day on the basis of the net asset value per Share of the relevant Class calculatedon that day.

Complete applications for Shares in Hedged Classes received and accepted by the Transfer Agentor by a duly authorised Share Distributor on a Valuation Day less than five hours before the NewYork Stock Exchange closing time or after the equivalent in Luxembourg time on Valuation Dayswhen the New York Stock Exchange is closed for normal business (usually 5:00 pm CET) willnormally be dealt with on the basis of the net asset value per Share of the relevant Class calculatedon the next Valuation Day.

The Board of Directors may permit, if it deems it appropriate, different dealing cut-off times to be agreedwith local distributors or for distribution in jurisdictions where the different time zone so justifies. Insuch circumstances, the applicable dealing cut-off time applied must always precede the time when theapplicable net asset value is calculated and published. Such different cut off time shall be disclosed in thelocal supplement to the Prospectus, the agreements in place with the local distributors or othermarketing material used in the jurisdictions concerned.

Investors will be given at least one personal account number. Such personal account number should beused in all correspondence with the Company or the Transfer Agent. In case of plurality of personalaccount numbers attributed to the same Investor, all these personal account numbers should beindicated for request applicable to all the accounts held by an Investor.

SettlementSettlement must be made within five (5) Luxembourg bank business days following the Valuation Dayafter the date on which the application or its functional equivalent as more fully described on page 38 isreceived in good form, unless the Board of Directors requires cleared funds on or prior to an applicationbeing accepted. Applicants will be required to compensate the Company at the discretion of the Board ofDirectors for any loss resulting from late settlement. Shares held through Clearstream or Euroclear mustbe settled in the currency of denomination of the relevant Fund or (if applicable) of the relevant Class of

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Shares and within three (3) Luxembourg bank business days following the Valuation Day.

Currency of PaymentPayment can be made in the base currency or (if applicable) the alternative currency of the selectedFund(s). However, an investor may, in certain instances as permitted by the Registrar and Transfer,Corporate, Domiciliary and Administrative Agent, provide for payment in any other currency which canbe freely exchanged for the base currency of the selected Fund(s) and the necessary foreign exchangetransaction will be arranged on behalf of, and at the expense of, the investor. For payment in thealternative currency of the selected Class of Shares, any necessary foreign exchange transaction will bearranged by, and at the expense of, the Fund. Shares held through Clearstream or Euroclear must besettled in the currency of denomination of the relevant Fund or (if applicable) of the relevant Class ofShares and within three (3) Luxembourg bank business days following the Valuation Day.

Investors settling in a currency other than the base currency or (if applicable) the alternativecurrency of the Fund(s) for which the investment is intended are advised that a delay inprocessing the application until the next Valuation Day may occur to allow for currencyconversion.

Exchange of SharesShareholders wishing to exchange Shares from one Class to Shares of the same Class or another Class ofanother Fund or with Shares of another Class of the same Fund (if available) will be entitled to do so onany Valuation Day subject to an exchange charge authorised in exceptional circumstances by the Boardof Directors at its discretion which shall not exceed 1% of the value of the Shares being requested forexchange and subject to the following exceptions: Class B Shares can only be exchanged with Class BShares of another Fund; Class C Shares of a Fund can only be exchanged into Class C Shares of a Fund,which issues Class C Shares of the same Currency; and only institutional investors as defined in thesection ‘‘Classes of Shares ^ Sales Charge Structure’’ can exchange their Shares into or with Class IShares. Other exchange charges and restrictions may apply as set forth in the section ‘‘Exchange ofShares’’. Exchange requests may be made in writing or, if expressly allowed by the Transfer Agent, bytelephone, facsimile or electronic means, and shall contain the information stated in the section‘‘Exchange of Shares’’. Restrictions relating to the exchange of Shares of a Class into Shares of anotherClass are more fully described under the section ‘‘Exchange of Shares’’.

Any request to exchange Shares may not be executed until any previous transaction involving the Sharesto be exchanged has been completed and full settlement on those Shares received.

Complete requests for exchange of Shares on any Valuation Day from a Fund denominated in onecurrency into a Fund denominated in another currency will require one additional Luxembourgbank business day in order to effectuate the currency transactions for such exchange.

Redemption of SharesShares may be redeemed at a price equal to the relevant net asset value of the relevant Class calculated onthe applicable Valuation Day by giving notice to the Transfer Agent in writing or, if expressly allowed bythe Transfer Agent, by telephone, facsimile or electronic means, containing the information stated in thesection ‘‘Redemption of Shares’’. Concerning the redemption requests made by telephone, facsimile andelectronic means, the Transfer Agent may in its own discretion request a written and duly signedconfirmation, in which case it may delay the processing of the request until receipt of writtenconfirmation thereof. Where a certificate has been issued in the name(s) of the Shareholder(s), the Boardof Directors may require that such share certificate, duly endorsed, be returned to the Transfer Agentprior to the transaction being effectuated at any applicable net asset value and therefore prior to paymentbeing made. In the case of physical bearer Shares, the certificate must be returned together with theunmatured coupons, to the Principal Paying Agent. Any request to redeem Shares may not be executeduntil any previous transaction involving the Shares to be redeemed has been completed and fullsettlement on those Shares received.

Complete redemption requests for Shares (other than for Hedged Classes of Shares) received bythe Transfer Agent or by a duly authorised Share Distributor on a Valuation Day before the New

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York Stock Exchange closing time or before the equivalent in Luxembourg time on Valuation Dayswhen the New York Stock Exchange is closed for normal business (usually 10:00 pm CET) will bedealt with on that day on the basis of the net asset value per Share of the relevant Class calculatedon that day.

Complete redemption requests for Shares (other than for Hedged Classes of Shares) received bythe Transfer Agent or a duly authorised Share distributor after the New York Stock Exchangeclosing time or after the equivalent in Luxembourg time on Valuation Days when the New YorkStock Exchange is closed for normal business (usually 10:00 pm CET) will normally be dealt withon the basis of the net asset value per Share of the relevant Class calculated on the next ValuationDay.

Complete redemption requests for Shares in Hedged Classes received by the Transfer Agent or bya duly authorised Share Distributor on a Valuation Day five hours before the New York StockExchange closing time or before the equivalent in Luxembourg time on Valuation Days when theNew York Stock Exchange is closed for normal business (usually 5:00 pm CET) will be dealt withon that day on the basis of the net asset value per Share of the relevant Class calculated on thatday.

Complete redemption requests for Shares in Hedged Classes received by the Transfer Agent or aduly authorised Share distributor less than five hours before the New York Stock Exchangeclosing time or after the equivalent in Luxembourg time on Valuation Days when the New YorkStock Exchange is closed for normal business (usually 5:00 pm CET) will normally be dealt withon the basis of the net asset value per Share of the relevant Class calculated on the next ValuationDay.

The Board of Directors may permit, if it deems it appropriate, different dealing cut-off times to be agreedwith local distributors or for distribution in jurisdictions where the different time zone so justifies. Insuch circumstances, the applicable dealing cut-off time applied must always precede the time when theapplicable net asset value is calculated and published. Such different cut off time shall be disclosed in thelocal supplement to the Prospectus, the agreements in place with the local distributors or othermarketing material used in the jurisdictions concerned.

The proceeds of redemption of Class B Shares may be subject to a contingent deferred sales charge ifsuch Shares are redeemed within four years of the date of issue. Further details of this charge are givenon page 35. Certain transactions with respect to Class A Shares and Class AX Shares may also be subjectto a contingent deferred sales charge if redeemed within the first 18 months of purchase. The proceeds ofredemption of Class C Shares may be subject to a contingent deferred sales charge if such Shares areredeemed within 12 months of the date of issue. For further details with respect to this charge see section‘‘Classes of Shares Sales Charge Structure’’.

Past performanceInvestors should refer to the simplified prospectus of the Company for historical performance charts ofthe relevant Funds as at 30 June (or 31 December as the case may be) for the last three years.

Regular Savings Plans and Systematic Withdrawal PlansRegular Savings Plans and Systematic Withdrawal Plans are available for the benefit of Shareholders invarious countries. For further information please contact the Transfer Agent or your local FranklinTempleton Investments office.

Anti-Money Laundering LegislationPursuant to the Law of April 5, 1993 relating to the financial sector (as amended), and to the circulars ofthe Luxembourg supervisory authority (especially the CSSF circular 05/188, the IML circulars 91/75 and94/112 and the BCL circular 98/153), obligations have been imposed on all professionals of the financialsector to prevent the use of UCITS for money laundering purposes. Within this context a procedure forthe identification of investors has been imposed. Namely, the Application Form of an investor must beaccompanied, in the case of individuals, by a copy of the passport or identification card and, in the case

9

of legal entities, by a copy of the statutes, articles of incorporation or other constitutive documents, anextract from the commercial register and a list of authorised signatories. In addition, in the case of legalentities not listed on a recognised Stock Exchange, identification of the shareholders owning more than5% of the shares issued or of the voting rights as well as the name and address of persons having asignificant influence on the management of the legal persons may be required. In the case of a trust, theApplication Form must, at least, be accompanied by a copy of the trust instrument, copy of the passportsand/or statutes or other appropriate constitutive documents of the trustee(s) and a list of authorisedsignatories. In addition, the identification of the trustee, the settler, the ultimate beneficiary and theprotector may be required. Any copy must be certified to be a true copy by one of the followingauthorities : ambassador, consulate, notary or police officer or their equivalent in the jurisdictionconcerned. Such identification procedure must be complied with in the following circumstances:

(a) in the case of direct subscriptions to the Company; and

(b) in the case of subscriptions received by the Company from any intermediary resident in a countrywhich does not impose on such intermediary an obligation to identify investors equivalent to thatrequired under the laws of the Grand Duchy of Luxembourg for the prevention of moneylaundering.

It is generally accepted that professionals of the financial sector resident in a country which has ratifiedthe conclusions of the Financial Action Task Force (Groupe d’action financie're internationale (‘‘GAFI’’)) aredeemed to be intermediaries having an identification obligation equivalent to that required under thelaws of the Grand Duchy of Luxembourg.

The following countries, as well as the Grand Duchy of Luxembourg, have ratified the conclusions of theFinancial Action Task Force: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland,France, Germany, Greece, Gulf Co-operation Council, Hong Kong, Iceland, Ireland, Italy, Japan, Mexico,the Netherlands, New Zealand, Norway, Portugal, the Russian Federation, Singapore, South Africa,Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States of America.

Such information provided to the Transfer Agent is collected and processed for anti-money launderingcompliance purposes.

Data protectionAll personal data of investors contained in the application form and all and any further personal datacollected in the course of the business relationship with the Company and/or the Transfer Agent may becollected, recorded, stored, adapted, transferred or otherwise processed and used (‘‘processed’’) by theCompany, the Transfer Agent and other companies of Franklin Templeton Investments, the Custodianand the financial intermediary of such investors. Such data shall be processed for the purposes ofaccount administration, anti-money laundering identification, tax identification under the EuropeanUnion Tax Savings Directive 2003/48/EC and the development of the business relationship.

To this end, data may be transferred to companies appointed by the Company or the Transfer Agent tosupport the Company related activity (e.g. client communication agents or paying agents).

October 2005

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Table of contents Page

Board of Directors and Officers................................................................................12 Investment Objectives and Policies ..........................................................................20 Hedging Practice and Other Risk Considerations .....................................................36

Dividend Policy .......................................................................................................43 Management and Administration.............................................................................45 Investment Managers...............................................................................................46 Custodian................................................................................................................46

Registrar and Transfer, Corporate, Domiciliary and Administrative Agent................46 Form of Shares ........................................................................................................46 Classes of Shares - Sales Charge Structure................................................................47 Issue of Shares .........................................................................................................54

Procedure for Application........................................................................................55 Redemption of Shares ..............................................................................................57 Exchange of Shares ..................................................................................................60 Transfer of Shares ....................................................................................................62

Trading Policy .........................................................................................................62 Publication of Share Prices.......................................................................................63 Temporary Suspension of Issues, Redemptions and Exchanges................................64 Management and Company Charges........................................................................64

Taxation of the Company ........................................................................................66 Taxation of Shareholders .........................................................................................66 Meetings and Reports ..............................................................................................68 Documents Available for Inspection.........................................................................68

Certificates and Registration ....................................................................................68 Appendix A - Investment Restrictions......................................................................69 Appendix B - General Information...........................................................................77 Appendix C - Determination of the Net Asset Value Of Shares.................................80

Appendix D - Investor’s Profile ................................................................................83 Appendix E - Class I ( dis) Shares And Class I (acc) Shares - Management Fees .......86 Appendix F - Franklin Templeton Investment Funds ISIN Codes............................87

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Board of Directors and OfficersChairman:The Honorable Nicholas F. BradyChairman and Chief Executive OfficerCHOPTANK PARTNERS, INC. 16 North Washington Street,Easton MD 21601, U.S.A.

Directors:Gregory E. JohnsonCo-PresidentFRANKLIN RESOURCES, INC.One Franklin ParkwaySan Mateo CA 94403-1906, U.S.A.

Dr. J. B. Mark MobiusDirector EmeritusTEMPLETON ASSET MANAGEMENT LTD7 Temasek Boulevard# 38-03 Suntec Tower OneSingapore 038987

Mark G. HoloweskoPresidentTEMPLETON CAPITAL ADVISERS LIMITEDBox N-7759West Bay StreetLyford CayNassau, Bahamas

Gregory E. McGowanExecutive Vice President and General CounselTEMPLETON WORLDWIDE, INC.500 East Broward Boulevard, Suite 2100Fort Lauderdale, FL 33394-3091, U.S.A.

His Grace the Duke of Abercorn, James Hamilton KGChairmanABERCORN ESTATESBarons Court, NewtonstewartOmagh BT78 4EZ, Northern Ireland, U.K.

The Right Reverend Michael A. MannK.C.V.O.The CottageLower End Farm, EastingtonNorthleach GL54 3PN, England, U.K.

Richard H. FrankManaging DirectorDARBY OVERSEAS INVESTMENTS LIMITED1133 Connecticut Avenue NWSuite 400Washington DC 20036, U.S.A

12

David E. SmartDirector and CEOFRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITEDThe Adelphi Building1-11 John Adam Street London WC2N 6HT, England, U.K.

The Honourable Trevor G. TrefgarneAudit Committee MemberGARRO SECURITIES LIMITED235 Vauxhall Bridge RoadLondon SW1V 1EJEngland, U.K.

James J.K. HungPresident & CEOL’THAN METALS, INCFloor 5-1N 23 Section 3 Jen-Ai RoadTaipei, Taiwan

Geoffrey Ainsworth LanglandsManaging PartnerLANGLANDS CONSULTORIA LtdaAvenida das Ame¤ricas 500Bloco 6, Sala 227 (Downtown)Rio de Janeiro CEP 22630-010Brazil

Conducting Officers:William Lockwood26, boulevard RoyalL-2449 LuxembourgGrand Duchy of Luxembourg

Denise Voss26, boulevard Royal,L-2449 LuxembourgGrand Duchy of Luxembourg

Investment Managers:As to: Templeton Euroland Fund;

Templeton European Fund;Templeton Global (Euro) Fund;Templeton Global Balanced Fund*;Templeton Global Equity Income Fund;Templeton Global Income Fund*; andTempleton Global Smaller Companies Fund

FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED5 Morrison StreetEdinburgh EH3 8BH, Scotland, U.K.

*Franklin Templeton Investment Management Limited has been appointed as Investment Manager inrespect of the equity portion of the assets of Templeton Global Balanced Fund and of Templeton GlobalIncome Fund.

13

As to: Templeton Asian Growth Fund;Templeton BRIC Fund;Templeton China Fund;Templeton Eastern Europe Fund;Templeton Emerging Markets Fund;Templeton Japan Fund;Templeton Korea Fund;Templeton Latin America Fund; andTempleton Thailand Fund

TEMPLETON ASSET MANAGEMENT LTD7 Temasek Boulevard# 38-03 Suntec Tower OneSingapore 038987

As to: Franklin Aggressive Growth Fund;Franklin Biotechnology Discovery Fund;Franklin High Yield Fund;Franklin High Yield (Euro) Fund*;Franklin Income Fund;Franklin India Fund;Franklin Technology Fund;Franklin Technology FundFranklin U.S. Equity Fund;Franklin U.S. Government Fund;Franklin U.S. Growth Fund;Franklin U.S. Ultra Short Bond Fund;Franklin U.S. Small-Mid Cap Growth Fund;Franklin U.S. Total Return Fund;Templeton Asian Bond Fund;Templeton Emerging Markets Bond Fund;Templeton Euro Liquid Reserve Fund;Templeton Euroland Bond Fund;Templeton European Total Return Fund*;Templeton Global Balanced Fund�;Templeton Global Bond Fund;Templeton Global Bond (Euro) Fund;Templeton Global Income Fund�;Templeton Global Total Return Fund; andTempleton U.S. Dollar Liquid Reserve Fund

FRANKLIN ADVISERS, INC.One Franklin ParkwaySan Mateo, CA 94403-1906, U.S.A.

Franklin Advisers, Inc. has appointed Fiduciary Trust International Limited as sub-advisor in relation tothe Templeton Euro Liquid Reserve Fund, the Templeton Euroland Bond Fund and Fiduciary TrustCompany International and Fiduciary Trust International Limited as sub-advisors in relation to theTempleton Global Total Return Fund; and Franklin Templeton Asset Management (India) PrivateLimited as sub-advisor in relation to Franklin India Fund.

*Franklin Advisers, Inc. has been appointed as Investment Manager of this Fund, together withFiduciary Trust International Limited.

�Franklin Advisers, Inc. has been appointed as Investment Manager in respect of the fixed incomeportion of the assets of Templeton Global Balanced Fund and of Templeton Global Income Fund.

14

As to: Franklin European Growth Fund;Franklin European Small-Mid Cap Growth Fund;Franklin Global Real Estate (Euro) Fund;Franklin Global Real Estate (USD) Fund; andFranklin Global Small-Mid Cap Growth Fund

FIDUCIARY TRUST COMPANY INTERNATIONALFourth Floor600, 5th AvenueNew York, NY 100 20-2302U.S.A.

As to: Franklin High Yield (Euro) Fund*; andTempleton European Total Return Fund*

FIDUCIARY TRUST INTERNATIONAL LIMITEDThe Adelphi Building1-11 John Adam StreetLondon WC2N 6HT, England, U.K.

*Fiduciary Trust International Limited has been appointed as Investment Manager of this Fund, togetherwith Franklin Advisers, Inc.

As to: Templeton Global Fund; andTempleton Growth (Euro) Fund

TEMPLETON GLOBAL ADVISORS LIMITEDP.O. Box N-7759Lyford CayNassau, Bahamas

Templeton Global Advisors Limited has appointed Franklin Templeton Investment Management Limitedas sub-advisor in relation to Templeton Global Fund.

As to: Templeton U.S. Value Fund

FRANKLIN TEMPLETON INVESTMENTS CORP.1, Adelaide Street East, Suite 2101,Toronto ONTARIO M5C 3B8, Canada

As to: Franklin Mutual Beacon Fund;Franklin Mutual European Fund; andFranklin Mutual Global Discovery Fund

FRANKLIN MUTUAL ADVISERS, LLC101 John F. Kennedy ParkwayShort Hills, NJ 07078-2789, U.S.A.

As to: Franklin Global Growth Fund

FIDUCIARY INTERNATIONAL INC.Fourth Floor600, 5th AvenueNew York, NY 100 20-2302U.S.A.

As to: Franklin Templeton Japan Fund

FRANKLIN TEMPLETON INVESTMENTS JAPAN LIMITEDKanematsu Building, 6th Floor14-1, Kyobashi 2 chomeChuo-Ku, Tokyo

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As to: Franklin Templeton Global Growth and Value Fund

FRANKLIN TEMPLETON ALTERNATIVE STRATEGIES, INC. (responsible for the growthand value weights of the Fund’s assets)Corporation Trust Center1209 Orange StreetWilmington, Delaware 19801, U.S.A., and

FIDUCIARY TRUST COMPANY INTERNATIONAL (responsible for the growth equityportion of the Fund’s assets)Fourth Floor600, 5th AvenueNew York, NY 100 20-2302U.S.A. and

TEMPLETON INVESTMENT COUNSEL, LLC (responsible for the value portion of theFund’s assets)500 East Broward BoulevardFort Lauderdale, Florida 33394U.S.A.

Principal Distributor:TEMPLETON GLOBAL ADVISORS LIMITEDP.O. Box N-7759Lyford CayNassau, Bahamas

Distribution Controller:FRANKLIN TEMPLETON INTERNATIONAL SERVICES S.A.26, boulevard RoyalL-2449 LuxembourgGrand Duchy of Luxembourg

Share Distributors and Consultants:FRANKLIN/TEMPLETON SECURITIES INVESTMENT CONSULTING(SINOAM) INC. (CONSULTANT)9F, #87, Sec. 4Chung Hsiao E. RoadTaipeiTaiwan, R.O.C.

FRANKLIN TEMPLETON FRANCE S.A.16 18 avenue Georges VF-75008 ParisFrance

FRANKLIN TEMPLETON INVESTMENTS (ASIA) LIMITED17/F, Chater House8 Connaught Road CentralHong Kong

FRANKLIN TEMPLETON INVESTMENT SERVICES GmbHMainzer Landstra�e 16D-60325 Frankfurt am MainGermany

16

FRANKLIN TEMPLETON INTERNATIONAL SERVICES S.A.26, boulevard RoyalL-2449 LuxembourgGrand Duchy of Luxembourg

FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITEDThe Adelphi Building1-11 John Adam StreetLondon WC2N 6HT, England, U.K.

FRANKLIN TEMPLETON SWITZERLAND LTDBahnofstrasse 22CH-8022 Zu« richSwitzerland

TEMPLETON ASSET MANAGEMENT LTD7 Temasek Boulevard#38-03 Suntec Tower One03897 Singapore

Custodian:J.P. MORGAN BANK LUXEMBOURG S.A.European Bank & Business Centre6 route de Tre'vesL-2633 SenningerbergGrand Duchy of Luxembourg

Registrar and Transfer, Corporate, Domiciliary andAdministrative Agent:FRANKLIN TEMPLETON INTERNATIONAL SERVICES S.A.26, boulevard RoyalL-2449 LuxembourgGrand Duchy of Luxembourg

Auditors:PRICEWATERHOUSECOOPERS Sa'rl400, route d’EschB.P. 1443L-1014 LuxembourgGrand Duchy of Luxembourg

Legal Advisers:ELVINGER, HOSS & PRUSSEN2, Place Winston ChurchillB.P 425L-2014 LuxembourgGrand Duchy of Luxembourg

Listing Agent:J.P. MORGAN BANK LUXEMBOURG S.A.European Bank & Business Centre6 route de Tre'ves L-2633 SenningerbergGrand Duchy of Luxembourg

17

Administration and AdvisersPrincipal Paying Agent:

J.P. MORGAN BANK LUXEMBOURG S.A.European Bank & Business Centre

6 route de Tre'vesL-2633 Senningerberg

Grand Duchy of Luxembourg

Local Paying Agents:in Austria :

Bank Austria Creditanstalt AGAm Hof 2

A-1010 Wien

in Belgium:ING Belgique S.A.

Marnixlaan, 24/Avenue Marnix, 24B-1000 Brussel/B-1000 Bruxelles

in Czech Republic :CitibankPraha 6

166 40, Evropska 178

in France:BNP Paribas S.A.

Agence Paris Investisseurs & Banquiers63, boulevard Haussmann

F-75008 Paris

in Germany:J.P.MORGAN AGJunghofstra�e 14

60311 Frankfurt am MainGermany

andMARCARD, STEIN & CO GmbH & Co KG

Ballindamm 36D-20095 Hamburg

in Italy:Banca Generali

Via Machiavelli, 4I-34132 Trieste

Banca Intesa SpaPiazza Paolo Ferrari, 10

I-20121 Milano

BNP Paribas Securities Services S.A.Milan Branch

Via Ansperto, 5I- 20123 Milano

andCitibank International plc

Foro Buonaparte, 16I- 20121 Milano

18

In Poland:Citigroup Global Transaction Services

citibank handlowyul. Senatorska 16

00-923 Warsaw, Poland

in Spain:Bankinter SA

Paseo de la Castellana 29Sp-28046 Madrid

in Switzerland:JPMorgan Chase Bank

Zu« rich BranchDreiko«ningstrasse 21

CH-8022 Zu« rich

Local Financial Services Agents:

in Ireland:The Governor and Company of the Bank of Ireland

International Financial Services Centre1 Harbourmaster Place

Dublin 1

in the Netherlands:ING (Nederland) Trust

P.O. Box 2838Prinses Irenestraat 61

1000 CV Amsterdam Zuid

in Sweden:SE Banken

Sergels Torg 210640 Stockholm

Registered Office:26, boulevard RoyalL-2449 Luxembourg

Grand Duchy of Luxembourg

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Investment Objectives and PoliciesThe Company aims to provide investors with a choice of Funds investing in a wide range of

transferable securities on a worldwide basis and featuring a diverse array of investment objectivesincluding capital growth and income. The overall objective of the Company is to seek to minimiseinvestment exposure through diversification and to provide Shareholders with the benefit of a portfoliomanaged by entities of Franklin Templeton Investments according to its successful time-testedinvestment selection methods.

The profile of the typical investor for whom each Fund is designed is more fully described inAppendix D of this Prospectus.

Each Fund may invest in ‘‘when-issued’’ securities, lend its portfolio securities and borrow money,all within the limits of the Company’s investment restrictions.

Further, subject to the limits set forth in the investment restrictions, the Company may withrespect to each Fund invest in options on securities and enter into financial futures contracts for efficientportfolio management.

In addition, the Company may also seek to protect and enhance the asset value of its differentFunds through hedging strategies consistent with the Funds’ investment objectives by utilising currencyoptions, forward contracts and futures contracts.

Each Fund may, on an ancillary basis, hold liquid assets. Such assets may be kept in the form ofcash deposits or in money market instruments.

The specific investment objectives and policies of each of the different Funds are subject to thefollowing interpretation:

^ Funds that bear in their name a reference to a particular type of assets, or a particular country,region or industry, will invest at least two thirds of their net assets in investments corresponding tosuch security, country, region or industry.

^ If a description of a Fund’s investment policy states that investments will be made ‘‘primarily’’,‘‘mainly’’ or ‘‘principally’’ in a particular type of security, or a particular country, region or industry,such Fund will invest at least two thirds of its net assets in investments corresponding to suchsecurity, country, region or industry. If a description of a Fund’s investment policy states that theInvestment Manager retains the flexibility to invest in other securities than the categories orcountries, regions or industries in which it will ‘‘primarily’’, ‘‘mainly’’ or ‘‘principally’’ invest, suchother investments will not exceed one third of the net invested assets of the corresponding Fund. Ifa description of a Fund’s investment policy is related to investments in corporations of a particularcountry or region, such reference means (in the absence of any further specification in theProspectus) investments in companies incorporated or having their principal business activities insuch country or region.

The Investment Objectives and Policies described below are binding on the respective InvestmentManagers of the Funds.

The specific investment objectives and policies of the different Funds are the following:

Franklin Aggressive Growth Fund

The Fund’s investment objective is capital appreciation. The Fund invests primarily in equitysecurities of U.S. issuers demonstrating accelerating growth, increasing profitability, or above-average growth or growth potential as compared with the overall economy. Equity securitiesgenerally entitle the holder to participate in a company’s general operating results. They includecommon stocks, convertible securities and warrants on securities.

The Fund primarily invests in small, medium, and large capitalisation companies with stronggrowth potential across a wide range of sectors. In choosing equity investments, the Fund’smanager will focus on sectors that have exceptional growth potential and fast growing, innovative

20

companies within these sectors. In addition, solid management and sound financial records arefactors the manager also considers. Although the manager will search for investments across a largenumber of sectors, it expects to have significant positions in particular sectors. These sectors mayinclude, for example, technology (including computers and telecommunications), health care(including biotechnology), consumer products, and consumer services (including media,broadcasting and entertainment). Notwithstanding the foregoing, at no time will the InvestmentManager invest more than 10% of the Fund’s total net assets into non-investment grade debtsecurities as defined by an accredited rating agency. The base currency of the Fund is U.S. Dollar.

Franklin Biotechnology Discovery Fund

The Fund’s objective is to seek capital appreciation. The Fund invests primarily in equity securitiesof biotechnology companies and discovery research firms located in the U.S. and other countriesand to a lesser extent in debt securities of any type of foreign or U.S. issuers. The Fund invests asubstantial portion of its assets in smaller capitalisation companies, which are generally companieswith a market capitalisation of less than USD 2 billion at the time of the Fund’s investment.

For the Fund’s investment purposes, a biotechnology company is one that has at least 50% of itsearnings derived from biotechnology activities, or at least 50% of its assets devoted to suchactivities based on the company’s most recent fiscal year. Biotechnology activities are research,development, manufacture, and distribution of various biotechnological or biomedical products,services and processes. This may include companies involved with genomics, genetic engineering,and gene therapy. It also includes companies involved in the application and development ofbiotechnology in areas such as health care, pharmaceuticals, and agriculture.

To the extent that the Fund invests in debt securities, it generally buys securities that are ratedinvestment grade or unrated securities that it determines to be of comparable quality. Investmentgrade debt securities are rated in the top four ratings categories by independent ratingorganisations such as Standard & Poor’s Corporation or Moody’s Investors Service, Inc.

The Fund anticipates that under normal conditions, it will invest more of its assets in U.S.securities than in those of any other single country although the Fund may have more than 50% ofits total assets in non-U.S. securities.

The manager may take a temporary defensive position when it believes the securities tradingmarkets or the economies of countries where the Fund invests are experiencing excessive volatilityor prolonged general decline, or other adverse conditions exist. Under these circumstances, theFund may be unable to pursue its investment goal. Notwithstanding the foregoing, at no time willthe Investment Manager invest more than 10% of the Fund’s total net assets into non-investmentgrade debt securities as defined by an accredited rating agency. The base currency of the Fund isU.S. Dollar.

Franklin European Growth Fund

The Fund’s investment objective is capital appreciation. The Fund will seek to achieve itsinvestment objective by investing no less than half of its net assets in a portfolio of listed equity orequity-related securities, which qualify as transferable securities (including warrants andconvertible securities). At least two thirds of the Fund’s net assets will be invested intransferable securities issued by companies or governments or public bodies having their place ofincorporation or their principal business activities in various European countries includingAustria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary,Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden,Switzerland, Turkey and the United Kingdom. The base currency of the Fund is Euro.

Franklin European Small Mid-Cap Growth Fund

The Fund’s investment objective is capital appreciation. The Fund invests primarily in small andmid-cap growth equity securities of companies located throughout Europe. The Fund invests in adiversified portfolio of equity and equity related securities (including warrants and convertible

21

securities). The Fund invests in companies with a market capitalisation above Euro 100 millionand below Euro 8 billion or the equivalent in local currencies at the time of purchase. The basecurrency of the Fund is Euro.

Franklin Global Growth Fund

The Fund’s investment objective is capital appreciation through investment in growth transferablesecurities. The Investment Manager will seek to achieve the investment objective of the Fund byinvesting primarily in listed equities and equity related securities, which qualify as transferablesecurities (including convertible securities and warrants) throughout the world. The Fund’sexposure to various regions and markets will vary from time to time according to the InvestmentManager’s opinion as to the prevailing conditions and prospects for these markets.

The Fund invests in growth stocks, including convertible securities and warrants, in bothdeveloped and emerging markets, and in companies listed on the stock markets in the followingregions and countries : North America; Continental Europe: Austria, Belgium, Denmark, Finland,France, Germany, Italy, the Netherlands, Norway, Spain, Sweden and Switzerland; the UnitedKingdom and Ireland; Asia: Hong Kong, Japan, Malaysia, Singapore and Australia. The Fund mayalso invest in emerging markets. Investment in emerging markets countries are subject to a higherdegree of risk, as described in the Section ‘‘Hedging Practice and other Risk Considerations’’ in theProspectus. The base currency of the Fund is U.S. Dollar.

Franklin Global Real Estate (Euro) Fund

The Fund’s investment objective is to maximise total investment return consisting of income andcapital appreciation.

The Investment Manager will seek to achieve its investment objective by investing in real estateinvestment trusts (REITs) and other companies whose principal business is real estate oriented andwhich are located around the world. These investments shall qualify as transferable securities. TheFund will seek to invest in companies across a wide range of real estate sectors and countries.

The base currency of the Fund is Euro. The non-Euro component of the portfolio will be hedgedinto Euro to reduce foreign currency risk exposure.

Franklin Global Real Estate (USD) Fund

The Fund’s investment objective is to maximise total investment return consisting of income andcapital appreciation.

The Investment Manager will seek to achieve its investment objective by investing in real estateinvestment trusts (REITs) and other companies whose principal business is real estate oriented andwhich are located around the world. These investments shall qualify as transferable securities. TheFund will seek to invest in companies across a wide range of real estate sectors and countries.

The base currency of the Fund is U.S. Dollar. The non-U.S. Dollar component of the portfolio willbe hedged into U.S. Dollar to reduce foreign currency risk exposure.

Franklin Global Small-Mid Cap Growth Fund

The Fund’s investment objective is capital appreciation. The Fund invests primarily in small andmedium capitalisation growth stocks from any developed country in the world. The Fund investsprimarily in a diversified portfolio of equity securities, which are U.S. Dollar or non-U.S. Dollardenominated. The Fund may also invest in equity-related securities such as convertible bonds andbonds with warrants which are U.S. Dollar or non-U.S. Dollar denominated. The Fund invests insmall-mid cap companies with market capitalisation below USD 8 billion at the time of purchase.For the purpose of this Fund’s investment objective, the term ‘‘developed countries’’ will includethose countries that are included in the Solomon Smith Barney EMI World Index. The basecurrency of the Fund is U.S. Dollar.

22

Franklin High Yield Fund

The Fund’s principal investment objective is to earn a high level of current income. As a secondaryobjective, the Fund seeks capital appreciation, but only when consistent with its principalobjective. The Fund will seek to achieve these objectives by investing primarily in fixed incomedebt securities of U.S. or non-U.S. issuers that, in the judgement of the Investment Manager, offerthe highest yield available without excessive risk at the time of the purchase. The Fund normallywill be invested in fixed income debt securities with investment grade or lower grade ratings, ifissued by U.S. issuers, or, if issued by non-U.S. issuers or unrated, their equivalent. TheInvestment Manager will attempt to avoid excessive risk by performing independent creditanalyses of issuers and by diversifying the Fund’s investments among different issuers. However,since the investment objective is more likely to be achieved through an investment policy that isflexible and adaptable, the Fund may also, temporarily and/or on an ancillary basis, seekinvestment opportunities in any other types of securities such as government securities, preferredstock, common stock and other equity linked securities, warrants and securities and bondsconvertible into common stock. The Fund may invest up to 10% of its assets in credit-linkedsecurities, which the investment manager may use as a means to invest more rapidly and efficientlyin certain segments of the high yield, bank loan and investment grade debt markets. The Fundmay also invest up to 10% of its total assets in securities in default. Investments in securities indefault are subject to a higher degree of risk as more fully described in the section ‘‘HedgingPractice and other Risk Considerations’’ in the Prospectus. The base currency of the Fund is U.S.Dollar.

Franklin High Yield (Euro) Fund

The Fund’s principal investment objective is to earn a high level of current income. As a secondaryobjective, the Fund seeks capital appreciation, but only when consistent with its principalobjective. The Fund will seek to achieve these objectives by investing primarily in fixed incomedebt securities of European or non-European issuers that, in the judgement of the InvestmentManagers, offer the highest yield available without excessive risk at the time of the purchase. TheFund will principally invest in Euro-denominated or non-Euro denominated Euro-hedged, fixedincome debt securities with non-investment grade ratings, or if unrated, their equivalent. TheInvestment Managers will attempt to avoid excessive risk by performing independent creditanalyses of issuers and by diversifying the Fund’s investments among different issuers. However,since the investment objective is more likely to be achieved through an investment policy that isflexible and adaptable, the Fund may also, temporarily and/or on an ancillary basis, seekinvestment opportunities in any other types of Euro-denominated securities such as governmentsecurities, preferred stock, common stock and other equity linked securities, warrants andsecurities and bonds convertible into common stock. The Fund may invest up to 10% of its assetsin credit-linked securities, which the Investment Managers may use as a means to invest morerapidly and efficiently in certain segments of the high yield, bank loan and investment grade debtmarkets. The Fund may also invest up to 10% of its total assets in securities in default. Investmentsin securities in default are subject to a higher degree of risk as more fully described in the section‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus. The base currency of theFund is Euro. The name of this Fund reflects the base currency of the Fund being in Euro, anddoes not imply that any particular proportion of the Fund’s net invested assets will be made inEuro.

Franklin Income Fund

The investment objective of the Fund is to maximise income while maintaining prospects forcapital appreciation. The Fund will invest in a diversified portfolio of transferable securitiesconsisting of equity securities and long and short-term debt securities. Equity securities generallyentitle the holder to participate in a company’s general operating results. These include commonstocks, preferred stocks and convertible securities. Debt securities represent an obligation of theissuer to repay a loan of money to it, and generally provide for the payment of interest. Theseinclude bonds, notes and debentures.

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In its search for growth opportunities, the Fund invests in common stocks of companies from avariety of industries such as utilities, oil, gas, real estate and consumer goods. The Fund seeksincome by selecting investments such as corporate, foreign and U.S. Treasury bonds, as well asstocks with attractive dividend yields. The Fund may invest in debt securities that are rated belowinvestment grade. Investment grade debt securities are rated in the top four ratings categories byindependent rating organisations such as Standard & Poor’s Corporation (S&P) and Moody’sInvestors Service, Inc. (Moody’s). The Fund generally invests in securities rated at least CAA byMoody’s or CCC by S&P or unrated securities that the Fund’s Investment Manager determines areof comparable quality. Generally, lower rated securities offer higher yields than more highly ratedsecurities to compensate investors for the higher risk. Further information is contained under‘‘Hedging Practice and other Risk Considerations’’.

The Fund may invest up to 25% of its net invested assets in non-U.S. securities. It ordinarily buysnon-U.S. securities that are traded in the U.S. or American Depository Receipts, which arecertificates typically issued by a bank or trust company that give their holders the right to receivesecurities issued by a U.S. or a non-U.S. company.

The Fund’s Investment Manager searches for undervalued or out-of-favour securities it believesoffer opportunities for income today and significant growth tomorrow. It performs independentanalysis of the securities being considered for the Fund’s portfolio, rather than relying principallyon the ratings assigned by rating agencies. In its analysis, the Investment Manager considers avariety of factors, including:

^ the experience and managerial strength of the company;

^ responsiveness to changes in interests and business conditions;

^ debt maturity schedules and borrowing requirements;

^ the company’s changing financial condition and market recognition of the change; and

^ a security’s relative value based on such factors as anticipated cash flow, interest or dividendcoverage, asset coverage, and earnings prospects.

The Investment Manager may take a temporary defensive position when it believes the markets orthe economy are experiencing excessive volatility, a prolonged general decline or when otheradverse conditions may exist. Under these circumstances, the Fund may be unable to pursue itsinvestment goal. The base currency of the Fund is U.S. Dollar.

Franklin India Fund

The Fund’s investment objective is capital appreciation. The Fund will invest primarily in equitysecurities of entities, which are incorporated, or have their principal business activities in India.The Fund seeks to invest in companies across a wide range of industries irrespective of theirmarket capitalisation. In addition the Fund may seek investment opportunities in fixed incomesecurities issued by any of the above-mentioned entities as well as money market instruments. Thebase currency of the Fund is the U.S. Dollar. Investment in Emerging Markets countries are subjectto a higher degree of risk, as described more fully in the section ‘‘Hedging Practice and other RiskConsiderations’’ in the Prospectus.

Franklin Technology Fund

The Fund’s investment objective is capital appreciation. The Fund will invest at least two thirds ofits total net invested assets in equity securities of companies expected to benefit from thedevelopment, advancement, and use of technology. These may include, for example, companies inthe following industries :

^ technology services, including computer software, data services, and internet services ;

^ electronic technology, including computers, computer products, and electroniccomponents;

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^ telecommunications, including networking, wireless, and wire-line services and equipment;

^ media and information services ;

^ semiconductors and semiconductor equipment; and

^ precision instruments.

The Fund will invest in securities of large, well-established companies, as well as small to medium-sized companies that the Investment Manager believes provide good emerging growthopportunities.

The Fund will use a growth approach that employs intensive, bottom-up, fundamental research ofcompanies. The Investment Manager will also take into consideration broad-based trends whenconsidering the selection of investments. In general, the Investment Manager will look forcompanies it believes display, or will display, some of the following characteristics, among others:quality management; robust growth prospects ; strong market positioning; high, or rising profitmargins; and good return on capital investment. Notwithstanding the foregoing, at no time willthe Investment Manager invest more than 10% of the Fund’s total net assets into non-investmentgrade debt securities as defined by an accredited rating agency. The base currency of the Fund isU.S. Dollar.

Franklin U.S. Equity Fund

The primary investment objective of the Fund is capital appreciation. The Fund’s investmentstrategy is to invest primarily in U.S. equity securities, including common and preferred stocks, orsecurities convertible into common stocks, as well as American Depository Receipts and AmericanDepository Shares that are listed on the major U.S. stock exchanges. The Investment Manager willemploy an active, bottom-up fundamental research process to search for individual securitiesbelieved to possess superior risk-return characteristics, taking into account both future growthpotential and valuation considerations. This strategy will be applied in a diversified manner,enabling the Investment Manager to search in all areas of the U.S. stock market, including anymarket capitalisation size, sector and industry. On an ancillary basis, the Fund may employhedging techniques and hold cash reserves from time to time. Notwithstanding the foregoing, atno time will the Investment Manager invest more than 10% of the Fund’s total net assets into non-investment grade debt securities as defined by an accredited rating agency. The benchmark of theFund is the S&P 500. The base currency of the Fund is U.S. Dollar.

Franklin U.S. Government Fund

The investment objective of the Fund is safety of principal and income, which it seeks to achieveprimarily through a policy of investing in debt obligations issued or guaranteed by the UnitedStates of America government and its agencies. The base currency of the Fund is U.S. Dollar.

Franklin U.S. Growth Fund

The Fund’s principal investment objective is to provide capital appreciation by investing primarilyin equity securities of companies located in the United States. The Fund may also invest in equitysecurities of companies located in other countries but listed on a U.S. stock exchange. The Fundseeks to invest in companies across a wide range of industries that have above average growthpotential than the broader economy and that are highly competitive in their industry. Thecomposite of the Fund’s investments will generally show similar characteristics to stocks in theRussell 1000 Growth Index (P/E, P/B, earnings growth, market capitalisation etc.) The Fund may,on an ancillary basis, invest in American Depository Receipts. The base currency of the Fund is theU.S. Dollar.

Franklin U.S. Ultra Short Bond Fund

The Fund’s investment goal is to provide as high a level of current income as is consistent withprudent investing, while seeking preservation of shareholders’ capital. The Fund will investprimarily in U.S. investment grade fixed income securities with a targeted average duration of less

25

than 3 years. For the purposes of this Fund, investment grade securities are those securities ratedBBB ^ by S&P or Moody’s Baa3 or higher.

In addition, the Fund may seek to obtain market exposure to the securities in which it primarilyinvests by entering into a series of purchase and sale contracts or by using other investmenttechniques including mortgage dollar rolls. The base currency of the Fund is the U.S. Dollar.

Franklin U.S. Small-Mid Cap Growth Fund

The Fund’s investment objective is capital appreciation. The Fund will invest at least two thirds ofits net assets in the equity securities of U.S. small and medium capitalisation companies. For thisFund, mid cap companies are those companies with market capitalisation values not exceedingUSD 8.5 billion and small cap companies are those companies with market capitalisation valuesnot exceeding: (i) USD1.5 billion; or (ii) the highest market cap value in the Russell 2000 Index,whichever is greater at the time of the purchase. In addition, the Fund may invest in equitysecurities of larger companies. The base currency of the Fund is U.S. Dollar.

Franklin U.S. Total Return Fund

The Fund’s principal investment objective is to provide high current income, consistent withpreservation of capital. Its secondary goal is capital appreciation over the long term.

The Fund uses a wide range of investments to efficiently manage the portfolio of investments tohelp reduce investment costs and manage portfolio risks. These investments primarily includedebt and interest bearing instruments, government, corporate and mortgage-backed as well asasset-backed debts, futures, and certain other derivative instruments, including index basedfinancial derivatives and credit default swaps.

The Fund primarily invests in U.S. issuers but may invest up to 20% of its net assets (withouttaking into account ancillary liquid assets) in non-U.S. issuers and up to 10% of its net assets innon-U.S. dollar denominated investments. Up to 15% of its net assets may be invested in non-investment grade debt securities and investments. The base currency of the Fund is the U.S.Dollar.

Franklin Mutual Beacon Fund

The primary objective of the Fund is capital appreciation. A secondary objective is income. TheFund will pursue its objective primarily through investments in common stock, preferred stock,and debt securities convertible or expected to be convertible into common or preferred stock. Nomore than 30% of the Fund’s net assets will be invested in securities of non-U.S. issuers. Theopinions of the Investment Manager are based upon analysis and research, taking into account,among other factors, the relationship of book value (after taking into account accountingdifferences among countries) to market value, cash flow, multiple of earnings of comparablesecurities, creditworthiness of issuers, as well as the value of collateral securing a debt obligation,with the objective of purchasing equity and debt securities at below their intrinsic value. The Fundwill also seek to invest in the securities of companies involved in mergers, consolidations,liquidations and reorganisations or as to which there exist tender or exchange offers, and mayparticipate in such transactions. The Fund may purchase indebtedness and participations therein,both secured and unsecured, of debtor companies in reorganisation or financial restructuring.Such indebtedness may be in the form of securitised loans, notes, bonds or debentures. The basecurrency of the Fund is U.S. Dollar.

Franklin Mutual European Fund

The Fund’s principal investment objective is capital appreciation, which may occasionally be shortterm. Its secondary objective is income. The Fund will primarily invest in equity securities anddebt securities convertible or expected to be convertible into common or preferred stock ofcompanies incorporated or having their principal activities in European countries that the managerbelieves are available at prices less than their actual value based on certain recognised or objective

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criteria (intrinsic value). These include common stocks, preferred stocks and convertible securities.The Fund will invest predominantly of its total net invested assets (being the Fund’s assets less anycash or cash equivalents) in the securities of issuers organised under the laws of or whose principalbusiness operations are located in European countries. For purposes of the Fund’s investments,European countries means all of the countries that are members of the European Union, theUnited Kingdom, Eastern and Western Europe and those regions of Russia and the former SovietUnion that are considered part of Europe. The Fund currently intends to invest primarily insecurities of issuers in Western Europe. The Fund will normally invest in securities from at leastfive different countries, although, from time to time, it may invest all of its assets in a singlecountry. The Fund may invest up to 10% of its total net invested assets in securities of U.S. issuersand other non-European issuers. The Fund may also seek to invest in the securities of companiesinvolved in mergers, consolidations, liquidations and reorganisations or as to which there existtender or exchange offers, and may participate in such transactions. To a lesser extent, the Fundmay also purchase indebtedness and participations therein, both secured and unsecured, of debtorcompanies in reorganisation or financial restructuring. The base currency of the Fund is Euro.

Franklin Mutual Global Discovery Fund

The Fund’s investment objective is capital appreciation. Under normal market conditions, theFund will pursue its objective primarily through investments in common stock, preferred stockand debt securities convertible or expected to be convertible into common or preferred stock ofcompanies of any nation that the Investment Manager believes are available at market prices lessthan their value based on certain recognised or objective criteria (intrinsic value). The Fundexpects to invest primarily, and may invest up to 100% of it net assets in non-U.S. issuers, whichmay include sovereign debt and participations in foreign government debt.

The Fund will also seek to invest in the securities of companies involved in mergers,consolidations, liquidations and reorganisations or as to which there exist tender or exchangeoffers, and may participate in such transactions. The Fund may purchase indebtedness andparticipations therein, both secured and unsecured, of debtor companies in reorganisation orfinancial restructuring. Such indebtedness may be in the form of loans, notes, bonds ordebentures. The Fund invests primarily in mid- and large-cap companies with a marketcapitalisation greater than 1.5 billion U.S. Dollar.

The Investment Manager may take a temporary defensive position when it believes the markets orthe economy are experiencing excessive volatility, a prolonged general decline or when otheradverse conditions may exist. Under these circumstances, the Fund may be unable to pursue itsinvestment goal. The base currency of the Fund is U.S. Dollars.

Franklin Templeton Global Growth and Value Fund

The Fund’s investment objective is capital appreciation. The Fund will invest in equity securitiesand debt securities convertible or expected to be convertible into common or preferred stocks ofcompanies of any market capitalisation located anywhere in the world, including emergingmarkets. At least half of the Fund’s assets without taking into account ancillary liquid assets shallbe made in equity securities or similar instruments The Fund may also invest in American,European and Global Depositary Receipts. The Fund will follow a quantitative model to make anallocation of its assets between ‘‘value’’ and ‘‘growth’’ stocks. The base currency of this Fund is U.S.Dollar.

Franklin Templeton Japan Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing primarily in equity securities of issuers incorporated or having their principal businessactivities in Japan. In addition, the Fund may also seek investment opportunities in other types ofsecurities such as preferred stocks, securities convertible into common stocks, and corporate andgovernment debt obligations which are Japanese Yen and non- Japanese Yen denominated. Thebase currency of the Fund is Japanese Yen.

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Templeton Asian Bond Fund

The Fund’s principal investment objective is to maximise, consistent with prudent investmentmanagement, total investment return consisting of a combination of interest income, capitalappreciation and currency gains. Under normal market conditions, the Fund will primarily investin a portfolio of fixed and floating rate debt securities and debt obligations of governments,government-related or corporate issuers located throughout Asia. The Fund may also invest insecurities or structured products where the security is linked to or derives its value from anothersecurity, linked to assets or currencies of any Asian country. More specifically, the Fund maypurchase debt obligations issued by governments and supranational entities organised orsupported by several national governments located in Asia. The Fund may also purchase mortgageand asset-backed securities, convertible bonds, and use financial futures contracts, or options onsuch contracts, on government securities throughout Asia. The Fund may invest in investmentgrade and non-investment grade debt securities issued by Asian issuers including securities indefault. Investments in securities in default are subject to a higher degree of risk, as described morefully in the Section ‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus.

The Fund may invest up to 33% of its net assets in fixed and floating rate debt securities and debtobligations of governments, government-related or corporate issuers located outside of Asia whichare impacted by economic or financial dynamics in Asia.

In order to effectively manage cash flows in or out of the Fund, the Fund may buy and sellfinancial futures contracts or options on such contracts or hold money market instruments. TheFund may use futures contracts on government securities to help manage risk relating to interestrates and other market factors, to increase liquidity, and to quickly and efficiently cause new cashto be invested in the securities markets or, if cash will be needed to meet shareholder redemptionrequests, to remove Fund assets from exposure to the market. The Fund may also participate inmortgage dollar roll transactions. The Fund will seek to protect and enhance the asset value of theportfolio and especially cash or money market instruments through hedging strategies consistentwith the Fund’s investment objectives by utilising currency options, forward contracts and futurescontracts. The base currency of the Fund is the U.S. Dollar.

Templeton Asian Growth Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing primarily in equity securities of entities, which are incorporated, or have their area ofprimary activity, in the Asia Region. The Fund may also invest in equity securities, which are listedon recognised exchanges in capital markets of the Asia Region (excluding Australia, New Zealandand Japan). The Asia Region includes but is not limited to the following countries : Hong Kong,India, Indonesia, Korea, Malaysia, People’s Republic of China, Pakistan, Philippines, Singapore, SriLanka, Taiwan and Thailand. Under normal market conditions, the Fund will invest primarily incommon stocks. However, since the investment objective is more likely to be achieved through aninvestment policy that is flexible and adaptable, the Fund may seek investment opportunities inother types of transferable securities, including fixed income securities. The base currency of theFund is U.S. Dollar. Investments in Emerging Markets countries are subject to a higher degree ofrisk, as described more fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ inthe Prospectus.

Templeton BRIC Fund

The Fund’s investment objective is capital appreciation. The Fund will invest primarily in equitysecurities of companies (i) organised under the laws of or with their principal office in Brazil,Russia, India and China (including Hong-Kong and Taiwan) (‘‘BRIC’’) or (ii) which derive theprincipal portion of their revenues or profits from BRIC economies or have the principal portion oftheir assets in BRIC economies.

However, since the investment objective is more likely to be achieved through an investmentpolicy that is flexible and adaptable, the Fund may seek investment opportunities in other types oftransferable securities, including debt and fixed income securities and in money market

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instruments. The base currency of the Fund is U.S. Dollar. Investment in Emerging Marketscountries are subject to a higher degree of risk, as described more fully in the Section ‘‘HedgingPractice and other Risk Considerations’’ in the Prospectus.

Templeton China Fund

The investment objective of the Fund is capital appreciation, which it seeks to achieve through apolicy of investing primarily in equity securities of companies (i) organised under the laws of orwith their principal offices in the People’s Republic of China (‘‘China’’), Hong Kong or Taiwan or(ii) which derive the principal portion of their revenue from goods or services sold or produced, orhave the principal portion of their assets in China, Hong Kong or Taiwan. The Fund may alsoinvest in equity securities of companies (i) for which the principal market for the trading ofsecurities is China, Hong Kong or Taiwan or (ii) that are linked to assets or currencies in China,Hong Kong or Taiwan. However, since the investment objective is more likely to be achievedthrough an investment policy that is flexible and adaptable, the Fund may also seek investmentopportunities in other types of securities such as preferred stock, securities convertible intocommon stock, and corporate and government debt obligations which are U.S. Dollar and non-U.S. Dollar denominated. The base currency of the Fund is U.S. Dollar. Investments in EmergingMarkets countries are subject to a higher degree of risk, as described more fully in the Section‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus.

Templeton Eastern Europe Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve by investingprimarily in listed equity securities of issuers organised under the laws of, or with their principalactivities within, the countries of Eastern Europe, as well as the New Independent States, i.e. thecountries in Europe and Asia that were formerly part of or under the influence of the Soviet Unionin the past (‘‘the Region’’). The Fund may also invest in securities issued by the governments of theabove-mentioned countries and privatisation certificates of companies located, or with theirprincipal activities, within the Region. Eastern Europe includes the following countries : Albania,Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, the Czech Republic, Greece, Hungary, theFormer Yugoslav Republic of Macedonia, Malta, Montenegro, Poland, Romania, Russia, Serbia, theSlovak Republic, Slovenia, and Turkey. The New Independent States that were formerly part of theSoviet Union, apart from Russia itself, include: Armenia, Azerbaijan, Belarus, Estonia, Georgia,Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Tajikistan, Turkmenistan, Ukraine, andUzbekistan. The Investment Manager anticipates that the Fund will invest primarily in companies(i) of which, if listed, the principal equity securities market is in the Region; or (ii) that derive atleast 50% of their revenues or profits from goods produced or sold, investments made, or servicesperformed, in the Region or that have at least 50% of their assets situated in the Region. The Fundwill primarily invest in equity securities of publicly traded companies. Preference will be given tothe countries with functioning stock markets where foreign investment is permitted andappropriate custodial arrangements exist. The base currency of the Fund is Euro. Investments inEmerging Markets countries are subject to a higher degree of risk, as described more fully in theSection ‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus.

Templeton Emerging Markets Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing primarily in equity securities, and as an ancillary matter in debt obligations, issued bycorporations incorporated or having their principal business activities in, and governments of,developing or emerging nations. The Fund may also invest in those companies, which derive asignificant proportion of their revenues or profits from emerging economies or have a significantportion of their assets in emerging economies. The Fund may also invest in equity and debtsecurities of issuers that are linked to assets or currencies of emerging nations. The Fund willinvest primarily in common stocks. However, since the investment objective is more likely to beachieved through an investment policy that is flexible and adaptable, the Fund may seekinvestment opportunities in other types of securities, such as preferred stock, securities convertible

29

into common stock, and corporate and government debt obligations, which are U.S. Dollar andnon-U.S. Dollar denominated. Notwithstanding the foregoing, at no time will the InvestmentManager invest more than 10% of the Fund’s total net assets into non-investment grade debtsecurities as defined by an accredited rating agency. The base currency of the Fund is U.S. Dollar.Investments in Emerging Markets countries are subject to a higher degree of risk, as describedmore fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus.

Templeton Emerging Markets Bond Fund

The investment objective of the Fund is to maximise, consistent with prudent investmentmanagement, total investment return, consisting of a combination of interest income and capitalappreciation. The Fund will seek to achieve this objective through a policy of investing primarilyin fixed and floating rate debt securities and obligations issued by corporations, governments orgovernment-related entities of developing or emerging nations, including Brady bonds (issued asa result of an exchange for previously defaulted bank debt), and debt obligations issued bysupranational entities organised or supported by several national governments in EmergingMarkets. In addition, the Fund may purchase preferred stock, common stock and other equitylinked securities, warrants, and debt securities exchangeable or convertible into common stock.Notwithstanding the foregoing, at no time will the Investment Manager invest more than 10% ofthe Fund’s net invested assets into equity securities. The Fund may also invest, in accordancewith the investment restrictions, in securities or structured products linked to assets orcurrencies in any developing or emerging nation. The securities and debt obligations the Fundinvests in may be denominated in U.S. Dollar or any other currency. The base currency of theFund is U.S. Dollar. Investments in Emerging Markets countries are subject to a higher degree ofrisk, as described more fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ inthe Prospectus.

Templeton Euro Liquid Reserve Fund

The investment objective of the Fund is to provide Shareholders with the opportunity to invest ina portfolio of high quality securities primarily Euro denominated, or hedged back into Euro toavoid any currency exposure. The Fund will consist principally of transferable securities issued orguaranteed by the governments of any nation worldwide and eligible securities of corporate issuersof any nation. Notwithstanding the foregoing, at no time will the Investment Manager invest morethan 10% of the Fund’s total net assets into non-investment grade debt securities as defined by anaccredited rating agency. The portfolio will be invested in a manner that the average remainingmaturity of all securities and instruments comprised in the portfolio of the Fund does not exceedtwelve months. For the purpose of calculating the residual maturity of each single security orinstrument, the financial instruments attached thereto shall be taken into account. For thesecurities or instruments whose terms of issue provide for an adjustment of their interest rate byreference to market conditions, the residual maturity until the date on which the rate is adjustedshall be considered. The base currency of the Fund is Euro.

Templeton Euroland Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve primarilythrough a policy of investing in equity and debt obligations of any issuer in a member country ofthe European Monetary Union including corporations and governments, whether denominated inEuro or relevant national currency, and in stock or debt obligations denominated in Euro of anyother issuer. The Fund will invest primarily in equity securities. However, since the investmentobjective is more likely to be achieved through an investment policy that is flexible and adaptable,the Fund may seek investment opportunities in other types of transferable securities, such aspreferred stock and securities convertible into common stock of any such issuers as describedabove. Notwithstanding the foregoing, at no time will the Investment Manager invest more than10% of the Fund’s total net assets into non-investment grade debt securities as defined by anaccredited rating agency. The base currency of the Fund is Euro.

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Templeton Euroland Bond Fund

The investment objective of the Fund, in accordance with prudent investment management, is tomaximise total investment return, through a combination of interest income and capitalappreciation. The Fund will seek to achieve its objective by investing in a portfolio of Euro-denominated fixed, floating rate and asset backed transferable debt securities, and in Euro-denominated debt obligations of government, supranational, government-related and corporateissuers worldwide. The assets of the Fund shall primarily (i.e. at least two thirds of the assetswithout taking into account ancillary liquid assets) be invested in investment grade securitiesissued by issuers from countries part of the European Monetary Union (‘‘EMU’’).

To best facilitate the investment objective, the Fund may purchase, on an ancillary basis, Euro-denominated securities issued by non-EMU member states or other issuing entities. In this respectthe Fund will hold no more than 15% of its net assets in securities issued by i) non-EMU memberstates and/or ii) such issuers with Standard & Poor’s and Moody’s ratings of BB+ or below and Ba1or below respectively. Notwithstanding the foregoing, at no time will the Investment Managerinvest more than 10% of the Fund’s net invested assets into equity securities. The base currency ofthe Fund is Euro.

Templeton European Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing in equity and debt obligations issued by European corporations and governments. TheFund will invest primarily in common stocks. However, since the investment objective is morelikely to be achieved through an investment policy that is flexible and adaptable, the Fund mayseek investment opportunities in other types of securities, such as preferred stock, securitiesconvertible into common stock, and fixed income securities, including debt obligations issued byEuropean governments. Notwithstanding the foregoing, at no time will the Investment Managerinvest more than 10% of the Fund’s total net assets into non-investment grade debt securities asdefined by an accredited rating agency. The base currency of the Fund is Euro.

Templeton European Total Return Fund

The Fund’s investment objective is to maximise, consistent with prudent investment management,total investment return consisting of a combination of interest income, capital appreciation, andcurrency gains by investing in a portfolio of fixed and floating rate debt securities and debtobligations of governments, government-related or corporate issuers in Europe. The Fund may also,in accordance with the investment restrictions, invest in securities or structured products where thesecurity is linked to or derives its value from another security, linked to assets or currencies of anyEuropean country. More specifically, the Fund may purchase debt obligations issued bygovernments and supranational entities organised or supported by several national governments.The Fund may also purchase mortgage and asset-backed securities, convertible bonds, and useforwards or futures contracts, or options on such contracts, including those on Europeangovernment bonds. The assets of the Fund shall primarily (i.e. at least two thirds of the assetswithout taking into account ancillary liquid assets) be invested in securities of European issuers.

The Fund may invest in investment grade and non-investment grade debt securities, subject to a30% maximum allocation of the Fund’s total net assets in non-investment grade debt, includinghigh yield corporate debt, private placements, global bonds and currencies of the emergingmarkets countries, of which up to 10% of the Fund’s total net assets may be in securities in default.Investments in securities in default are subject to a higher degree of risk, as described more fully inthe Section ‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus. On an ancillarybasis, the Fund may gain exposure to debt market indexes by investing in index based financialderivatives and credit default swaps. The base currency of the Fund is the Euro.

Templeton Global Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing in equity and debt obligations of companies and governments of any nation. The Fund

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will invest primarily in common stocks. However, since the investment objective is more likely tobe achieved through an investment policy that is flexible and adaptable, the Fund may seekinvestment opportunities in other types of securities, such as preferred stock, securities convertibleinto common stock, and fixed income securities, which are U.S. Dollar and non-U.S., Dollardenominated. Notwithstanding the foregoing, at no time will the Investment Manager invest morethan 10% of the Fund’s total net assets into non-investment grade debt securities as defined by anaccredited rating agency. The base currency of the Fund is U.S. Dollar.

Templeton Global (Euro) Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing in equity and debt obligations of companies and governments of any nation. The Fundwill invest primarily in common stocks. However, since the investment objective is more likely tobe achieved through an investment policy that is flexible and adaptable, the Fund may seekinvestment opportunities in other types of securities, such as preferred stock, securities convertibleinto common stock, and fixed income securities, which are Euro, and non-Euro denominated. Thebase currency of the Fund is Euro. The name of the Fund reflects the base currency of the Fundbeing in Euro, and does not imply that any particular proportion of the Fund’s net invested assetswill be made in Euro.

Templeton Global Balanced Fund

The investment objective of the Fund is to seek capital appreciation and current income,consistent with prudent investment management, by investing in equity and corporate debtsecurities and, to a lesser extent, government securities issued by entities throughout the world.The Investment Manager anticipates that the majority of the Fund’s portfolio will normally beinvested in equity or equity-linked securities, including debt or preferred stock convertible orexchangeable into equity securities, selected primarily on the basis of their capital growthpotential. The Fund will seek income by investing in fixed or floating rate securities and debtobligations of government, government-related and corporate issuers in countries around theworld. The Fund may purchase U.S. Dollar and non-U.S. Dollar denominated equities, fixedincome securities and debt obligations. Notwithstanding the foregoing, at no time will theInvestment Manager invest more than 10% of the Fund’s total net assets into non-investmentgrade debt securities, as defined by an accredited rating agency and more than 40% of the Fund’stotal net assets into fixed income securities. The base currency of the Fund is U.S. Dollar.

Templeton Global Bond Fund

The Fund’s principal investment objective is to maximise, consistent with prudent investmentmanagement, total investment return consisting of a combination of interest income, capitalappreciation and currency gains. The Fund will seek to achieve its objectives by investingprimarily in a portfolio of fixed or floating rate debt securities and debt obligations of government,government-related or corporate issuers worldwide. The Fund may also, in accordance with theinvestment restrictions, invest in securities or structured products linked to assets or currencies ofany nation. The Fund may also purchase debt obligations issued by supranational entitiesorganised or supported by several national governments, such as the International Bank forReconstruction and Development or the European Investment Bank. The Fund may purchase U.S.Dollar and non-U.S. Dollar denominated fixed income securities and debt obligations and mayhold equity securities to the extent that such securities result from the conversion or exchange of apreferred stock or debt obligation. The base currency of the Fund is U.S. Dollar.

Templeton Global Bond (Euro) Fund

The Fund’s principal investment objective is to maximise total return consisting of a combinationof interest income, capital appreciation and currency gains. The Fund will seek to achieve itsobjective by investing in a portfolio of fixed or floating rate debt securities and debt obligationsprimarily issued by government, government-related or corporate issuers worldwide. The Fundmay also, in accordance with the investment restrictions, invest in securities or structured

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products where the security is linked to or derives its value from another security, linked to assetsor currencies of any nation. The Fund may also purchase debt obligations issued by supranationalentities organised or supported by several national governments, such as the International Bank forReconstruction and Development or the European Investment Bank. The Fund may purchase U.S.Dollar and non-U.S. Dollar denominated fixed income securities and debt obligations and mayhold equity securities to the extent that such securities result from the conversion or exchange of apreferred stock or debt obligation. The Fund may purchase Euro and non-Euro denominatedsecurities and debt obligations. The non-Euro component of the portfolio will be hedged intoEuro.

The base currency of the Fund is Euro. The name of this Fund reflects the base currency of theFund being in Euro, and does not imply that any particular proportion of the Fund’s net investedassets will be made in Euro.

Templeton Global Equity Income Fund

The Fund’s investment objective is to provide a combination of current income and long-termcapital appreciation. Under normal market conditions the Fund will invest in a diversifiedportfolio of equity securities worldwide. The Fund seek income by investing in stocks theInvestment Manager believes offers attractive dividend yields. The Investment Manager seekscapital appreciation by searching for undervalued or out-of-favour securities offering currentincome and/or opportunities for future capital appreciation. Capital appreciation is sought byinvesting in common stocks of companies from a variety of industries such utilities, oil, gas, andconsumer goods, operating in a number of regions and countries, equity securities of companieslocated anywhere in the world, including Emerging Market.

The Investment Manager may take a temporary defensive position when it believes the markets orthe economy are experiencing excessive volatility, a prolonged general decline or when otheradverse conditions may exist. Under these circumstances, the Fund may be unable to pursue itsinvestment goal. The base currency of the Fund is U.S. Dollar.

Templeton Global Income Fund

The Fund’s investment objective is to maximise current income while maintaining prospects forcapital appreciation. Under normal market conditions, the Fund will invest in a diversifiedportfolio of debt and equity securities worldwide. The Fund seeks income by investing in aportfolio of fixed rate debt securities and debt obligations of governments, governments-related orcorporate issuers worldwide, including in Emerging Markets, as well as stocks the InvestmentManager believes offer attractive dividend yields. In particular, the Fund may purchase debtobligations issued by governments and supranational entities organised and supported by severalnational governments. The Fund may invest in investment grade and non-investment grade debtssecurities issued by U.S. and non-U.S. issuers including securities in default. Investments insecurities in default are subject to a higher degree of risk, as described more fully in the Section‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus. The Investment Manager maytake a temporary defensive position when it believes the markets or the economy are experiencingexcessive volatility, a prolonged general decline or when other adverse conditions may exist.Under these circumstances, the Fund may be unable to pursue its investment goal. The basecurrency of the Fund is U.S. dollar.

Templeton Global Smaller Companies Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve through a policyof investing in equity and debt obligations of smaller companies (companies with a marketcapitalisation of under USD 2 billion or equivalent at the time of purchase) throughout the world.The Fund will invest primarily in common stocks of such companies. However, since theinvestment objective is more likely to be achieved through an investment policy that is flexible andadaptable, the Fund may seek investment opportunities in companies with larger marketcapitalisations, as well as in other types of securities, such as preferred stock, securities convertible

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into common stock and fixed income securities, which are U.S. Dollar and non-U.S. Dollardenominated. Notwithstanding the foregoing, at no time will the Investment Manager invest morethan 10% of the Fund’s total net assets into non-investment grade debt securities as defined by anaccredited rating agency. The base currency of the Fund is U.S. Dollar.

Templeton Global Total Return Fund

The Fund’s principal investment objective is to maximise, consistent with prudent investmentmanagement, total investment return consisting of a combination of interest income, capitalappreciation, and currency gains. Under normal market conditions, the Fund will invest in aportfolio of fixed and floating rate debt securities and debt obligations of governments,government-related or corporate issuers worldwide. The Fund may also, in accordance with theinvestment restrictions, invest in securities or structured products where the security is linked toor derives its value from another security, linked to assets or currencies of any nation. Morespecifically, the Fund may purchase debt obligations issued by governments and supranationalentities organised or supported by several national governments. The Fund may also purchasemortgage and asset-backed securities, convertible bonds, and use financial futures contracts, oroptions on such contracts, on government securities worldwide. The Fund may invest ininvestment grade and non-investment grade debt securities issued by U.S. and non-U.S. issuersincluding securities in default. Investments in securities in default are subject to a higher degree ofrisk, as described more fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ inthe Prospectus.

In order to effectively manage cash flows in or out of the Fund, the Fund may buy and sellfinancial futures contracts or options on such contracts. The Fund may use futures contracts onU.S. Treasury securities to help manage risks relating to interest rates and other market factors, toincrease liquidity, and to quickly and efficiently cause new cash to be invested in the securitiesmarkets or, if cash will be needed to meet shareholder redemption requests, to remove Fund assetsfrom exposure to the market. The Fund may also participate in mortgage dollar roll transactions.On an ancillary basis, the Fund may gain exposure to debt market indexes by investing in indexbased financial derivatives and credit default swaps. The base currency of the Fund is the U.S.Dollar.

Templeton Growth (Euro) Fund

The Fund’s investment objective is capital appreciation. The Fund invests primarily in the equitysecurities of companies located anywhere in the world, including emerging markets.

Equity securities generally entitle the holder to participate in a company’s general operatingresults. These include common stocks and preferred stocks. The Fund will also invest inAmerican, European, and Global Depository Receipts. These are certificates issued typically by abank or a trust company that give their holders the right to receive securities issued by a foreign ordomestic company.

Depending upon current market conditions, the Fund may also invest up to 25% of its net assetsin debt securities of companies and governments located anywhere in the world. Debt securitiesrepresent an obligation of the issuer to repay a loan of money to it and generally provide for thepayment of interest. These include bonds, notes and debentures.

In choosing equity investments, the Investment Manager will focus on the market price of acompany’s securities relative to its evaluation of the company’s long-term earnings, asset value andcash flow potential.

The base currency of the Fund is Euro. The name of the Fund reflects the base currency of theFund being in Euro and does not imply that any particular proportion of the Fund’s net investedassets will be made in Euro. Investments in Emerging Market countries are subject to a higherdegree of risk, as described more fully in the Section ‘‘Hedging Practice and other RiskConsiderations’’ in the Prospectus.

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Templeton Japan Fund

The investment objective of the Fund is capital appreciation, which it seeks to achieve through apolicy of investing primarily in equity securities of issuers incorporated or having their principalbusiness activities in Japan. The Fund may also invest in equity securities of issuers having assets,earnings or profits in Japan. The Fund will invest in both equities and other securities, includingsecurities issued by the Japanese government and, to a lesser extent, warrants of issuers on theJapanese stock market. Notwithstanding the foregoing, at no time will the Investment Managerinvest more than 10% of the Fund’s total net assets into non-investment grade debt securities asdefined by an accredited rating agency. The base currency of the Fund is U.S. Dollar.

Templeton Korea Fund

The investment objective of the Fund is capital appreciation, which it seeks to achieve through apolicy of investing primarily in equity securities issued by Korean incorporated companies orcompanies having their principal business activities in Korea. The Fund may also invest in equitysecurities of issuers having assets, earnings or profits in Korea. The Fund will invest in equities andother securities, including securities issued by the Korean government and, to a lesser extent,warrants of issuers on the Korean stock market. The base currency of the Fund is U.S. Dollar.Investments in Emerging Markets countries are subject to a higher degree of risk, as describedmore fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus.

Templeton Latin America Fund

The Fund’s investment objective is capital appreciation, which it seeks to achieve, under normalmarket conditions, through a policy of investing primarily in equity securities and as an ancillarymatter in debt securities of issuers incorporated or having their principal business activities in theLatin American region. The Latin American region includes, but is not limited to, the followingcountries : Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador,French Guyana, Guatemala, Guyana, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru,Surinam, Trinidad/Tobago, Uruguay and Venezuela. The balance of the Fund’s assets may beinvested in equity securities and debt obligations of companies and government entities ofcountries other than those named above. However, since the investment objective is more likely tobe achieved through an investment policy that is flexible and adaptable, the Fund may seekinvestment opportunities in other types of securities, such as preferred stock, securities convertibleinto common stock and fixed income securities which are denominated in currencies other thanLatin American currencies such as U.S. Dollar or Euro. The base currency of the Fund is U.S.Dollar. Investments in Emerging Markets countries are subject to a higher degree of risk, asdescribed more fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ in theProspectus.

Templeton Thailand Fund

The investment objective of the Fund is capital appreciation, which it seeks to achieve through apolicy of investing primarily in equity securities of issuers incorporated in Thailand or issuershaving their principal business activities in Thailand. The Fund may also invest in equity securitiesof issuers having their assets, earnings or profits in Thailand. The Fund will invest in equities andother securities, including securities issued by the Thailand government and, to a lesser extent,warrants of issuers on the Thailand stock market. The base currency of the Fund is U.S. Dollar.Investments in Emerging Markets countries are subject to a higher degree of risk, as describedmore fully in the Section ‘‘Hedging Practice and other Risk Considerations’’ in the Prospectus.

Templeton U.S. Dollar Liquid Reserve Fund

The investment objective of the Fund is to provide shareholders with the opportunity to invest in aportfolio of high quality securities primarily U.S. Dollar denominated, or hedged back into U.S.Dollar to avoid any currency exposure. The Fund will consist principally of transferable securitiesissued or guaranteed by the governments of any nation worldwide and eligible securities ofcorporate issuers of any nation. Notwithstanding the foregoing, at no time will the Investment

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Manager invest more than 10% of the Fund’s total net assets into non-investment grade debtsecurities as defined by an accredited rating agency. The portfolio will be invested in a manner thatthe average remaining maturity of all securities and instruments comprised in the portfolio of theFund does not exceed twelve months. For the purpose of calculating the residual maturity of eachsingle security or instrument, the financial instruments attached thereto shall be taken intoaccount. For the securities or instruments whose terms of issue provide for an adjustment of theirinterest rate by reference to market conditions, the residual maturity until the date on which therate is adjusted shall be considered. The base currency of the Fund is U.S. Dollar.

Templeton U.S. Value Fund

The Fund’s principal investment objective is capital appreciation. The Fund will invest in a valuestyle biased portfolio of equity securities of companies in the United States and may invest insecurities of any size. The Fund may use various derivative instruments seeking to protect itsassets, implement a cash or tax management strategy or enhance its returns as more fully describedin the Section ‘‘Hedging Practice and other Risks Considerations’’ of the Prospectus. The Fund mayenter into interest rate, index, currency exchange or equity swap agreements up to 5% of its totalassets. The base currency of the Fund is the U.S. dollar.

Note: Investors in Funds investing in Emerging Markets should be aware of the specificrisks of such Funds. Investors are in particular informed that securities issued bycorporations and public-law entities in Emerging Markets are subject to higher volatilitythan securities in industrialised countries. In addition the liquidity of such securities may besubstantially smaller than with comparable securities in industrialised countries. Please findfurther information in the section ‘‘Hedging Practice and other Risk Considerations’’.

Hedging Practice and Other Risk ConsiderationsAll Funds investing in the securities of issuers (by corporations, governments, and public-law

entities) in different nations and denominated in different currencies involve certain risks. These risks aretypically heightened in developing countries and emerging markets. Such risks, which can have adverseeffects on portfolio holdings, may include (1) investment and repatriation restrictions, (2) currencyfluctuations, (3) the potential for unusual market volatility as compared to more industrialised nations,(4) government involvement in the private sector, (5) limited investor information and less stringentinvestor disclosure requirements, (6) shallow and substantially smaller liquid securities markets than inmore industrialised countries, which means a Fund may at times be unable to sell certain securities atdesirable prices, (7) certain local tax law considerations, (8) limited regulation of the securities markets,(9) international and regional political and economic developments, (10) possible imposition ofexchange controls or other local governmental laws or restrictions, (11) the increased risk of adverseeffects from deflation and inflation, and (12) the possibility of limited legal recourse for the Fund.

Since the Company values the portfolio holdings of each of its Funds in either U.S. Dollar,Japanese Yen or Euro, changes in currency exchange rates adverse to those currencies may affect thevalue of such holdings and each respective Fund’s yield thereon.

All equity and equity related securities may fluctuate in value due to economic, political,market, and issuer specific developments. Such developments may adversely affect securities, regardlessof company specific performance. Additionally, different industries, financial markets, and securities canreact differently to these developments. Such fluctuations are often exacerbated in the short-term as well.The risk that one or more companies in a Fund’s portfolio will fall, or fail to rise, can adversely affect theoverall portfolio performance in any given period.

The stock prices of smaller and mid-sized companies can perform differently than larger, morerecognised, companies and have the potential to be more volatile. A lower degree of liquidity in theirsecurities, a greater sensitivity to changes in economic conditions and interest rates, and uncertainty overfuture growth prospects may all contribute to such increased price volatility. Additionally, smallercompanies may be unable to generate new funds for growth and development, may lack depth in

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management, and may be developing products in new and uncertain markets all of which are risks toconsider when investing in such companies.

Funds investing in growth stocks can be more volatile and may react differently to economic,political, market, and issuer specific developments than the overall market. Historically, the prices ofgrowth stocks have been more volatile than other securities, especially, over short term periods of time.Growth stocks may also be more expensive, relative to their earnings, than the market in general. Assuch, growth stocks can experience greater volatility in reaction to changes in earnings growth.

Credit risk, a fundamental risk relating to all fixed income securities, is the chance that an issuerwill fail to make principal and interest payments when due. Issuers with higher credit risk typically offerhigher yields for this added risk. Conversely, issuers with lower credit risk typically offer lower yields.Generally, government securities are considered to be the safest in terms of credit risk, while corporatedebt, especially those with poorer credit ratings, have the highest credit risk. Changes in the financialcondition of an issuer, changes in economic and political conditions in general, or changes in economicand political conditions specific to an issuer, all are factors that may have an adverse impact on a firm’scredit quality and security values.

Some Funds may invest in initial public offerings (‘‘IPO’s’’). IPO risk is the risk that the marketvalues of IPO shares may experience high volatility from factors such as the absence of a prior publicmarket, unseasoned trading, the limited number of shares available for trading, and limited informationabout the issuer. Additionally, a Fund may hold IPO shares for a very short period of time, which mayincrease a Fund’s expenses. Some investments in IPO’s may have an immediate and significant impact ona Fund’s performance.

Some Funds invest in real estate securities or real estate investment trusts (REITs). Real estatevalues rise and fall in response to a variety of factors, including local, regional and national economicconditions, interest rates and tax considerations. When economic growth is slow, demand for propertydecreases and prices may decline. Property values may decrease because of overbuilding, increases inproperty taxes and operating expenses, changes in zoning laws, environmental regulations or hazards,uninsured casualty or condemnation losses, or general decline in neighbourhood values.

Equity REITs may be affected by any changes in the value of the properties owned and otherfactors, and their prices tend to go up and down. A REIT’s performance depends on the types andlocations of the properties it owns and on how well it manages those properties. A decline in rentalincome may occur because of extended vacancies, increased competition from other properties, tenants’failure to pay a rent or poor management. A REIT’s performance also depends on the company’s abilityto finance property purchases and renovations and manage its cash flows. Since the REITs typically areinvested in a limited number of projects or in particular market segment, they are more susceptible toadverse developments affecting a single project or market segment than more broadly diversifiedinvestments.

Certain Funds may invest in higher-yielding securities rated lower than investment grade.Accordingly, an investment in these Funds is accompanied by a higher degree of credit risk. Belowinvestment grade securities such as, for example, high yield debt securities, may be considered a highrisk strategy and can include securities that are unrated and/or in default. Lower-quality, higher-yielding,securities may also experience greater price volatility when compared to higher-quality, lower-yielding,securities. Additionally, default rates tend to rise for companies with poorer rated securities duringeconomic recessions or in times of higher interest rates. Moreover, Funds that invest in corporate loansand corporate debt securities that are made in connection with highly leveraged transactions are subjectto greater credit risks than are other loans and debt securities in which a Fund might invest.

Corporate loans and corporate debt securities may be secured by certain collateral. To that end,there are risks which may cause the collateral to be insufficient in the event that a borrower defaults on acorporate loan or corporate debt security. In most credit agreements, there is no formal requirement topledge additional collateral if the value of the collateral declines subsequent to the Fund’s investment inthe corporate loan or corporate debt security. There is also the risk that the collateral may be difficult toliquidate. Consequently, the Fund might not receive payments to which it is entitled. This may result in

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a decline in the value of the investment and, in turn, a decline in the net asset value of the Fund. If aborrower becomes involved in bankruptcy proceedings, the Fund’s access to the collateral may belimited by bankruptcy and other laws. This risk is increased when a corporate loan or corporate debtsecurity is made in connection with a highly leveraged transaction. In the event that a court decides thatthe Fund’s access to the collateral is limited or void, it is unlikely that the Fund would be able to recoverthe full amount of the principal and interest due to it.

The Franklin Mutual Beacon Fund, the Franklin Mutual European Fund and the Franklin MutualGlobal Discovery Fund may also invest in the securities of companies involved in mergers,consolidations, liquidations and reorganisations or as to which there exist tender or exchange offers,and may participate in such transactions; they may also purchase indebtedness and participationstherein, both secured and unsecured, of debtor companies in reorganisation or financial restructuring.Such investments also involve greater credit risks.

Some Funds may invest in debt securities on which the issuer is not currently making interestpayments (defaulted debt securities). These Funds may buy defaulted debt securities if, in the opinion ofthe Investment Manager, it appears likely that the issuer may resume interest payments or otheradvantageous developments appear likely in the near future. These securities may become illiquid.

The risk of loss due to default may also be considerably greater with lower-quality securitiesbecause they are generally unsecured and are often subordinated to other creditors of the issuer. If theissuer of a security in a Fund’s portfolio defaults, the Fund may have unrealised losses on the security,which may lower the Fund’s net asset value per share. Defaulted securities tend to lose much of theirvalue before they default. Thus, the Fund’s net asset value per share may be adversely affected before anissuer defaults. In addition, the Fund may incur additional expenses if it must try to recover principal orinterest payments on a defaulted security.

All Funds that invest in fixed income securities are subject to interest rate risk. A fixed incomesecurity’s value will generally increase in value when interest rates fall and decrease in value wheninterest rates rise. Interest rate risk is the chance that such movements in interest rates will negativelyaffect a security’s value or, in a Fund’s case, its net asset value Fixed income securities with longer-termmaturities tend to be more sensitive to interest rate changes than shorter-term securities. As a result,longer-term securities tend to offer higher yields for this added risk. While changes in interest rates mayaffect a Fund’s interest income, such changes may positively or negatively affect the net asset value of theFund’s shares on a daily basis.

Certain fixed income securities give an issuer the right to call its securities, before their maturitydate, in periods of declining interest rates. The possibility of such ‘‘pre-payment risk’’ may force the Fundto reinvest the proceeds of such investments in securities offering lower yields, thereby reducing theFund’s interest income.

The Franklin Income Fund, the Franklin U.S. Government Fund, the Franklin U.S. Ultra ShortBond Fund, the Franklin U.S. Total Return Fund, the Templeton Asian Bond Fund and the TempletonGlobal Total Return Fund may engage in mortgage dollar roll transactions. In a mortgage dollar roll, aFund sells mortgage-backed securities for delivery in the current month and simultaneously contracts torepurchase substantially similar (name, type, coupon, and maturity) securities on a specified future date.During the period between the sale and repurchase (the ‘‘roll period’’), the Fund foregoes principal andinterest paid on the mortgage-backed securities. The Fund is compensated by the difference between thecurrent sales price and the lower forward price for the future purchase (often referred to as the ‘‘drop’’),as well as by the interest earned on the cash proceeds of the initial sale. The Fund could suffer a loss ifthe contracting party fails to perform the future transaction and the Fund is therefore unable to buy backthe mortgage-backed securities it initially sold. Mortgage dollar rolls will be entered into only with highquality government securities dealers and member banks of the Federal Reserve System.

Mortgage dollar roll transactions may (due to the deemed borrowing position involved), increasethe Fund’s overall investment exposure and result in losses. Mortgage dollar rolls will be consideredborrowings for the purposes of the Fund’s borrowing limitations unless the Fund segregates on its booksan offsetting cash position or a position of liquid securities of equivalent value.

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The Franklin High Yield (Euro) Fund and the Franklin High Yield Fund may invest in credit-linked securities. Credit-linked securities are debt securities that represent an interest in a pool of, or areotherwise collateralised by, one or more corporate debt obligations or credit default swaps incorporateddebt or bank loan obligations. Such debt obligations may represent the obligations of one or morecorporate issuers. The Fund has the right to receive periodic interest payments from the issuer of thecredit-linked security (usually the seller of the underlying credit default swap(s)) at an agreed-uponinterest rate, and a return of principal at the maturity date. Credit default swaps will be documentedunder ISDA standard documentation and the Company will enter into this type of contracts only withfinancial institutions of high standing specialised in this type of transactions as counterparties.

The Funds bear the risk of loss of its principal investment, and the periodic interest paymentsexpected to be received for the duration of its investment in the credit-linked security, in the event thatone or more of the debt obligations underlying the credit default swaps go into default or otherwisebecome non-performing. Upon the occurrence of such a credit event (including bankruptcy, failure totimely pay interest or principal, or a restructuring), the Fund affected will generally reduce the principalbalance of the related credit-linked security by the Fund’s pro rata interest in the par amount of thedefaulted underlying debt obligation in exchange for the actual value of the defaulted underlyingobligation or the defaulted underlying obligation itself, resulting in a loss of a portion of the Fund’sinvestment. Thereafter, interest on the credit-linked security will accrue on a smaller principal balanceand a smaller principal balance will be returned at maturity. To the extent a credit-linked securityrepresents an interest in underlying obligations of a single corporate or other issuer, a credit event withrespect to such issuer presents greater risk of loss to a Fund than if the credit-linked security representedan interest in underlying obligations of multiple issuers.

In addition, the Fund bears the risk that the issuer of the credit-linked security will default orbecome bankrupt. In such an event, the Fund may have difficulty being repaid, or fail to be repaid, theprincipal amount of its investment and the remaining periodic interest payments thereon.

An investment in credit-linked securities also involves reliance on the counterparty to the creditdefault swap entered into with the issuer of the credit-linked security to make periodic payments to theissuer under the terms of the swap. Any delay or cessation in the making of such payments may beexpected in certain instances to result in delays or reductions in payments to the Fund as an investor insuch credit-linked securities. Additionally, credit-linked securities are typically structured as limitedrecourse obligations of the issuer of such securities such that the securities issued will usually beobligations solely of the issuer and will not be obligations or responsibilities of any other person.

Most credit-linked securities are structured as Rule 144A securities so that they may be freelytraded among institutional buyers. A Fund will generally only purchase credit-linked securities, whichare determined to be liquid in accordance with the Fund’s liquidity guidelines. However, the market forcredit-linked securities may suddenly become illiquid. The other parties to the transaction may be theonly investors with sufficient understanding of the derivative to be interested in bidding for it. Changesin liquidity may result in significant, rapid and unpredictable changes in the prices for credit-linkedsecurities. In certain cases, a market price for a credit-linked security may not be available or may not bereliable, and the Fund could experience difficulty in selling such security at a price the investmentmanager believes is fair. The credit-linked securities structured as Rule 144A securities will be includedin the calculation of the limits for non-listed securities.

The value of a credit-linked security will typically increase or decrease with any change in value ofthe underlying debt obligations, if any, held by the issuer and the credit default swap. Further, in caseswhere the credit-linked security is structured such that the payments to the Fund are based on amountsreceived in respect of, or the value of performance of, any underlying debt obligations specified in theterms of the relevant credit default swap, fluctuations in the value of such obligation may affect the valueof the credit-linked security.

Investment in the biotechnology and technology sectors may present a greater risk and a highervolatility than investment in a broader range of securities covering different economic sectors. Inaddition, these sectors may be subject to greater government regulation than other sectors and, as aresult, changes to such government regulation may have a material adverse effect on these sectors. Such

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investments may therefore drop sharply in value in response to market, regulatory or research setbacksin addition to possible adverse effects from the competition of new market entrants, patentconsiderations and product obsolescence. Particularly within technology, short product cycles anddiminishing profit margins are additional factors to consider when investing.

Other Funds may invest in equity securities of issuers in, as well as in public and private debt andother fixed income securities of issuers in Russia, countries of Eastern Europe as well as the NewIndependent States and the countries being under the influence of the Soviet Union in the past. Thesesecurities involve significant risks and special considerations, which are not typically associated withinvesting in securities of issuers in the EU Member States and the United States of America. They areadditional to the normal risks inherent in any such investments and include political, economic, legal,currency, inflation and taxation risks. There is also risk of loss due to lack of adequate systems fortransferring, pricing, accounting for and safekeeping or record keeping of securities.

In particular, the Russian market presents a variety of risks in relation to the settlement andsafekeeping of securities. These risks result from the fact that physical securities do not exist ; as aconsequence, the ownership of securities is evidenced only on the issuer’s register ofshareholders. Each issuer is responsible for the appointment of its own registrar. The result isa broad geographic distribution of several hundred registrars across Russia. Russia’s FederalCommission for Securities and Capital Markets (the ‘‘Commission’’) has defined theresponsibilities for registrar activities, including what constitutes evidence of ownership andtransfer procedures. However, difficulties enforcing the Commission’s regulations mean that thepotential for loss or error still remains and there is no guarantee that the registrars will actaccording to the applicable laws and regulations. Widely accepted industry practices are actuallystill in the process of being established. When registration occurs, the registrar produces anextract of the register of shareholders as at that particular point in time. Ownership of shares isvested in the records of the registrar but is not evidenced by the possession of an extract of theregister of shareholders. The extract is only evidence that registration has taken place. However,the extract is not negotiable and has no intrinsic value. In addition, a registrar will typically notaccept an extract as evidence of ownership of shares and is not obligated to notify the Custodianor its local agents in Russia, if or when it amends the register of Shareholders. Russian securitiesare not on physical deposit with the Custodian or its local agents in Russia.

Therefore, neither the Custodian nor its local agents in Russia can be considered asperforming a physical safekeeping or custody function in the traditional sense. The registrars areneither agents of, nor responsible to, the Custodian or its local agents in Russia. The Custodian’sliability only extends to its own negligence and wilful default and to that caused by negligence orwillful misconduct of its local agents in Russia, and does not extend to losses due to theliquidation, bankruptcy, negligence or willful default of any registrar. In the event of such lossesthe Company will have to pursue its rights directly against the issuer and/or its appointedregistrar.

Certain Funds may invest in securities of issuers in countries whose markets do not qualify asregulated markets (such as Russia) and therefore these Funds may not invest more than 10% of their netassets in such securities.

Investments in and holding of warrants may result in increased volatility of the net asset value ofcertain Funds, which may make use of warrants, and accordingly is accompanied by a higher degree ofrisk.

For the purpose of efficient portfolio management, the Company may, within the context of eachFund’s overall investment policy, and within the limits set forth in the investment restrictions, engage incertain transactions involving the use of derivative instruments, including (i) put and call options onsecurities, debt obligations, currency forward contracts, indices and currencies (including over-the-counter (‘‘OTC’’) options); (ii) stock index and interest rate futures contracts and options thereon; (iii)structured products, where the security is linked to or derives its value from another security or aderivative contract ; and (iv) delayed delivery or when-and-if issued securities such as may be created as aresult of a debt restructuring. The Company may engage, within the limits established by the investment

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restrictions, in various portfolio strategies involving the use of the hedging instruments in order to hedgeagainst market and currency risks. For the purpose of hedging risks connected with the evolution ofstock markets, for example, the Company may sell stock index futures, write call options on stockindices and purchase put options on stock indices. For the purpose of hedging interest rates, theCompany may sell interest rate futures contracts, write call options and purchase put options on interestrates, and enter into interest rate swaps.

In order to hedge against currency fluctuations in any Fund(s), the Company may enter intoforward currency contracts and purchase and write call and put options (including OTC options) oncurrencies, including through the use of cross-currency transactions and transactions involving thepurchase or sale of one or more currencies against assets denominated in another currency that fluctuatein a substantially similar manner to such currencies. Guidelines followed in determining that onecurrency moves in a substantially similar manner to another currency include the following: (i) thecorrelation of one currency to another currency is proven over a significant period of time to be over85%; (ii) the two currencies are, by explicit government policy, scheduled to participate in EuropeanMonetary Union on a set future date (which would include using the Euro itself as a proxy for hedgingbond positions denominated in other currencies scheduled to become part of the Euro on a set futuredate) ; and (iii) the currency used as the hedging vehicle against the other currency is part of a currencybasket against which the central bank for that other currency explicitly manages its currency within aband or corridor that is either stable or sloping at a predetermined rate. There can be no assurance thatthe objective sought to be obtained from the use of such instruments will be achieved.

If a Fund intends to engage in transactions involving the use of derivative instruments as part of itsregular investment strategy, rather than on an occasional basis, this will be described in the InvestmentObjectives and policy of such Fund.

A class of Shares may be designated in a currency other than the base currency of a Fund(‘‘Alternative Currency Class’’) or hedged in a currency other than the base currency of a Fund (‘‘HedgedShare Class). Hedged Share Classes are designed to reduce exchange rate fluctuations between the basecurrency of the sub-fund and the currency of the Hedged Share Class. In certain circumstances adverseexchange rate fluctuations between the base currency and the class currency may result in a decrease inreturn and/or a loss of capital for shareholders.

The risk for holders of any hedged Class of Shares may be mitigated by using any of the efficientportfolio management techniques and instruments (including currency options and forward currencyexchange contracts currency futures, written call options and purchased put options on currencies andcurrency swaps), within the conditions and limits imposed by the Luxembourg Supervisor Authority, tohedge the foreign currency exposure of such Classes into base currency of the Fund.

In respect of Hedged Share Classes that may be available, the hedging strategy employed may notcompletely eliminate the exposure of the Hedged Share Classes to movements of the base currency of therelevant Fund.

Investors should be aware that this strategy may substantially limit Shareholders of the relevanthedged Class from benefiting if the class currency falls against the base currency of the Fund.Additionally, Shareholders of the hedged Class may be exposed to fluctuations in the net asset value perShares reflecting the gains/loss on and the costs of the relevant financial instruments.

The gains/loss on and the costs of the relevant financial instruments will accrue solely to therelevant hedged Class. Any currency exposure of a hedged Class may not be combined with or offsetwith that of any other class of the Company.

The use of derivative instruments and hedging transactions may or may not achieve itsintended objective and involves special risks.

Performance and value of derivative instruments depend on the performance or value of theunderlying asset. Derivative instruments involve cost, may be volatile and may involve a smallinvestment relative to the risk assumed. Their successful use may depend on the Investment Manager’sability to predict market movements. Risks include delivery failure, default by other party or the inability

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to close out a position because the trading market becomes illiquid. Some derivative instruments areparticularly sensitive to changes in interest rate. The risk of loss to a Fund for a swap transaction on a netbasis depends on which party is obligated to pay the net amount to the other party. If the counterparty isobligated to pay the net amount to the Fund, the risk of loss to the Fund is loss of the entire amount thatthe Fund is entitled to receive; if the Fund is obligated to pay the net amount, the Fund’s risk of loss islimited to the net amount due.

Included among the issuers of debt securities or obligations in which the Company may invest areentities organised and operated solely for the purpose of restructuring the investment characteristics ofvarious securities or obligations. These entities may be organised by investment banking firms, whichreceive fees in connection with establishing each entity and arranging for the placement of its securities.

The Company may enter into interest rate, index and currency exchange rate swap agreements forpurposes of attempting to obtain a particular desired return at a lower cost to the Company than if theCompany had invested directly in an instrument that yielded that desired return. Swap agreements aretwo party contracts entered into primarily by institutional investors for periods ranging from a few daysto more than one year. In a standard ‘‘swap’’ transaction, two parties agree to exchange the returns (ordifferentials in rates of return) earned or realised on particular predetermined investments orinstruments. The gross returns to be exchanged or ‘‘swapped’’ between the parties are calculated withrespect to a ‘‘notional amount’’, i.e., the return on or increase in value of a particular U.S. Dollar amountinvested at a particular interest rate, in a particular foreign currency, or in a ‘‘basket’’ of securitiesrepresenting a particular index. The ‘‘notional amount’’ of the swap agreement is only a fictive basis onwhich to calculate the obligations which the parties to a swap agreement have agreed to exchange. TheCompany’s obligations (or rights) under a swap agreement will generally be equal only to the net amountto be paid or received under the agreement based on the relative values of the positions held by eachparty to the agreement (the ‘‘net amount’’). The Company’s obligations under a swap agreement will beaccrued daily (offset against any amounts owing to the Company) and any accrued but unpaid netamounts owed to a swap counterparty will be covered by the maintenance of a segregated accountconsisting of cash, United States of America government securities, or high grade debt obligations, toavoid any potential leveraging of the Company’s portfolio. The Company will not enter into a swapagreement with any single party if the net amount owed or to be received under existing contracts withthat party would exceed 5% of the Company’s assets.

Whether the Company’s use of swap agreements will be successful in furthering its investmentobjective will depend on the ability of the Investment Managers to correctly predict whether certaintypes of investments are likely to produce greater returns than other investments. Because they are twoparty contracts and because they may have terms of greater than seven calendar days, swap agreementsmay be considered to be illiquid. Moreover, the Company bears the risk of loss of the amount expectedto be received under a swap agreement in the event of the default or bankruptcy of a swap agreementcounterparty. The Investment Managers will cause the Company to enter into swap agreements onlywith counterparties that would be eligible for consideration as repurchase agreement counterpartiesunder the Company’s repurchase agreement guidelines.

The Company may lend each Fund’s portfolio securities to specialised banks, credit institutionsand other financial institutions of high standing, or through recognised clearing institutions such asClearstream or Euroclear. The lending of securities will be made for periods not exceeding thirty (30)calendar days. Loans will be secured continuously by collateral consisting of cash, and/or securitiesissued or guaranteed by member states of the Organisation for Economic Cooperation and Development(‘‘OECD’’) or by their local authorities which at the conclusion of the lending agreement, must be at leastequal to the value of the global valuation of the securities of each Fund lent. The collateral must beblocked in favour of the Company until the termination of the lending contract. Lending transactionsmay not be carried out on more than 50% of the aggregate market value of the securities of each Fund’sportfolio; provided, however, that this limit is not applicable where the Company has the right toterminate the lending contract at any time and obtain restitution of the securities lent. Any transactionexpenses in connection with such loans may be charged to the concerned Fund.

The Company may, on behalf of each Fund, from time to time enter, on an ancillary basis, intorepurchase agreement transactions which consist of the purchase and sale of securities with a clause

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reserving the seller the right or the obligation to repurchase from the acquirer the securities sold at aprice and term specified by the two parties in their contractual arrangement. The Company can act eitheras purchaser or seller in repurchase agreement transactions or in a series of continuing repurchaseagreement transactions. The Company may not buy or sell securities using a repurchase agreementtransaction unless the counterpart in such transaction is a financial institution of high standingspecialising in this type of transaction. During the life of a repurchase agreement under which theCompany has bought securities, the Company cannot sell the securities which are the object of thetransaction before the right to repurchase these securities has been exercised by the counterpart or beforethe repurchase term has expired. The Company must take care to ensure that the level of its exposure torepurchase agreement transactions is such that it is able, at all times, to meet its obligations to redeem itsShares.

Shareholders should understand that all investments involve risk and there can be noguarantee against loss resulting from an investment in any Fund(s), nor can there be anyassurance that the Fund(s) investment objective(s) will be attained. Neither the InvestmentManagers, nor any of their worldwide affiliated entities, guarantee the performance or any futurereturn of the Company or any of its Funds.

Dividend PolicyIn respect of all Funds which issue distribution Shares, it is the intention of the Board of Directors

to distribute substantially all of the income attributable to the distribution Shares. Subject to any legal orregulatory requirements, the Board of Directors reserves the right to introduce new Classes of Shares,which may retain and re-invest their net income.

Annual dividends may be declared separately in respect of each Fund at the Annual GeneralMeeting of Shareholders.

Interim share dividends may be paid upon a decision of the Board of Directors in relation to any ofthe Funds.

It is, moreover, anticipated that distributions will be made under normal circumstances as set outbelow:

Monthly (following the end of each calendar month) in the case of Shares relating to the followingFunds:

^ Franklin High Yield Fund^ Franklin Income Fund^ Franklin U.S. Government Fund^ Franklin U.S. Ultra Short Bond Fund^ Franklin U.S. Total Return Fund^ Templeton Asian Bond Fund^ Templeton European Total Return Fund^ Templeton Global Bond Fund^ Templeton Global Total Return Fund^ Templeton U.S. Dollar Liquid Reserve Fund

Quarterly (following the end of each calendar quarter) in the case of Shares relating to the followingFunds:

^ Franklin Global Real Estate (Euro) Fund^ Franklin Global Real Estate (USD) Fund^ Templeton Emerging Markets Bond Fund^ Templeton Global Balanced Fund^ Templeton Global Equity Income Fund^ Templeton Global Income Fund

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Annually (in December of each year, further to the resolution of the Shareholders at the Annual GeneralMeeting) in the case of Shares relating to the following Funds:

^ Franklin Aggressive Growth Fund^ Franklin High Yield (Euro) Fund^ Franklin India Fund^ Franklin Mutual Beacon Fund^ Franklin Mutual European Fund^ Franklin Mutual Global Discovery Fund^ Franklin Templeton Japan Fund^ Franklin U.S. Small-Mid Cap Growth Fund^ Templeton Asian Growth Fund^ Templeton BRIC Fund^ Templeton China Fund^ Templeton Eastern European Fund^ Templeton Emerging Markets Fund^ Templeton Euro Liquid Reserve Fund^ Templeton Euroland Bond Fund^ Templeton European Fund^ Templeton Global Fund^ Templeton Global (Euro) Fund^ Templeton Global Bond (Euro) Fund^ Templeton Global Smaller Companies Fund^ Templeton Growth (Euro) Fund^ Templeton Latin America Fund

In order to receive dividends on distribution Shares, Shareholders must be registered as holders ofsuch distribution Shares on the register of Shareholders on the Valuation Day determined by theCompany as being the record date.

Dividends of registered distribution Shares will normally be reinvested in the subscription offurther distribution Shares of the Fund and Class to which such dividends relate, unless otherwise statedin the Application Form. Such further distribution Shares, which will be in registered form withoutShare certificate, will be issued on the date on which the relevant dividend is paid at a price which will becalculated in the same way as for other issues of Shares of that Fund on the Valuation Day on which theprice of the distribution Shares of that Fund goes ex-dividend. No initial sales charge will be payable.Applicants not wishing to use this reinvestment facility should complete the appropriate section of theApplication Form. In the event that cash dividends are payable, they will be paid to holders of registereddistribution Shares who have elected to receive dividends in cash either by transfer of funds or by chequemailed to their address shown on the register of Shareholders (any charges in either case being at theexpense of the Shareholder).

In the event that upon specific request of a Shareholder, as aforesaid, dividends are to be paid incash in the base currency of the particular Fund(s) or (if applicable) in its alternative currency or, at theShareholder’s expense, in any other freely convertible currency, they will be paid to holders of registereddistribution Shares by transfer or cheque mailed, at their own risk, to their address shown on the registerof Shareholders. Dividends unclaimed within five (5) years will be forfeited and will accrue for thebenefit of the relevant Fund.

Dividends on bearer Shares will be paid at the offices of the Principal Paying Agent in Luxembourgor at the offices of any local Paying Agent designated in the dividend announcement. Dividends will beannounced (together with the name(s) and address(es) of the Principal Paying Agent and/or local PayingAgent(s)) in the following newspapers : Expansion, Dagens Naeringsliv, De Tijd, Handelsblatt, HongKong Economic Times, Il Sole 24 Ore, La Tribune, L’Echo, Luxemburger Wort, South China MorningPost and The Financial Times as well as in any other newspapers or on any Internet site which the Boardof Directors may from time to time determine.

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When dividends of USD 250 (or currency equivalent) or less cannot be paid to a registeredshareholder due to missing data or if the cheque issued is not cashed in due time, the Company or theTransfer Agent reserves the right to automatically re-invest such dividends and any subsequentdividends to be paid in the subscription of further distribution shares of the Fund and class to whichsuch dividends relate until receipt of instructions in good order from the Shareholder.

If a dividend has been declared but not paid on a bearer Share, and no coupon has been tenderedfor such dividend within a period of five years, the Company will, as it is entitled to do under the laws ofthe Grand Duchy of Luxembourg, declare the dividend forfeited and such unpaid dividend will accruefor the benefit of the relevant Fund.

In respect of each dividend declared, the Board of Directors may determine if, and to what extent,such dividend is to be paid out of realised and unrealised capital gains regardless of capital losses,increased or decreased, as the case may be, by the portion of net investment income and capital gainsattributable to Shares issued and to Shares repurchased.

It should be remembered that dividend distributions are not guaranteed, that the Company’sFunds do not pay interest and that the price of Shares in the Company’s Funds and any incomeearned on the Shares may go down as well as up. It should also be remembered that any dividenddistribution lowers the value of the Shares in the Company’s Funds by the amount of thedistribution. Future earnings and investment performance can be affected by many factors,including changes in exchange rates, not necessarily within the control of the Company, itsdirectors, officers or any other person. No guarantees as to future performance of, or future returnfrom, the Company can be given by the Company itself, or by any director or officer of theCompany, by Franklin Templeton Investments, or any of its worldwide affiliates, or by any oftheir directors, officers or employees.

The Company’s Funds use an accounting practice known as equalisation, by which a portion ofthe proceeds from sales and costs of redemption of Shares, equivalent on a per Share basis to the amountof undistributed net investment income on the date of the transaction, is credited or charged toundistributed income. As a result, undistributed net investment income per Share is unaffected by salesor redemptions of Shares. However, in respect of any Fund offering only accumulation Shares, the Boardof Directors reserves the right not to apply equalisation.

Management And AdministrationThe Board of Directors is responsible for the Company’s management and control, including the

determination of investment policy.

Conducting OfficersThe Board of Directors of the Company has appointed the Conducting Officers mentioned under

Section ‘‘Board of Directors and Officers’’ to conduct the business of the Company.

The Conducting Officers shall conduct the business of the Company and, more specifically, shallhave the duty to ensure that the different service providers to which the Company has delegated certainfunctions (comprising the Investment Managers, the Registrar and the Transfer, Corporate, Domiciliaryand Administrative Agent and the Principal Distributor) perform their function in compliance with theLaw relating to collective investment undertakings, the articles of incorporation of the Company, thisProspectus and the provisions of the contracts which have been entered into between the Company andeach of them. The Conducting Officers shall also ensure compliance of the Company with theinvestment restrictions and oversee the implementation of the Funds’ investment policies.

The Conducting Officers shall also report to the Board of Directors on a quarterly basis and informthe Board of Directors without delay of any non-compliance of the Company with the InvestmentRestrictions.

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Investment ManagersFranklin Advisers, Inc., Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies,

Inc., Franklin Templeton Investments Corp. , Franklin Templeton Investments Japan Limited, FranklinTempleton Investment Management Limited, Fiduciary International Inc., Fiduciary Trust CompanyInternational, Fiduciary Trust International Limited, Templeton Investment Counsel, LLC, TempletonAsset Management Ltd and Templeton Global Advisors Limited act as investment managers to the Fundsof the Company as may other affiliated investment advisory companies within Franklin TempletonInvestments and provide day-to-day management in respect of the investment and re-investment of theassets of the Funds.

The Investment Managers and their affiliates serve as advisers for a wide variety of publicinvestment mutual funds and private clients in many nations. Franklin Templeton Investments has beeninvesting globally over the past 57 years and provides investment management and advisory services to aworldwide client base, including approximately 15.3 million mutual fund shareholders, foundations andendowments, employee benefit plans and individuals. The Franklin Templeton Investment Managers areindirect wholly owned subsidiaries of Franklin Resources, Inc. (‘‘Franklin’’). Through its subsidiaries,Franklin is engaged in various aspects of the financial services industry. As of September 30, 2004,theentities of Franklin Templeton Investments managed over USD 361.9 billions in assets worldwide.

CustodianJ.P. Morgan Bank Luxembourg S.A. has been appointed Custodian of the Company’s assets,

including the securities and cash of the Company, which will be held either directly or throughcorrespondents, nominees, agents or delegates of the Custodian. The Custodian was appointed by anagreement dated August 31, 1994, as amended, which may be terminated on 90 days’ notice.

J.P. Morgan Bank Luxembourg S.A. performs the custodial functions in accordance with the Lawrelating to collective investment undertakings.

J.P. Morgan Bank Luxembourg S.A. was incorporated as a socie¤te¤ anonyme for an unlimitedduration from May 16, 1973 and has its registered office at European Bank & Business Centre, 6 routede Tre'ves, L-2633 Senningerberg, Grand Duchy of Luxembourg. On December 31, 2004, its capitalreserves amounted to USD253.142.990,17.

The Custodian shall further ensure that the subscriptions and redemptions of Shares in theCompany effected by the Company are carried out in accordance with the provisions of the Law relatingto collective investment undertakings and the Articles, ensure that in transactions involving theCompany’s assets any consideration is remitted to the Custodian within the usual time limits, and ensurethat the Company’s income is applied in accordance with the provisions of the Law relating to collectiveinvestment undertakings and the Articles.

Registrar and Transfer, Corporate, Domiciliary and Administrative AgentAs the Registrar and Transfer, Corporate, Domiciliary and Administrative Agent, Franklin

Templeton International Services S.A. is responsible for processing the issue, redemption and exchangeof Shares, the maintenance of accounting records and all other administrative functions as required bythe laws of the Grand Duchy of Luxembourg.

Form Of SharesShares of each Fund are available in registered form only. In the absence of a request for Shares to

be issued in any particular form, investors will be deemed to have requested that their Shares be issuedin registered form without certificates.

Physical bearer Shares already in issue may be exchanged into registered Shares or be held underthe global holdings of Clearstream or Euroclear. Registered Shares may not be exchanged for physicalbearer Shares, but may be exchanged to be held under the global holdings of Clearstream or Euroclear.

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The Board of Directors has resolved that the Company may not issue warrants, options or otherrights to subscribe for Shares in the Company to its Shareholders or other persons.

Classes of Shares ^ Sales Charge StructureThe Shares relating to certain Funds of the Company are in six Classes : Class A, Class AX, Class B,

Class N, Class C and Class I as more fully described on pages 4^5.

The difference in the various classes relates to the fee structure applicable to each of them as morefully described hereafter.

The issue proceeds of the various Share Classes are invested in one common underlying portfolioof investments but the net asset value of each Class will be different as a result of the different issue priceof, the different fee structure and the specific distribution charge imposed on such Classes of Shares, asmore fully described hereafter.

The Board of Directors intends to distribute substantially all the income attributable to distributionShares, whereas no distribution of dividends shall be made for accumulation Shares but the net incomeattributable will be reflected in the increased value of the Shares.

In addition, the Company may offer within a Sub-Fund several Classes with the samecharacteristics as described above (A, AX, B, N, C, or I ) denominated in another currency than the Fundbase currency (an ‘‘alternative currency’’). In relation to such Sub-Fund, the net asset value of the Classconcerned will be calculated and published in the alternative currency and subscription proceeds forsuch Classes are to be paid by investors, and redemption proceeds are paid to redeeming shareholders insuch alternative currency. The Company does not currently intend to hedge the currency risks towhich these Classes are exposed, except for Hedged Share Classes.

In respect of Hedged Share Classes, the currency exposure of the Class alternative currencywill be hedged into the Fund base currency in order that investor in the Hedged Share Classesreceive a return in the alternative currency which is not materially affected by changes in valuebetween the Class alternative currency and the Fund base currency.

Class A Shares

Class A Shares may either be distribution Shares (Class A (dis) Shares) or accumulation Shares(Class A (acc) Shares). No distribution of dividends will be made in respect of Class A (acc) Shares butthe net income attributable will be reflected in the increased value of the Shares. All other terms andconditions applicable to Class A (acc) Shares are the same as those which apply for Class A (dis) Shares.

^ Initial Sales Charge

Class A Shares will be offered at the applicable net asset value, plus an initial sales charge of upto 6.50% of the total amount invested. This maximum charge, assuming no other charges or expensesare applicable, amounts to approximately 6.95% of the aggregate Share price of the Shares beingacquired and out of this charge the Principal Distributor may make payments to sub-distributors,intermediaries, dealers and/or professional investors, who may include affiliates of Franklin TempletonInvestments. The initial sales charge may be waived in whole or in part by the Principal Distributoreither for individual investors or for particular groups of investors. The balance of the amount investedafter the deduction of any applicable initial sales charge will then be applied to the purchase of Sharesin the relevant Fund.

If in any country in which the Shares are offered, local law or practice requires or permits a lowersales charge or a different minimum than that stated above for any individual purchase order, thePrincipal Distributor may sell Class A Shares, and may authorise sub-distributor(s), intermediary(ies),dealer(s) and/or professional investor(s) to sell Class A Shares, within such country at a total price lessthan the applicable price set forth above, but in accordance with the amounts permitted by the law orpractice of such country.

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^ Deferred Sales Charge

In addition, in order to recover commissions paid to sub-distributors, intermediaries, dealers and/or professional investors on qualified investments of USD 1 million or more in respect of Class A Shares,a contingent deferred sales charge of 1.00% applies to certain of those redemptions within the first 18months after each investment. The charge is 1.00% of the lesser of the value of the Shares redeemed(exclusive of reinvested dividends distributions) or the total cost of such Shares, and is retained by thePrincipal Distributor. The way this charge is calculated is the same for all Classes of Shares, with theexception of the percentage applicable, and is more fully described in the section Class B Shares.

Qualified investments concerned are investments made either as a lump sum or throughcumulative orders of the investor, his spouse, his children and/or grandchildren if they are under the ageof 18. For the purpose of the application of the qualified investments rules, shareholding in otherinvestment Funds offered by Franklin Templeton Investment may be combined at the investor’s request.Information on the investment Funds which Shares may be combined, and details of the procedure,terms and conditions applicable may be obtained from the Transfer Agent upon request.

^ Maintenance Charge

In addition, a maintenance charge of up to a certain percentage per annum of the applicable average netasset value is deducted and paid to the Principal Distributor, in order to compensate the PrincipalDistributor for any expenses incurred by it in connection with Shareholders liaison and administration ofthe Shares. This charge is accrued daily and is deducted and paid monthly to the Principal Distributor.

The following maintenance charge apply in respect of the different Funds:

^ Franklin Aggressive Growth Fund up to 0.50%^ Franklin Biotechnology Discovery Fund up to 0.50%^ Franklin European Growth Fund up to 0.50%^ Franklin European Small-Mid Cap Growth Fund up to 0.50%^ Franklin Global Growth Fund up to 0.50%^ Franklin Global Real Estate (Euro) Fund up to 0.50%^ Franklin Global Real Estate (USD) Fund up to 0.50%^ Franklin Global Small-Mid Cap Growth Fund up to 0.50%^ Franklin High Yield Fund up to 0.40%^ Franklin High Yield (Euro) Fund up to 0.40%^ Franklin Income Fund up to 0.50%^ Franklin India Fund up to 0.50%^ Franklin Technology Fund up to 0.50%^ Franklin U.S. Equity Fund up to 0.50%^ Franklin U.S. Government Fund up to 0.30%^ Franklin U.S. Growth Fund up to 0.50%^ Franklin U.S. Ultra Short Bond Fund up to 0.30%^ Franklin U.S. Small-Mid Cap Growth Fund up to 0.50%^ Franklin U.S. Total Return Fund up to 0.30%^ Franklin Mutual Beacon Fund up to 0.50%^ Franklin Mutual European Fund up to 0.50%^ Franklin Mutual Global Discovery Fund up to 0.50%^ Franklin Templeton Global Growth and Value Fund up to 0.50%^ Franklin Templeton Japan Fund up to 0.50%^ Templeton Asian Bond Fund up to 0.30%^ Templeton Asian Growth Fund up to 0.50%^ Templeton BRIC Fund up to 0.50%^ Templeton China Fund up to 0.50%^ Templeton Eastern Europe Fund up to 0.50%^ Templeton Emerging Markets Fund up to 0.50%^ Templeton Emerging Markets Bond Fund up to 0.50%^ Templeton Euro Liquid Reserve Fund up to 0.10%

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^ Templeton Euroland Fund up to 0.50%^ Templeton Euroland Bond Fund up to 0.30%^ Templeton European Fund up to 0.50%^ Templeton European Total Return Fund up to 0.30%^ Templeton Global Fund up to 0.50%^ Templeton Global (Euro) Fund up to 0.50%^ Templeton Global Balanced Fund up to 0.50%^ Templeton Global Bond Fund up to 0.30%^ Templeton Global Bond (Euro) Fund up to 0.30%^ Templeton Global Equity Income Fund up to 0.50%^ Templeton Global Income Fund up to 0.50%^ Templeton Global Smaller Companies Fund up to 0.50%^ Templeton Global Total Return Fund up to 0.30%^ Templeton Growth (Euro) Fund up to 0.50%^ Templeton Japan Fund up to 0.50%^ Templeton Korea Fund up to 0.50%^ Templeton Latin America Fund up to 0.50%^ Templeton Thailand Fund up to 0.50%^ Templeton U.S. Dollar Liquid Reserve Fund up to 0.10%^ Templeton U.S. Value Fund up to 0.50%

The Principal Distributor may, from time to time, pay part of the maintenance charge to various sub-distributors, intermediaries, dealers, investors or particular groups of investors.

Class AX (accumulation) Shares

No distribution of dividends will be made in respect of Class AX (accumulation) Shares (Class AX(acc) Shares) but the net income attributable will be reflected in the increased value of the Shares. Theother terms and conditions applicable to Class AX (acc) Shares are described below.

^ Initial Sales Charge

The price at which Class AX (acc) Shares are offered is the net asset value per Share nextdetermined after the purchase order is received, as defined herein, plus an initial sales charge of up to6.50% of the total amount invested. This maximum charge, assuming no other charges or expenses areapplicable, amounts to approximately 6.95% of the aggregate Share price of the Shares being acquiredand out of this charge the Principal Distributor may make payments to sub-distributors, intermediaries,dealers and/or professional investors, who may include affiliates of Franklin Templeton Investments. Theinitial sales charge may be waived in whole or in part by the Principal Distributor either for individualinvestors or for particular groups of investors. The balance of the amount invested after the deduction ofany applicable initial sales charge will then be applied to the purchase of Shares in the relevant Fund.

If in any country in which the Shares are offered, local law or practice require or permits a lowersales charge or a different minimum than that stated above for any individual purchase order, thePrincipal Distributor may sell Class AX (acc) Shares, and may authorise sub-distributor(s),intermediary(ies), dealer(s) and/or professional investor(s) to sell Class AX (acc) Shares, within suchcountry at a total price less than the applicable price set forth above, but in accordance with the amountspermitted by the law or practice of such country.

^ Deferred Sales Charge

In addition, in order to recover commissions paid to sub-distributors, intermediaries, dealers and/or professional investors on qualified investments of USD 1 million or more in respect of Class AX (acc)Shares, a Contingent Deferred Sales Charge of 1.00% applies to certain of those redemptions within thefirst 18 months after each investment. The charge is 1.00% of the lesser of the value of the Sharesredeemed (exclusive of reinvested dividends distributions) or the total cost of such Shares, and isretained by the Principal Distributor. The way this charge is calculated is the same for all Classes ofShares, with the exception of the percentage applicable, and is more fully described in the section Class BShares.

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Qualified investments concerned are investments made either as a lump sum or throughcumulative orders of the investor, his spouse, his children and/or grandchildren if they are under the ageof 18. For the purpose of the application of the qualified investments rules, shareholding in otherinvestment Funds offered by Franklin Templeton Investments may be combined at the investor’srequest. Information on the investment Funds which Shares may be combined, and details of theprocedure, terms and conditions applicable may be obtained from the Transfer Agent upon request.

^ Maintenance Charge

In addition, a maintenance charge of up to 0.50% per annum of the applicable net assets isdeducted and paid to the Principal Distributor in order to compensate the Principal Distributor for anyexpense incurred by it in connection with Shareholders liaison and administration of the Shares. ThePrincipal Distributor may, from time to time, pay a part of the maintenance charge to various sub-distributors, intermediaries, investors or particular groups of investors.

Class B Shares

Class B Shares may either be distribution Shares (Class B (dis) Shares) or accumulation Shares(Class B (acc) Shares). No distribution of dividends will be made in respect of Class B (acc) Shares, butthe net income attributable will be reflected in the increased value of the Shares. All other terms andconditions applicable to Class B (acc) Shares are the same as those which apply for Class B (dis) Shares.

The price at which Class B Shares will be offered is the net asset value per Share next determinedafter the purchase order is received, as defined herein. Purchases of Class B Shares are not subject to aninitial sales charge. However, Class B Shares are subject to a Contingent Deferred Sales Charge (CDSC) ifan investor redeems Shares within four years of purchase. The CDSC for these Class B Shares is based onthe net asset value of the shares being redeemed or their net asset value when purchased, whichever isless. The net asset value of the shares being redeemed will be used as a basis for the calculation of theCDSC in respect of Shares sold through specific authorised Canadian distributors and shall be specifiedin documentation to be provided by these distributors to investors prior to subscription. There is noCDSC on Shares acquired through reinvestment of dividends. To keep the CDSC as low as possible, eachtime a request to sell Shares is placed, any Shares in the Shareholder’s account not subject to a CDSC willbe sold first. If there are not enough of these to meet the request, additional Shares will be sold in theorder they were purchased. The amount of the CDSC is calculated by multiplying the followingpercentages by the net asset value of the Shares being redeemed or their net asset value when purchasedwhichever is less. The following table sets for the rate of CDSC applicable to redemptions of Class BShares :

Years since Purchase CDSC

Less than one year 4.00%Equal or more than one year but less than two years 3.00%Equal or more than two years but less than three years 2.00%Equal or more than three years but less than four years 1.00%Equal or more than four years 0.00%

In determining the applicability and rate of any Contingent Deferred Sales Charge, it will beassumed in a redemption of Class B Shares that, first, a redemption will be made of those Sharesrepresenting reinvestment of dividends and then of the remaining Shares held by the Shareholder for thelongest period of time, employing the current value of the Shares being sold or their net asset value whenpurchased, whichever is less. The holding period for the purposes of applying a Contingent DeferredSales Charge on Class B Shares of a particular Fund acquired through an exchange of Class B Shares fromanother Fund having Class B Shares will be measured from the date that such Class B Shares wereinitially acquired in the other Fund. These determinations will result in any Contingent Deferred SalesCharge being imposed at the lowest possible rate.

Class B Shares of a Fund can only be exchanged (see ‘‘Exchange of Shares’’ below) into Class BShares of a Fund which continues to issue Class B Shares. Shareholders should be aware that thisrestriction may limit their possibility to acquire Shares of another Fund through exchange because Class

50

B Shares are not available in all Funds and the further issue of Class B Shares of any Fund may besuspended at any time by the Board of Directors.

Class B Shares purchased from February 1, 2004 forward shall be automatically converted intoClass A Shares of the same Fund on the last day of the month in which the eight-year anniversary ofpurchase occurs. Class B Shares purchased by January 31, 2004 will be automatically converted into thesame Fund’s Class A Shares on January 31, 2012. As a result, the terms and other conditions applicableto such Shares shall become those applicable to Class A Shares.

Class B Shares in the Templeton U.S. Dollar Liquid Reserve Fund will be issued only in exchangefor Class B Shares in another Fund. Any such exchange from Class B Shares of any particular Fund to theTempleton U.S. Dollar Liquid Reserve Fund may only be made into Class B Shares of that Fund. In theevent of such exchange, the Contingent Deferred Sales Charge applicable on the Class B Sharesexchanged at the date of the transaction shall be taken to apply to the acquisition of the B Shares in theTempleton U.S. Dollar Liquid Reserve Fund and will continue accordingly.

Amounts assessed as a CDSC are paid to the Principal Distributor, or such other party as theCompany may from time to time appoint to defray distribution costs incurred by the PrincipalDistributor or such other party. The Contingent Deferred Sales Charge may be waived in whole or inpart by the Principal Distributor and/or such other party at its discretion either for individual investors orfor particular groups of investors.

Investors should note that a redemption of Shares may take place at a price that is more or lessthan the Shareholder’s original acquisition cost, depending upon the net asset value of the Shares at thetime of redemption compared to the shareholder’s acquisition cost and, with respect to Class B Shares,upon the imposition of any applicable CDSC.

^ Maintenance Charge

In addition, in the case of Class B Shares, a maintenance charge of up to 0.75% per annum of theapplicable average net asset value is deducted and paid to the Principal Distributor, in order tocompensate the Principal Distributor for any expenses incurred by it in connection with Shareholdersliaison and administration of the Shares and the proper handling of the CDSC. This charge is accrueddaily and is deducted and paid monthly to the Principal Distributor.

The Principal Distributor may, from time to time, pay part of the maintenance charge to varioussub-distributors, intermediaries, dealers, investors or particular groups of investors.

^ Servicing Charge

In addition, in the case of Class B Shares, a servicing charge of 1.00% per annum of the applicableaverage net asset value is deducted and paid to the Principal Distributor and/or other party (as describedabove), in order to compensate the Principal Distributor and/or other party for any financing costs andexpenses incurred by it in connection with sales of Class B Shares. This charge is accrued daily and isdeducted and paid monthly to the Principal Distributor and/or other party.

^ Shares issued upon reinvestment of dividends

Shares issued pursuant to the automatic reinvestment of dividends are not subject to any initialsales charge or any CDSC.

Class C Shares

Class C Shares may either be distribution Shares (Class C (dis) Shares) or accumulation Shares(Class C (acc) Shares). No distribution of dividends will be made in respect of Class C (acc) Shares, butthe net income attributable will be reflected in the increased value of the Shares. All other terms andconditions applicable to Class C (acc) Shares are the same as those which apply for Class C (dis) Shares.

The price at which Class C Shares will be offered is the net asset value per Class C Share nextdetermined after the purchase order is received, as defined herein. Purchases of Class C Shares are notsubject to an initial sales charge. However, Class C Shares are subject to a Contingent Deferred Sales

51

Charge (CDSC) of 1.00% if an investor redeems Shares within one year of purchase. The CDSC forthese Class C Shares is based on the net asset value of the Shares being redeemed (exclusive ofreinvestments) or their net asset value when purchased whichever is less. The net asset value of theShares being redeemed will be used as a basis for the calculation of the CDSC in respect of Shares soldthrough specific authorised Canadian distributors and shall be specified in documentation to beprovided by these distributors to investors prior to subscription. To keep the CDSC as low as possible,each time a request to sell Shares is placed, any Shares in the Shareholder’s account not subject to aCDSC will be sold first. If there are not enough of these Shares to meet the request, additional Shareswill be sold in the order they were purchased. The amount of the CDSC is calculated by multiplying theCDSC rate by the net asset value of the Shares being redeemed or their net asset value when purchasedwhichever is less.

Class C Shares of a Fund can only be exchanged into Class C Shares of a Fund which issues ClassC Shares. Shareholders should be aware that this restriction may limit their possibility to acquire Sharesof another Fund through exchange because Class C Shares are not available in all Funds and the furtherissue of Class C Shares of any Fund may be suspended at any time by the Board of Directors.

Amounts assessed as a CDSC are paid to the Principal Distributor, or such other party as theCompany may from time to time appoint to defray distribution costs incurred by the PrincipalDistributor or such other party. The CDSC may be waived in whole or in part by the PrincipalDistributor and/or such other party, as appointed from time to time by the Company, at its discretioneither for individual investors or for particular groups of investors.

Investors should note that a redemption of Shares may take place at a price that is more or lessthan the Shareholder’s original acquisition cost, depending upon the net asset value of the Shares at thetime of redemption compared to the shareholder’s acquisition cost and, with respect to Class C Shares,upon the imposition of any applicable CDSC.

^ Maintenance and Service Charge

In respect of the Class C Shares, a maintenance and service charge of up to 1.10% per annum ofthe applicable average net asset value is deducted. This charge is accrued daily and is deducted and paidmonthly as described below.

During the first year of investment, this charge is deducted and paid to the Principal Distributorand/or other party (as described above), in order to compensate the Principal Distributor and/or otherparty for any financing costs and expenses incurred by it in connection with sales of Class C Shares.

In the second and subsequent years of investment, this charge is deducted and paid to thePrincipal Distributor, in order to compensate the Principal Distributor for any expenses incurred by it inconnection with Shareholders liaison and administration of the Shares.

Class I Shares

Class I Shares may either be distribution Shares (Class I (dis) Shares) or accumulation Shares (Class I(acc) Shares). No distribution of dividends will be made in respect of Class I (acc) Shares but the netincome attributable will be reflected in the increased value of the Shares. All other terms and conditionsapplicable to Class I (acc) Shares are the same as those which apply for Class I (dis) Shares.

Class I Shares are only offered to institutional investors as defined from time to time by theguidelines or recommendations of the competent Luxembourg supervisory authority, in certain limitedcircumstances, for distribution in certain countries and/or through certain sub-distributors and/orprofessional investors at the discretion of the Principal Distributor, in which case any local supplement tothis Prospectus or marketing material, including that used by the relevant intermediaries, will refer to thepossibility and terms to subscribe for Class I Shares.

The price at which Class I Shares are offered is the net asset value per Share next determined afterthe purchase order is received, as defined herein. Purchases of Class I Shares are not subject to a CDSCor any maintenance, distribution or servicing charge. Class I Shares have a minimum initial investmentof USD 5,000,000 (except for the Class I (dis) Shares of the Franklin U.S. Government Fund which has a

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minimum initial investment of USD 1,000,000), which may be waived in whole or part at the discretionof the Principal Distributor (‘‘Minimum Account Balance’’).

Class N Shares

Class N Shares may either be distribution Shares (Class N (dis) Shares) or accumulation Shares(Class N (acc) Shares). No distribution of dividends will be made in respect of Class N (acc) Shares, butthe net income attributable will be reflected in the increased value of the Shares. All other terms andconditions applicable to Class N (acc) Shares are the same as those which apply for Class N (dis) Shares.

Class N Shares may be offered in certain limited circumstances; in respect of existing instructionsfor automatic reinvestment of dividends relating to Class N Shares in issue (having the samecharacteristics as the Class N Shares in issue to which such reinvested dividends relate), or fordistribution in certain countries and/or through certain sub-distributors, dealers and/or professionalinvestors at the discretion of the Principal Distributor, in which case any local supplement to thisProspectus or marketing material, including that used by the relevant intermediaries, will refer to thepossibility and terms to subscribe for Class N Shares.

^ Initial Sales Charge

Class N Shares will be offered at the applicable net asset value, plus an initial sales charge of up to3.00% of the total amount invested. This maximum charge, assuming no other charges or expenses areapplicable, amounts to approximately 3.09% of the aggregate Share price of the Shares being acquiredand out of this charge the Principal Distributor may make payments to sub-distributors, intermediaries,dealers and/or professional investors, who may include affiliates of Franklin Templeton Investments. Theinitial sales charge may be waived in whole or in part by the Principal Distributor either for individualinvestors or for particular groups of investors. The balance of the amount invested after the deduction ofany applicable initial sales charge will then be applied to the purchase of Shares in the relevant Fund.

If in any country in which the Shares are offered, local law or practice requires or permits a lowersales charge or a different minimum than that stated above for any individual purchase order, thePrincipal Distributor may sell Class N Shares, and may authorise sub-distributor(s), intermediary(ies),dealer(s) and/or professional investor(s) to sell Class N Shares, within such country at a total price lessthan the applicable price set forth above, but in accordance with the amounts permitted by the law orpractice of such country.

^ Distribution Charge

In addition to any other terms, Class N Shares are subject to a distribution charge of up to 1.25%per annum of the applicable average net asset value, deducted and paid to the Principal Distributor forproviding distribution and Shareholder liaison services to the Company. This charge is accrued daily andis deducted and paid monthly to the Principal Distributor.

The Principal Distributor may, from time to time, pay part of the distribution charge to varioussub-distributors, intermediaries, dealers, investors or particular groups of investors.

Alternative currency Class of Shares

A Euro alternative currency Class of Shares is offered in respect of the following Funds and ShareClasses :

^ Franklin India Fund A (acc) EUR, I (acc) EUR, N (acc) EUR^ Franklin Technology Fund N (acc) EUR^ Franklin U.S. Equity Fund A (acc) EUR, N (acc) EUR and I (acc) EUR^ Franklin Mutual Beacon Fund A (acc) EUR and N (acc) EUR^ Franklin Mutual Global Discovery Fund A(acc) EUR, N (acc) EUR and I (acc) EUR^ Franklin Templeton Japan Fund A (acc) EUR, I (acc) EUR and N (acc) EUR^ Templeton Asian Bond Fund A (acc) EUR, N (acc) EUR^ Templeton Asian Growth Fund A (dis) EUR, A (acc) EUR, I (acc) EUR^ Templeton BRIC Fund A (acc) EUR, N (acc) EUR

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^ Templeton Emerging Markets Fund N (acc) EUR^ Templeton Emerging Markets Bond Fund A (dis) EUR^ Templeton Global Balanced Fund A (acc) EUR, N (acc) EUR^ Templeton Global Bond Fund A (acc) EUR, A (dis) EUR and I (acc) EUR^ Templeton Global Equity Income Fund A (acc) EUR^ Templeton Global Income Fund A (acc) EUR^ Templeton Global Smaller Companies Fund C (acc) EUR^ Templeton Global Total Return Fund A (dis) EUR

A U.S. Dollar alternative currency Class of Shares is offered in respect of the following Funds andShare Classes:

^ Franklin European Small-Mid Cap Growth Fund B (acc) USD^ Franklin Mutual European Fund A (acc) USD, B (acc) USD, N (acc) USD

and C (acc) USD^ Franklin Templeton Japan Fund A (acc) USD, C (acc) USD and I (acc) USD^ Templeton Eastern Europe Fund A (acc) USD, C (acc) USD^ Templeton European Fund A (acc) USD, A (dis) USD and N (acc) USD^ Templeton European Total Return Fund A (dis) USD, C (dis) USD^ Templeton Growth (Euro) Fund I (dis) USD

A UK Sterling alternative currency Class of Shares is offered in respect of the following Funds andShare Classes:

^ Franklin Aggressive Growth Fund A (dis) GBP^ Franklin India Fund A (dis) GBP^ Franklin Global Real Estate (Euro) Fund A (dis) GBP^ Franklin Mutual European Fund A (dis) GBP^ Franklin Mutual Global Discovery Fund A (dis) GBP^ Templeton Asian Growth Fund A (dis) GBP^ Templeton BRIC Fund A (dis) GBP^ Templeton China Fund A (dis) GBP^ Templeton Eastern Europe Fund A (dis) GBP^ Templeton European Total Return Fund A (dis) GBP^ Templeton Global Bond Fund A (dis) GBP^ Templeton Latin America Fund A (dis) GBP

A Swiss Francs (CHF) alternatives currency Class of Shares is offered in respect of the followingFunds and Share Classes :

^ Templeton Global Total Return Fund I (dis) CHF

The terms and conditions applicable to the Classes of Shares available in alternative currency arethe same as those which apply for the same Classes of Shares offered in the base currency.

The Board of Directors may decide to offer an alternative currency Class of Shares in anothercurrency than ones mentioned above.

Hedged Class of Shares

A Hedged Class of Shares is offered in respect of the following Fund and Share Class :

^ Franklin U.S. Equity Fund A (acc) EUR-HG

The terms and conditions applicable to the Hedged Classes of Shares are the same as those whichapply for the same Classes of Shares offered in the base currency, the only difference being the hedgingof the Hedged Class into Fund base currency.

Issue Of SharesShares are made available through the Principal Distributor pursuant to a Distribution

Agreement dated November 6, 1990, duly assigned on October 30, 1992, for distribution of Shares

54

and the Principal Distributor will, from time to time, enter into contractual agreements with severalother sub-distributors, intermediaries, dealers and/or professional investors for the distribution ofthose Shares.

Shares of each Fund may be issued by the Company on any Valuation Day. Shares of each Fundshall be issued or sold at the net asset value per Share of the relevant Fund (see Appendix C), calculatedon the Valuation Day on which the application is received, plus any applicable initial sales charge asdescribed above, provided such application is received in Luxembourg on that Valuation Day. Theapplicable net asset value will be available on the following Valuation Day.

The Articles provide that Shares may not be issued or sold at less than the relevant net asset valueper Share (as to the computation of which, see Appendix C). Applications received by the Company inLuxembourg or by a distributor duly authorised in written on a Valuation Day will be dealt with at therelevant net asset value per Share determined on that Valuation Day.

Procedure For ApplicationApplications for Shares may be accepted at the discretion of the Board of Directors, and should be

made either (i) on the standard Application Form or (ii) by written application giving the informationstated below. Any subsequent purchase of Shares may also be made by telephone, facsimile or electronicrequest, if expressly allowed by the Transfer Agent. Concerning the requests made by telephone,facsimile and electronic means, the Transfer Agent may in its own discretion request a written and dulysigned confirmation, in which case it may delay the processing of the request until receipt of writtenconfirmation thereof. Applications for Shares (other than for Hedged Classes of Shares) should be sent ormade to the office of the Transfer Agent or the relevant appointed Share Distributor on a Valuation Daybefore the New York Stock Exchange closing time or before the equivalent in Luxembourg time onValuation Days when the New York Stock Exchange is closed for normal business (usually 10:00 pmCET). Applications for Shares in Hedged Classes should be sent or made to the office of the TransferAgent or the relevant appointed Share Distributor on a Valuation Day five hours before the New YorkStock Exchange closing time or before the equivalent in Luxembourg time on Valuation Days when theNew York Stock Exchange is closed for normal business (usually 5:00 pm CET). However, processing ofall applications received by a relevant Share Distributor will only commence once they have beenforwarded to the Transfer Agent or to a distributor duly authorised in writing. Subscription monies maybe required to be received by the Transfer Agent or the relevant Share Distributor in cleared funds priorto processing of the applications. In such case, the application will be dealt with on the basis of the netasset value per share of the relevant Class calculated on the valuation day when such funds are receivedby the Transfer Agent.

The Board of Directors may permit, if it deems it appropriate, different dealing cut-off times to beagreed with local distributors or for distribution in jurisdictions where the different time zone so justifies.In such circumstances, the applicable dealing cut-off time applied must always precede the time whenthe applicable net asset value is calculated and published. Such different cut off time shall be disclosed inthe local supplement to the Prospectus, the agreements in place with the local distributors or othermarketing material used in the jurisdictions concerned.

Orders for Shares will be settled in the Fund’s currency. Applicants settling in a currency otherthan the base currency or (if applicable) the alternative currency of the Fund concerned are advised thata delay in processing the application until the next Valuation Day may occur to allow for currencyconversion.

Applications not made on the standard Application Form should be duly signed and:

(a) state the name of the Fund(s) Class, the Class ISIN code (please refer to Appendix F of theProspectus for details of ISIN codes) and number of Shares applied for in the Fund(s) or theamount to be invested (which should include provision for any applicable initial salescharge) ;

(b) state how payment has been or will be made;

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(c) acknowledge receipt of this Prospectus (and any specific annex applicable to localjurisdictions, if applicable) and confirm that the application is made on the basis of andsubject to the information contained in this Prospectus and the Articles and agree to abideby the terms and conditions thereof ;

(d) state the name (and reference, if any) of the Applicant, the passport number, date of birthand nationality of the Applicant, whether the application is made on behalf of a minor andthe address to which the confirmation statement is to be dispatched;

(e) confirm that the Shares are not being acquired either directly or indirectly by or on behalf ofany U.S. person or on behalf of any person in any other jurisdiction that would be restrictedor prohibited from acquiring Shares and that the Applicant will not sell, transfer orotherwise dispose of any such Shares, directly or indirectly, to or for the account of any U.S.person or in the United States of America or to or for the account of any person in suchother jurisdiction, unless pursuant to an exemption from registration requirements availableunder U.S. law, any applicable statute, rule or interpretation;

(f) to the extent that the Applicant has chosen to have dividends in respect of Shares in anyFund(s) reinvested in further Shares, instruct the Company to receive payment of anydividends paid in respect of such Shares on the Applicant’s behalf and to apply suchdividends in subscription for further Shares in the Fund(s) in respect of which the dividendsare paid at the net asset value on the Valuation Day on which the price of the Shares of thatFund goes ex-dividend. If, however, no indication is given to the contrary, all dividends inrespect of a Fund will automatically be reinvested in additional Shares of the relevant Fund;

(g) confirm who is the ultimate economic beneficiary, unless the Applicant is an intermediaryhaving an identification obligation equivalent to that required under the laws of the GrandDuchy of Luxembourg (as described it the section ‘‘Anti-Money Laundering Legislation’’) ;and

(h) state whether the application is for Shares with or without Share certificates. Please refer tothe section ‘‘Certificates and Registration’’ herein on page 68.

If there is any discrepancy between the name of the Fund(s) Class, the Class ISIN code orthe currency of the Fund(s) Class quoted in the Application, the order will be processed on thebasis of the ISIN code quoted in the Application.

In addition, investors should provide the documentation required for anti-money launderingpurposes and as more fully described in the section ‘‘Anti-Money Laundering Legislation’’.

As soon as the price at which the Shares are to be issued has been determined, the Company willinform the Applicant, if practicable, of the total amount receivable, including any applicable initial salescharge, in respect of the number of Shares applied for, or, in the case where a subscriber has indicatedthe amount to be invested, the number of Shares to be allotted. Payment of the total amount due shouldbe made in the base currency of denomination of the relevant Fund or (if applicable) of the relevant Classof Shares. However, payment may be made, in certain instances as permitted by the Registrar andTransfer, Corporate, Domiciliary and Administrative Agent, in any freely convertible currency and thenecessary foreign exchange transactions will be arranged on behalf of, and at the expense of, theApplicant. Shares held through Clearstream or Euroclear must be settled in the currency ofdenomination of the relevant Fund or (if applicable) of the relevant Class of Shares and within three (3)Luxembourg bank business days following the Valuation Day.

The Board of Directors is also authorised to accept applications for Shares in whole or in part inspecie, having due regard to the applicable requirements prescribed by the laws of the Grand Duchy ofLuxembourg.

The Board of Directors or the Transfer Agent reserves the right to net applications for Shares aswell as redemption requests received in respect of the same personal account number on the sameValuation Day for the same Class of Shares pertaining to the same Fund. As a result, only the net orderwill be processed.

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Payment should be made to the bank account set forth by the Principal Distributor as appropriateto the currency of settlement. Cheques and bank drafts should be remitted to the DistributionController, a relevant Share Distributor or a designated Paying Agent, whichever is applicable.

The allotment of Shares is conditional upon receipt of subscription monies, including anyapplicable initial sales charge, which must be paid within five (5) Luxembourg bank business days of theValuation Day. Any confirmation statement or Share certificate and any monies returnable to theApplicant will be retained by the Company pending clearance of the remittance. If timely settlement isnot made, an application may lapse and be cancelled. In such circumstances, the Company has the rightto bring an action against the defaulting Applicant to obtain compensation for any loss directly orindirectly resulting from the failure by the Applicant to make good settlement by the settlement date.The Board of Directors may decide from time to time, with respect to specific applications forsubscription, that subscription monies in cleared funds must be received on the Valuation Day.

The Articles allow the Company to exclude or restrict the holding of Shares by any person orcompany. Pursuant thereto, the beneficial ownership of Shares in the Company by U.S. persons isexcluded except in a transaction that does not violate U.S. law. The sale of Shares to or on behalf of anyperson in any other jurisdiction is excluded except in a transaction that complies with the laws of thatjurisdiction. The Company is entitled to require any person applying for, or claiming ownership rightsin, any Shares to provide satisfactory information to establish that person’s nationality and country ofresidence.

Subject to receipt of the subscription monies in full and the registration particulars, confirmationstatements together with registered Share certificates, if requested, will, within fourteen (14)Luxembourg bank business days of completion of the subscription process, be dispatched inaccordance with the Applicant’s instructions to the Applicant or its nominated agent, at the risk of theApplicant.

If any application is not accepted in whole or in part, the subscription monies will be returned tothe Applicant through the post or by wire transfer at the risk of the Applicant. The Company reserves theright to present all cheques and drafts for payment on receipt and to withhold, in respect of registeredShares, registration and share certificates, pending clearance of the Applicant’s cheque(s) or wire transferorder.

The right is reserved by the Board of Directors to reject any application. In addition, the Board ofDirectors reserves the right at any time, without notice, to discontinue the issue or sale of Sharespursuant to this Prospectus.

The notice required by the laws of the Grand Duchy of Luxembourg in respect of the issue andsale of Shares by the Company has been deposited with the Registre de Commerce et des Socie¤te¤s de et a'Luxembourg.

No Shares of any Class of any Fund will be issued by the Company during any period whencalculation of the net asset value per Share is suspended by the Company pursuant to the power reservedto it by its Articles and described in Appendix C. Notice of any such suspension will be given toApplicants for Shares, and applications made or pending during such suspension may be withdrawn bynotice in writing received by the Company prior to the lifting of such suspension. Unless withdrawn,applications will be considered on the first Valuation Day following the end of the suspension, as ifreceived on that Valuation Day.

Investors should promptly check the confirmation statement that is mailed after eachtransaction in order to ensure that it has been accurately recorded in their account. Claims shouldbe submitted in writing to the local Franklin Templeton Investments servicing office no later thanthirty (30) days after the processing date.

Redemption of SharesShares of any Class in any Fund can be redeemed on any Valuation Day. The Board of Directors

may require that redemption requests be given by such notice prior to the Valuation Day on which the

57

redemptions will be effective, as it will reasonably determine. A Shareholder wishing to have all or any ofhis Shares redeemed should ask to do so by written request or, if expressly allowed by the TransferAgent, by facsimile, telephone or electronic request specifying the Class, the Fund, the Class ISIN code(please refer to Appendix F of the Prospectus for details of ISIN codes) and (i) number of Shares to beredeemed, (ii) the amount of the redemption stated in the Fund’s base currency or, if applicable, theFund’s alternative currency, or (iii) the percentage holding of Shares to be redeemed, together withgiving instructions for the payment of redemption proceeds (including the relevant bank details).Concerning the redemption requests made by telephone, facsimile and electronic means, the TransferAgent may in its own discretion request a written and duly signed confirmation, in which case it maydelay the processing of the request until receipt of written confirmation thereof. Documentationprocedures are set forth below. Any request to redeem Shares may not be executed until any previoustransaction involving the Shares to be redeemed has been completed and full settlement on those Sharesreceived. Such request to redeem will be dealt with at the net asset value per shares determined on theValuation Day during which the previous transaction is completed and fully settled.

If there is any discrepancy between the name of the fund(s) class, the class ISIN code or thefund(s) class currency quoted in the redemption request, the request will be processed on thebasis of the ISIN code quoted in the redemption requests.

All Shares (other than Hedged Classes of Shares) tendered for redemption shall be redeemed, inthe case of complete redemption requests received by the Transfer Agent in Luxembourg or the relevantappointed Share distributor, on any date that is a Valuation Day before New York Stock Exchangeclosing time or before the equivalent in Luxembourg time on Valuation Days when the New York StockExchange is closed for normal business (usually 10:00 pm CET), at the relevant net asset value per Sharedetermined on that Valuation Day, subject to any applicable contingent deferred sales charge, asdescribed on page 47 and subsequents. All Shares for Hedged Classes of Shares tendered for redemptionshall be redeemed, in the case of the complete redemption requests received by the Transfer Agent inLuxembourg or the relevant appointed Share distributor, on any date that is the Valuation Day five hoursbefore New York Stock Exchange closing time or before the equivalent in Luxembourg time onValuation Days when the New York Stock Exchange is closed for normal business (usually 5:00 pmCET), at the relevant net asset value per Share determined on that Valuation Day, subject to anyapplicable contingent deferred sales charge.The net asset value per Share will be calculated on the basisof the statements set out in ‘‘Calculation of the Net Asset Value’’ in Appendix C.

If a redemption request would result in a Shareholder’s investment in any one Fund being lessthan USD 2,500 (or equivalent), the Company may redeem at any time the full shareholding in thatFund and pay the proceeds to the Shareholder.

The Board of Directors or the Transfer Agent reserve the right to net all applications for Shares aswell as redemption requests received from the same Investor in respect of any personal account(s) on thesame Valuation Day when such orders relate to the same Class of Shares pertaining to the same Fund. Asa result, only the net order will be processed.

Payment for Shares redeemed will be made not later than five (5) Luxembourg bank business daysafter the redemption request has been received in good order. For registered Shares, the redemptionproceeds will be remitted either as requested by the Shareholder, by transfer of funds or by cheque madeout in the name of the Shareholder and mailed to his address of record as shown in the Shareholders’register (any charges in either case being at the expense of the Shareholder). For bearer Shares, thecheque will be mailed to the Shareholder, or at the request and expense of the Shareholder, by transfer offunds, to the account indicated by the Shareholder. Cheques will normally be drawn in the currency ofthe relevant Fund. However, cheques can be drawn in any freely convertible currency and the necessaryforeign exchange transactions will be arranged. All such transactions will be made on behalf of, and atthe expense of, the Shareholder. All payments are made at the Shareholder’s risk with no responsibilityon the part of the Principal Distributor, the Distribution Controller, the Registrar and Transfer,Corporate, Domiciliary and Administrative Agent, the Share Distributors and/or the InvestmentManagers or the Company.

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Payment of redemption proceeds for any redemption request made in respect of Shares recentlypurchased by cheque or banker’s draft may be delayed for up to fifteen (15) Luxembourg bank businessdays or more to allow the cheque or banker’s draft to clear. A certified or banker’s cheque may clear inless time.

If, in exceptional circumstances more fully described herein in Appendix C, the liquidity of therelevant Fund is insufficient to enable redemption proceeds to be paid within five (5) Luxembourg bankbusiness days after the redemption request has been received in good order, payment will be made assoon as reasonably practicable thereafter, but without interest. Payments by transfer, if requested by theShareholder, will normally be made at the expense of the Shareholder.

The Company reserves the right not to be bound to redeem or exchange on any one Valuation Daymore than 10% of the value of the Shares of any Fund. In these circumstances, the Board of Directorsmay declare that part or all of such Shares for redemption will be deferred for a period not exceeding ten(10) Luxembourg bank business days and will be valued at the relevant net asset value per Sharedetermined on the Valuation Day(s) on which the Shares are redeemed. On such Valuation Day(s) theserequests for redemption will be complied with in priority to later requests.

The Board of Directors is also authorised to extend the period for payment of redemption proceedsto such period, not exceeding thirty (30) Luxembourg bank business days (shorter periods may howeverapply in some jurisdictions), as may be required by settlement and other constraints prevailing in thefinancial markets of countries in which a substantial part of the assets attributable to any Fund shall beinvested, and this exclusively with respect to those Funds of the Company of which the investmentobjectives and policies provide for investments in equity securities of issuers in developing countries(namely, the Franklin India Fund, the Templeton Asian Growth Fund, the Templeton BRIC Fund, theTempleton China Fund, the Templeton Eastern Europe Fund, the Templeton Emerging Markets Fund,the Templeton Emerging Markets Bond Fund, the Templeton Korea Fund, the Templeton Latin AmericaFund and the Templeton Thailand Fund).

With the consent of the Shareholder(s) concerned, and having due regard to the principle of equaltreatment of Shareholders, the Board of Directors may satisfy redemption requests in whole or in part inspecie by allocating to the redeeming Shareholder(s) portfolio securities of any Fund equal in value tothe net asset value attributable to the Shares to be redeemed.

Under normal circumstances, prior to a redemption request, and before any payment will bemade, the Transfer Agent must have received the registered Share certificate(s), if any, to be redeemedand the duly completed transfer information on the reverse side of the certificate(s).

The price at which Shares in any Fund are redeemed may be more or less than the cost to theShareholder depending on the net asset value per Share of the Fund at the time of redemption.

A Shareholder may not withdraw his request for redemption except in the event of a suspension ofthe valuation of assets of the Company (see Appendix C) and, in such event, a withdrawal of aredemption request will be effective only if written notification is received by the Transfer Agent beforetermination of the period of suspension. If the request is not so withdrawn, the redemption will be madeon the Valuation Day next following the end of the suspension.

If the total value of the Shares of any Fund is at any time below USD 20 million or the equivalentthereof in the currency of the relevant Fund, the Board of Directors may decide to redeem all the Sharesoutstanding of such Fund. Notice of such redemption will be sent to the registered Shareholders byregistered mail and will, if bearer Shares are outstanding, be published in certain newspapers worldwide.The price at which Shares will be redeemed will be the net asset value per Share of such Funddetermined upon realisation of all assets attributable to such Fund.

Holders of bearer Share certificates are advised to make appropriate security arrangements with thePrincipal Paying Agent for the delivery of certificates and all unmatured coupons to the Company inLuxembourg.

It is recommended to Shareholders to promptly check the confirmation statement that ismailed after each transaction in order to ensure that it has been accurately recorded in their

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account. Claims should be submitted in writing to the local Franklin Templeton Investmentsservicing office no later than thirty (30) days after the processing date.

Exchange of SharesShareholders may exchange Shares of one Class with Shares of the same or another Class of anotherFund or with Shares of another Class of the same Fund, if available, subject to the following exceptions:

^ Class B Shares can only be exchanged with Class B Shares of another Fund,

^ Class C Shares of a Fund can only be exchanged into Class C Shares of a Fund which issues ClassC Shares, and

^ only institutional investors as defined in the section ‘‘Classes of Shares ç Sales Charge Structure’’above can exchange their Shares into or with Class I Shares.

The exchange of Class N Shares with Class A Shares and Class AX Shares may be subject to acharge equivalent to the difference between the two levels of initial sales charge applicable (‘‘sales chargedifferential’’), except for institutional investors. Such sales charge differential may be waived in whole orin part by the Principal Distributor.

Class A Shares and Class AX Shares subject to a contingent deferred sales charge can only beexchanged with Shares subject to the same contingent deferred sales charge.

Exchange of Shares will be treated as a taxable event falling under the provisions of the SavingsDirective (as defined hereafter). As a result, tax may be withheld in respect of exchange of shares out ofthe relevant Fund falling within the scope of this Directive, as per applicable to the redemption of sharesunder the terms of the Savings Directive.

Shareholders wishing to exchange Shares (other than for Hedged Classes of Shares) will beentitled to do so on any day which is a Valuation Day by tendering the Share certificates (if issued) tothe Transfer Agent, accompanied by an irrevocable written request or, if expressly allowed by theTransfer Agent, by facsimile, telephone or electronic request before the New York Stock Exchangeclosing time or before the equivalent in Luxembourg time on Valuation Days when the New YorkStock Exchange is closed for normal business (usually 10:00 pm CET). Shareholders wishing toexchange Shares to or from Hedged Classes of Shares will be entitled to do so on any day which is aValuation Day by tendering the Share certificates (if issued) to the Transfer Agent, accompanied by anirrevocable written request or, if expressly allowed by the Transfer Agent, by facsimile, telephone orelectronic request five hours before the New York Stock Exchange closing time or before theequivalent in Luxembourg time on Valuation Days when the New York Stock Exchange is closed fornormal business (usually 5:00 pm CET). Exchange requests made by telephone, facsimile andelectronic means must specify the Class, the Fund, the Class ISIN code (please refer to Appendix F ofthe Prospectus for details of ISIN codes) for both Funds involved in the exchange, the number ofshares to be exchanged, Fund currency amount or percentage holding of Shares to be exchanged,together with the same details for the Fund(s) into which the exchange is to be made. As regardsexchange requests made by telephone, facsimile and electronic means, the Transfer Agent may at itsown discretion request a written and duly signed confirmation, in which case it may delay theprocessing of the request until receipt of written confirmation thereof.

If there is any discrepancy between the Class(es), the Fund(s), the Class ISIN code and theFund(s) Class currency quoted in the exchange request, the request will be processed on the basisof the ISIN code(s) quoted in the exchange request.

Requests for exchange of Shares on any Valuation Day from a Fund or a Class of Sharesdenominated in one currency into a Fund or a Class of Shares denominated in another currency willrequire one additional Luxembourg bank business day in order to effect the currency conversions forsuch exchange. However, in exceptional circumstances, the Company or the Transfer Agent may, at itsdiscretion, decide to process such a request for exchange and the necessary currency conversions on thesame Valuation Date.

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The number of Shares issued upon exchange will be based upon the respective net asset value ofthe Shares of the two relevant Funds or Class of Shares on the Valuation Day on which the exchangerequest is effected and will be calculated as follows:

A=[B�(C-D)]�EF

where

A = the number of Shares in the new Fund or Class of Shares to which the Shareholder shallbecome entitled;

B = the number of Shares in the original Fund or Class of Shares which the Shareholder hasrequested to be exchanged;

C = net asset value per Share of the original Fund or Class of Shares ;

D = calculated amount of exchange charge (if any) payable per Share;

E = the relevant currency exchange rate (defined as the currency exchange factor determined bythe Board of Directors for the relevant Valuation Day, as representing the effective rate ofexchange between the two relevant currencies) after adjusting such rate to reflect the effectivecosts of making the transfer, when the original Fund or Class of Shares and the new Fund orClass of Shares are not designated in the same currency and, in any other case, 1;

F = net asset value per Share of the new Fund or Class of Shares.

In exceptional circumstances, the Board of Directors may, at its discretion, authorise an exchangecharge which calculated amount shall not exceed 1% of the value of the Shares being requested forexchange. It is at present intended that the exchange charge will be paid to the Principal Distributor(who may, in turn, pay a portion thereof to the sub-distributors, intermediaries, dealers and/orprofessional investors receiving the order for exchange) after deducting the total transaction expensepayable to the Transfer Agent. Such charge shall be automatically deducted when the number of Sharesis calculated and paid by the Company as described above.

Exchanges may not, however, be effected if the result thereof would be that the Shareholder wouldbe registered as holding less than USD 2,500 (or the equivalent in the currency of denomination of theFund) in value of Shares of the original Fund(s) and also of the Fund(s) into which his Shares are to beexchanged.

Any request to exchange Shares may not be executed until any previous transaction involving theShares to be exchanged has been completed and full settlement on those Shares received.

In addition to the exchange charge described above, in certain circumstances an exchange fromany one Fund will necessitate a fee equivalent to the difference between the two levels of charges unlessthe Shareholder can document that as a result of prior exchanges, he had already paid the commissionrate differential. It is currently anticipated that any exchange rate differential will be paid to the PrincipalDistributor, who may, in turn, pay a portion of each differential to a sub-distributor, intermediary, dealerand/or professional investor. However, the exchange rate differential may be waived at the discretion ofthe Company.

A new registered Share certificate, if requested, will not be delivered or posted to the Shareholderuntil the old Share certificate has been received in good form by the Transfer Agent. In addition, newregistered Share certificates will not be issued unless specifically requested by the Shareholder. In theevent that a new Share certificate is requested, such new Share certificate will not be issued until suchtime as the exchange has been transacted.

Shareholders may, under certain circumstances, exchange Shares of the Company into Shares orunits of certain other investment Funds offered by Franklin Templeton Investments. Information on theinvestment Funds into which Shares may be exchanged, and details of the procedure, terms andconditions for exchange may be obtained from the Transfer Agent upon request.

It is recommended to Shareholders to promptly check the confirmation statement that ismailed after each transaction in order to ensure that it has been accurately recorded in their

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account. Claims should be submitted in writing to the local Franklin Templeton Investmentsservicing office no later than thirty (30) days after the processing date.

Transfer Of SharesTransfer of registered Shares shall be effected as follows:

(a) if share certificates have been issued, by inscription of the transfer to be made in the registerof Shareholders of the Company by the Transfer Agent upon delivering the sharescertificates representing such shares along with other instruments of transfer satisfactory tothe Company and/or its Transfer Agent such as the standard transfer form available at theregistered office of the Company and/or the Transfer Agent, and

(b) if no share certificates have been issued, by written declaration of transfer to be inscribed inthe register of shareholders of the Company, dated and signed by the transferor and, if sorequested by the Company and/or its Transfer Agent, also signed by the transferee, or bypersons holding suitable powers of attorney to act therefore.

A transfer may not, however, be effected if the result thereof would be that the Shareholdersconcerned would be registered as holding less than USD 2,500 (or the equivalent in the currency ofdenomination of the Fund) in value of Shares of the relevant Fund.

Any request to transfer Shares may not be executed until any previous transaction involving theShares to be transferred has been completed and full settlement on those Shares received.

The right is reserved by the Company to reject any transfer of Shares.

The Shares transferred may be subject to specific conditions, including CDSC. It is the duty of theinvestor to which the Shares are transferred to inform himself of any specific condition applicable to suchShares.

Trading PolicyMarket timing generally. The Company discourages short-term or excessive trading, often

referred to as ‘‘market timing’’, and intends to seek to restrict or reject such trading or take other action,as described below, if in the judgment of the Company or Transfer Agent such trading may interfere withthe efficient management of the portfolio of any Fund, may materially increase the Fund’s transactioncosts, administrative costs or taxes, or may otherwise be detrimental to the interests of the Company andits shareholders.

Market timing consequences. If information regarding a shareholder’s activity in the Company orin any other Franklin Templeton fund or non-Franklin Templeton fund is brought to the attention of theCompany or the Transfer Agent and based on that information the Company or its agents in their solediscretion conclude that such trading may be detrimental to the Company as described in this MarketTiming Trading policy, the Company may temporarily or permanently bar a shareholder’s futurepurchases into the Company or, alternatively, may limit the amount, number or frequency of any futurepurchases and/or the method by which a shareholder may request future purchases and redemptions(including purchases and/or redemptions by an exchange or transfer between the Company and anyother Franklin Templeton fund).

In considering an investor’s trading activity, the Company may consider, among other factors, theshareholder’s trading history both directly and, if known, through financial intermediaries, in theCompany, in other Franklin Templeton funds, in non-Franklin Templeton mutual funds, or in accountsunder common control or ownership.

Market timing through financial intermediaries. Shareholders are subject to this policy whetherthey are a direct shareholder of the Fund or are investing indirectly in the Company through a financialintermediary such as a bank, an insurance company, an investment advisor, or any other Distributor that

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acts as nominee for Shareholders subscribing the shares in their own name but on behalf of its customers(the shares being held in an ‘‘omnibus account’’).

While the Company will encourage financial intermediaries to apply the Company’s market timingtrading policy to their customers who invest indirectly in the Company, the Company is limited in itsability to monitor the trading activity or enforce its market timing trading policy with respect tocustomers of financial intermediaries. For example, should it occur, the Company may not be able todetect market timing that may be facilitated by financial intermediaries or made difficult to identify in theomnibus accounts used by those intermediaries for aggregated purchases, exchanges and redemptionson behalf of all their customers. More specifically, unless the financial intermediaries have the ability toapply the Company’s market timing trading policy to their customers through such methods asimplementing short-term trading limitations or restrictions, monitoring trading activity for what mightbe market timing, the Company may not be able to determine whether trading by customers of financialintermediaries is contrary to the Company’s market timing trading policy.

Risks from market timers. Depending on various factors, including the size of the Fund, theamount of assets the portfolio manager typically maintains in cash or cash equivalents and the euro, yenor dollar amount and number and frequency of trades, short-term or excessive trading may interfere withthe efficient management of the Fund’s portfolio, increase the Fund’s transaction costs, administrativecosts and taxes and/or impact Fund performance.

In addition, if the nature of the Fund’s portfolio holdings expose the Fund to shareholders whoengage in the type of market timing trading that seeks to take advantage of possible delays between thechange in the value of a Fund’s portfolio holdings and the reflection of the change in the net asset valueof the Fund’s shares, sometimes referred to as ‘‘arbitrage market timing’’, there is the possibility that suchtrading, under certain circumstances, may dilute the value of Fund shares if redeeming shareholdersreceive proceeds (and buying shareholders receive shares) based upon net asset values which do notreflect appropriate fair value prices. Arbitrage market timers may seek to exploit possible delays betweenthe change in the value of a Fund’s portfolio holdings and the net asset value of the Fund’s shares inFunds that hold significant investments in foreign securities because certain foreign markets close severalhours ahead of the U.S. markets, and in funds that hold significant investments in small-cap securities,high-yield (‘‘junk’’) bonds and other types of investments which may not be frequently traded.

The Company is currently using several methods to reduce the risk of market timing. Thesemethods include:

^ reviewing Shareholder activity for excessive trading and

^ committing staff to selectively review on a continuing basis recent trading activity in order toidentify trading activity that may be contrary to this market timing trading policy.

Though these methods involve judgments that are inherently subjective and involve someselectivity in their application, the Company seeks to make judgments and applications that areconsistent with the interests of the Company’s shareholders. There is no assurance that the Company orits agents will gain access to any or all information necessary to detect market timing in omnibusaccounts. While the Company will seek to take actions (directly and with the assistance of financialintermediaries) that will detect market timing, the Company cannot represent that such trading activitycan be completely eliminated.

Revocation of market timing trades. Transactions placed in violation of the Company’s markettiming trading policy are not necessarily deemed accepted by the Company and may be cancelled orrevoked by the Company or Transfer Agent on the Valuation days following receipt by the TransferAgent.

Publication of Share PricesThe net asset value per Share of each Fund and Class of Shares is made public at the registered

office of the Company and is available at the offices of the Principal Distributor and the Transfer Agent.The Company will arrange for the publication of the net asset value per Share of relevant Funds as

63

required under applicable laws and in such newspapers as the Board of Directors may decide from timeto time. This information is also available on the Internet site : http://www.franklintempleton.lu. TheCompany cannot accept any responsibility for any error or delay in publication or for non-publication ofprices.

Temporary Suspension of Issues, Redemptions and ExchangesThe determination of the prices of Shares of each Fund may be suspended during a period when

trading on a relevant stock exchange is substantially restricted or when other specified circumstancesexist which make it impracticable to dispose of or value any of the Company’s investments (seeAppendix C). No Share may be issued, redeemed or exchanged during a period of suspension. A noticeof any suspension shall be published, if appropriate, in such newspapers as the Board of Directors mayfrom time to time determine.

Management and Company ChargesTempleton Global Advisors Limited, a Bahamian corporation, acts as Principal Distributor of the

Shares, pursuant to an assignment of a Distribution Agreement dated as of November 6, 1990, betweenthe Company and Templeton, Galbraith & Hansberger Ltd., a Cayman Islands corporation, concludedfor an unlimited duration, which may be terminated by either the Company or the Principal Distributorupon three months’ notice. The Principal Distributor may enter into contractual arrangements withvarious sub-distributors, intermediaries, dealers and/or professional investors for the distribution ofShares outside the United States of America.

The Principal Distributor may be entitled to receive any applicable initial sales charge, of up to6.5% of the total amount invested. The initial charge shall in no case exceed the maximum permitted bythe laws, regulations and practice of any country where the Shares are sold.

The Investment Managers receive from the Company a monthly fee equivalent to a certainpercentage per annum (more fully described below) of each Fund’s average daily net assets during theyear. The following apply in respect of the Shares of all Classes, except Class I Shares, of the severalCompany’s Funds:

^ Franklin Aggressive Growth Fund 1.00%^ Franklin Biotechnology Discovery Fund 1.00%^ Franklin European Growth Fund 1.00%^ Franklin European Small Mid Cap Growth Fund 1.00%^ Franklin Global Growth Fund 1.00%^ Franklin Global Real Estate (Euro) Fund 1.00%^ Franklin Global Real Estate (USD) Fund 1.00%^ Franklin Global Small-Mid Cap Growth Fund 1.00%^ Franklin High Yield Fund 0.80%^ Franklin High Yield (Euro) Fund 0.80%^ Franklin Income Fund 0.85%^ Franklin India Fund 1.00%^ Franklin Technology Fund 1.00%^ Franklin U.S. Equity Fund 1.00%^ Franklin U.S. Government Fund 0.65%^ Franklin U.S. Growth Fund 1.00%^ Franklin U.S. Ultra Short Bond Fund 0.65%^ Franklin U.S. Small-Mid Cap Growth Fund 1.00%^ Franklin U.S. Total Return Fund 0.75%^ Franklin Mutual Beacon Fund 1.00%^ Franklin Mutual European Fund 1.00%^ Franklin Mutual Global Discovery Fund 1.00%^ Franklin Templeton Global Growth and Value Fund 1.00%

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^ Franklin Templeton Japan Fund 1.00%^ Templeton Asian Bond Fund 0.75%^ Templeton Asian Growth Fund 1.35%^ Templeton BRIC Fund 1.60%^ Templeton China Fund 1.60%^ Templeton Eastern Europe Fund 1.60%^ Templeton Emerging Markets Fund 1.60%^ Templeton Emerging Markets Bond Fund 1.00%^ Templeton Euro Liquid Reserve Fund 0.40%^ Templeton Euroland Fund 1.00%^ Templeton Euroland Bond Fund 0.65%^ Templeton European Fund 1.00%^ Templeton European Total Return Fund 0.75%^ Templeton Global Fund 1.00%^ Templeton Global (Euro) Fund 1.00%^ Templeton Global Balanced Fund 0.80%^ Templeton Global Bond Fund 0.75%^ Templeton Global Bond (Euro) Fund 0.75%^ Templeton Global Equity Income Fund 1.00%^ Templeton Global Income Fund 0.85%^ Templeton Global Smaller Companies Fund 1.00%^ Templeton Global Total Return Fund 0.75%^ Templeton Growth (Euro) Fund 1.00%^ Templeton Japan Fund 1.00%^ Templeton Korea Fund 1.60%^ Templeton Latin America Fund 1.40%^ Templeton Thailand Fund 1.60%^ Templeton U.S. Dollar Liquid Reserve Fund 0.40%^ Templeton U.S. Value Fund 1.00%

In respect of Class I Shares, the Investment Managers receive from the Company a monthly feeequivalent to a certain percentage per annum of each Fund’s average daily net assets during the year, asmore fully described in Appendix E.

As remuneration for the services rendered to the Company as Custodian of the Company, J.P.Morgan Bank Luxembourg S.A. will receive an annual fee depending of the nature of the investments ofthe different Funds of the Company in a range from 0.01% to 0.14% of the net asset values of the assetsof the different Funds. Such fee will be calculated and accrued daily and will be paid monthly in arrearsto the Custodian by the Company.

Franklin Templeton International Services S.A. in its respective capacities of registrar and transfer,corporate, domiciliary and administrative agent will receive as remuneration a maximum annual fee of0.2% of the net asset value of the company plus an additional fixed amount per shareholder account atthe relevant class level over a one year period. Such fees will be calculated and accrued daily and will bepaid monthly in arrears to Franklin Templeton International Services S.A. by the Company.

Such fees do not include normal banking and brokerage fees and commissions on transactionsrelating to the assets and liabilities of the Company as well as any reasonable out-of-pocket expensesincurred in connection with the Company, and chargeable to the Company and fees for other services asagreed from time to time. The amounts effectively paid will be shown in the Company’s financialstatements.

The Investment Managers may, from time to time, pay a part of their investment management feeto various sub-distributor(s), intermediary(ies), dealer(s) and/or professional investor(s).

Consistent with obtaining best execution, brokerage commissions on portfolio transactions for theCompany may be directed by the Investment Managers to broker-dealers in recognition of research

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services furnished by them as well as for services rendered in the execution of orders by such broker-dealers. The receipt of investment research and information and related services permits the InvestmentManagers to supplement their own research and analysis and makes available to them the views andinformation of individuals and research staffs of other firms. Such services do not include travel,accommodation, entertainment, general administrative goods or services, general office equipment orpremises, membership fees, employee salaries or direct money payment, which are paid by theInvestment Managers.

The Company’s soft commissions are subject to the following conditions: (i) the InvestmentManagers will act at all times in the best interest of the Company when entering into soft commissionarrangements; (ii) the services provided will be in direct relationship to the activities of the InvestmentManager undertaken in relation to the Company; (iii) brokerage commissions in portfolio transactionsfor the Company will be directed by the Investment Managers to broker-dealers that are entities and notto individuals; (iv) the Investment Managers will provide reports to the Board of Directors with respectto soft commissions including the nature of the services they receive; and (v) the amount of the softcommissions paid will be set out in the financial statements of the Company.

The Company bears its other operational costs including, but not limited to, the costs of buyingand selling underlying securities, governmental and regulatory charges, legal and auditing fees, insurancepremiums, interest charges, reporting and publication expenses, postage, telephone and facsimileexpenses. All expenses are estimated and accrued daily in the calculation of the net asset value of eachFund. The Company may, from time to time, pay certain fees to various sub-distributors, intermediaries,dealers and/or professional investors relating to placing certain Funds on sales platforms designed tobring about a wider distribution of Fund Shares. Such costs would only be allocated among the Fundsplaced on such platforms.

Taxation of the CompanyThe Company is not liable in the Grand Duchy of Luxembourg to any tax on its profits or income.

The Company, however, is liable in the Grand Duchy of Luxembourg to a tax of 0.05% per annumof its net asset value, such tax being payable quarterly on the basis of the value of the net assets of theCompany at the end of the relevant calendar quarter. This tax is not applicable for the portion of theassets of a Fund invested in other undertakings for collective investment which have been already subjectto such tax. In order to qualify under the current reduced tax rate of 0.01% (instead of the tax of 0.05%referred to above), the Templeton U.S. Dollar Liquid Reserve Fund and the Templeton Euro LiquidReserve Fund will be invested in a manner that the weighted average remaining maturity of all securitiesand instruments comprised in the portfolios of the respective Funds does not exceed twelve months. Forthe purpose of calculating the residual maturity of each single security or instrument, the financialinstruments attached thereto shall be taken into account. For the securities or instruments whose termsof issue provide for an adjustment of their interest rate by reference to market conditions, the residualmaturity until the date on which the rate is adjusted shall be considered.

Class I Shares may also qualify for the reduced tax rate of 0.01% if all the shareholders of this Classof Shares are institutional investors.

No stamp duty or other tax is payable in the Grand Duchy of Luxembourg on the issue of theShares in the Company.

Under current laws and practice, no capital gains tax is payable in the Grand Duchy ofLuxembourg on the realised or unrealised capital appreciation of the assets of the Company.

Investment income received or capital gains realised by the Company may be subject to tax in thecountries of origin at varying rates. The Company may benefit in certain circumstances from doubletaxation treaties, which the Grand Duchy of Luxembourg has concluded with other countries.

Taxation of ShareholdersLuxembourg

Subject to the provisions of the Savings Directive, as defined hereafter, Shareholders are currentlynot subject to any capital gains, income, withholding, gift, estate, inheritance or other taxes in the Grand

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Duchy of Luxembourg (except for Shareholders domiciled, resident or having a permanentestablishment in the Grand Duchy of Luxembourg and except for certain former residents of theGrand Duchy of Luxembourg if owning more than 10% of the Share capital of the Company).

The Council of the European Union adopted Directive 2003/48/EC on the taxation of savingsincome in the form of interest payments on 3 June 2003 (the ‘‘Savings Directive’’). The Savings Directiverequires Member States of the European Union to provide the tax authorities of other Member Stateswith details of payments of interest or similar payments paid by a paying agent (as defined by the SavingsDirective) within its jurisdiction to an individual resident in that other Member State. Austria, Belgiumand Luxembourg have opted instead for a tax withholding system for a transitional period in relation tosuch payments. Switzerland, Monaco, Liechtenstein, Andorra and San Marino and the Channel Islands,the Isle of Man and the dependent or associated territories in the Caribbean, have also introducedmeasures equivalent to information reporting or, during the above transitional period, withholding tax.

The Savings Directive has been implemented in Luxembourg by a law dated 21 June 2005 (the‘‘Law’’).

Dividends distributed by a Fund of the Company will be subject to the Savings Directive and theLaw if more than 15% of such Fund’s assets are invested in debt claims (as defined in the Law) andproceeds realised by Shareholders on the redemption or sale of Shares in a Fund will be subject to theSavings Directive and the Law if more than 40% of such Fund’s assets are invested in debt claims (suchFunds, hereafter ‘‘Affected Funds’’).

The applicable withholding tax will be at a rate of 15% from 1 July 2005 until 30 June 2008, 20%from 1 July 2008 until 30 June 2011 and 35% from 1 July 2011 onwards.

Consequently, if in relation to an Affected Fund a Luxembourg paying agent makes a payment ofdividends or redemption proceeds directly to a Shareholder who is an individual resident or deemedresident for tax purposes in another EU Member State or certain of the above mentioned dependent orassociated territories, such payment will, subject to the next paragraph below, be subject to withholdingtax at the rate indicated above.

No withholding tax will be withheld by the Luxembourg paying agent if the relevant individualeither (i) has expressly authorised the paying agent to report information to the tax authorities inaccordance with the provisions of the Law or (ii) has provided the paying agent with a certificate drawnup in the format required by the Law by the competent authorities of his State of residence for taxpurposes.

The Fund reserves the right to reject any application for Shares if the information provided by anyprospective investor does not meet the standards required by the Law as a result of the Savings Directive.

The list of Funds falling within the scope of the Savings Directive and the Law is made public atthe registered office of the company and is available at the offices of the Principal Distributor and theTransfer Agent. This information may also be available on the Internet site :

http://www.franklintempleton.lu

The foregoing is only a summary of the implications of the Directive and the Law, is basedon the current interpretation thereof and does not purport to be complete in all respects. It doesnot constitute investment or tax advice and Investors should therefore seek advice from theirfinancial or tax adviser on the full implications for themselves of the Directive and the Law.

United KingdomThe Company shall apply for certification as a ‘‘distributing fund’’ within the meaning of Schedule

27 of the UK Income and Corporation Taxes Act 1988 in respect of the distribution Share Classes offeredby the Company and for the accounting period beginning on July 1st, 2004. With respect to the taximplications of a distributing fund, please note the discussion on dividend policy on page 43 and kindlyconsult a professional advisor as to the possible tax or other consequences. Provided such certification isobtained, Shareholders resident or ordinarily resident in the United Kingdom for tax purposes, subject totheir personal circumstances, will be liable to United Kingdom capital gains tax or corporation tax inrespect of gains arising from the sale, redemption, or disposal of distribution Shares.

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Investors should consult their professional advisers as to the possible tax or otherconsequences of buying, holding, transferring or selling any of the Company’s Shares under thelaws of their countries of citizenship, residence and domicile.

Meetings and ReportsThe annual general meeting of Shareholders is held at the registered office of the Company on the

30th day of November in each year or, if such day is not a bank business day in Luxembourg, on theLuxembourg bank business day immediately preceding the 30th day of November. Notices of allmeetings will be published in the following newspapers : Luxemburger Wort and Me¤morial, Recueil desSocie¤te¤s et Associations (the ‘‘Me¤morial’’) and such other newspapers as the Board of Directors shall fromtime to time determine and will be sent to the holders of registered Shares by post at least eight (8)calendar days prior to the meeting at their addresses in the register of Shareholders. Such notices mayalso be made available on Internet sites as the Board of Directors shall from time to time determine. Theywill include the agenda and specify the time and place of the meeting, the conditions of admission andwill refer to the requirements of the laws of the Grand Duchy of Luxembourg with regard to thenecessary quorum and majorities required for the meeting. The requirements as to attendance, quorumand majorities at all general meetings will be those laid down in articles 67 and 67-1 of the law of August10, 1915 (as amended) relating to commercial companies and in the Articles.

Abridged audited annual reports are mailed to the Shareholders at their registered addresses.Effective December 31, 2005, the abridged unaudited semi-annual reports will be available on thefollowing Franklin Templeton internet site, www.franklintempleton.lu, and only distributed toregistered shareholders in those countries where local regulation so requires. The complete auditedannual reports and unaudited semi-annual reports are available at the registered office of the Company.The accounting year of the Company ends on June 30 of each year.

Documents Available for InspectionCopies of the Articles may be obtained at the registered office of the Company. The material

contracts referred to in Paragraph 5 of Appendix B on page 78 of this Prospectus are available forinspection at the same address during normal business hours.

Certificates and RegistrationApplicants should state whether registered Shares applied for are to be issued in:

(i) registered form without Share certificates (to be issued unless requested otherwise) or

(ii) registered form with Share certificates.

Shares of each Fund are available in registered form. The Application Form should be completedwith the full name and address of each of the persons in whose name the Shares are to be registered and,in the case of a joint application, who is to be the first named Shareholder. Unless otherwise requested,registered Share certificates will be dispatched to the address given on the Application Form or to that ofthe first named Applicant.

Share certificates will normally be posted at the risk of the subscriber within fourteen (14)Luxembourg bank business days of receiving a properly completed Application Form and payment.

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Append i x A

Investment RestrictionsThe Board of Directors shall, based upon the principle of spreading risks, have power to

determine the corporate and investment policy for the investments relating to each Fund and the courseof conduct of the management and business affairs of the Company, provided, however, that :

1.(a) the Company may not invest more than 10% of the net assets of any Fund in transferablesecurities and money market instruments other than those referred to hereafter :

(i) transferable securities and money market instruments admitted to official listing on a stockexchange in an E.U. Member State and/or ;

(ii) transferable securities and money market instruments dealt in or on another regulatedmarket in an E.U. Member State which operates regularly and is recognised and open to thepublic (hereafter referred to as a ‘‘regulated market’’) ;

(iii) transferable securities and money market instruments admitted to official listing on arecognised stock exchange in any other country in Europe, the American continents, Asia,India, the Pacific Basin, Australia and Africa ;

(iv) transferable securities and money market instruments dealt in on another regulated marketin the countries of the areas referred to under (iii) above, which operates regularly and isrecognised and open to the public;

(v) recently issued transferable securities and money market instruments, provided that theterms of issue include an undertaking that application will be made for admission to officiallisting on a stock exchange or on another regulated market, in the countries of the areasreferred to under (i), (ii) and (iii) above, which operates regularly and is recognised andopen to the public, and such admission is secured within a year of issue;

(vi) units of UCITS and/or other UCIs, whether situated in an EU member state or not, providedthat :

(a) such other UCIs have been authorised under the laws of any E.U. Member State orunder the laws of Canada, Hong Kong, Japan, Norway, Switzerland or the UnitedStates,

(b) the level of protection for unitholders in such other UCIs is equivalent to thatprovided for unitholders in a UCITS, and in particular that the rules on assetssegregation, borrowing, lending, and uncovered sales of transferable securities andmoney market instruments are equivalent to the requirements of directive 85/661/EEC,

(c) the business of such other UCIs is reported in half-yearly and annual reports to enablean assessment of the assets and liabilities, income and operations over the reportingperiod,

(d) no more than 10% of the assets of the UCITS or of the other UCIs, whose acquisitionis contemplated, can, according to their constitutional documents, in aggregate beinvested in units of other UCITS or other UCIs;

(e) For the purpose of this restriction and the limits set forth in 6. below, the followingdefinitions shall apply:

(f) ‘‘UCITS’’ shall mean an undertaking for collective investment in transferable securitiesauthorised according to Council Directive 85/611/EEC of 20 December 1985, asamended;

(g) ‘‘other UCI’’ shall mean an undertaking for collective investment or investment fundwithin the meaning of the first and second indents of Article 1. I (2) of CouncilDirective 85/611/EEC of 20 December 1985, as amended.

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(vii) deposits with credit institutions which are repayable on demand or have the right to bewithdrawn, and maturing in no more than 12 months, provided that the credit institutionhas its registered office in an E.U. Member State or, if the registered office of the creditinstitution is situated in a non-Member State, provided that it is subject to prudential rulesconsidered by the Luxembourg supervisory authority as equivalent to those laid down inCommunity law;

(viii) financial derivative instruments, including equivalent cash-settled instruments, dealt in on aregulated market referred to in subparagraph (i) to (v) above, and/or financial derivativeinstruments dealt in over-the-counter (‘‘OTC derivatives’’), provided that:

^ the underlying consists of instruments covered by this appendix under 1.a), financialindices, interest rates, foreign exchange rates or currencies, in which the Fund mayinvest according to its investment objectives,

^ the counterparties to OTC derivative transactions are institutions subject to prudentialsupervision, and belonging to the categories approved by the Luxembourgsupervisory authority,

^ the OTC derivatives are subject to reliable and verifiable valuation on a daily basis andcan be sold, liquidated or closed by an offsetting transaction at any time at their fairvalue at the Company’s initiative, and

(ix) money market instruments other than those dealt in on a regulated market and which fallunder 1.a), if the issue or the issuer of such instruments are themselves regulated for thepurpose of protecting investors and savings, and provided that such instruments are:

^ issued or guaranteed by a central , regional or local authority or by a central bank of aMember State, the European Central Bank, the European Union or the EuropeanInvestment Bank, a non-Member State or, in case of a Federal State, by one of themembers making up the federation, or by a public international body to which one ormore Member States belong, or

^ issued by an undertaking any securities of which are dealt in on regulated marketsreferred to above, or

^ issued or guaranteed by an establishment subject to prudential supervision inaccordance with criteria defined by the Community law, or by an establishment whichis subject to and complies with prudential rules considered by the Luxembourgsupervisory authority to be at least as stringent as those laid down by Community law,or

^ issued by other bodies belonging to the categories approved by the Luxembourgsupervisory authority provided that investments in such instruments are subject toinvestor protection equivalent to that laid down in the first, the second or the thirdindent and provided that the issuer is a company whose capital and reserves amountto at least 10 million euro and which presents and publishes its annual accounts inaccordance with the fourth directive 78/660/EEC, is an entity which, within a groupof companies which include one or several listed companies, is dedicated to thefinancing of the group or is an entity which is dedicated to the financing ofsecuritisation vehicles which benefit from a banking liquidity line.

(b) the Company may invest up to 10% of the net assets of any Fund in transferable securities andmoney market instruments other than those referred to in (a) above;

(c) each Fund of the Company may hold ancillary liquid assets ;

(d) (i) Each Fund of the Company may invest no more than 10% of its net assets in transferablesecurities and money market instruments issued by the same body. Each Fund of theCompany may not invest more than 20% of its net assets in deposits made with the samebody. The risk exposure to a counterparty of a Fund in an OTC derivative transaction may

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not exceed 10% of its assets when the counterparty is a credit institution referred to in a)(vii) above or 5% of its net assets in other cases.

(ii) The total value of the transferable securities and money market instruments held in theissuing bodies in each of which any Fund invests more than 5% of its net assets must notexceed 40% of the value of it assets. This limitation does not apply to deposits and OTCderivative transactions made with financial institutions subject to prudential supervision.

Notwithstanding the individual limits laid down in paragraph d) (i), a Fund may notcombine:

^ investments in transferable securities or money market instruments issued by a singlebody,

^ deposits made with a single body, and/or

^ exposures arising from OTC derivative transactions undertaken with a single body,

in excess of 20% of its assets.

(iii) The limit laid down under the first sentence of paragraph d) (i) above shall be of 35% wherethe Fund has invested in transferable securities or money market instruments issued orguaranteed by a E.U. Member State, by its local authorities, by a non-Member State or bypublic international bodies of which one or more Member States are members.

Such securities and money market instruments shall not be included in the calculation ofthe limit of 40% referred to under d) (ii) above.

(iv) The limit laid down under the first sentence of paragraph d)(i) above shall be of 25% forbonds issued by a credit institution which has its registered office in a E.U. Member Stateand is subject by law, to special public supervision designed to protect bondholders. Inparticular, sums deriving from the issue of these bonds must be invested in conformity withthe law in assets which, during the whole period of validity of the bonds, are capable ofcovering claims attaching to the bonds and which, in case of bankruptcy of the issuer, wouldbe used on a priority basis for the repayment of principal and payment of the accruedinterest.

If a Fund invests more than 5% of its net assets in the bonds above and issued by one issuer,the total value of such investments may not exceed 80% of the value of the assets of theFund.

(v) The limit set out above under d) (i), (ii), (iii) and (iv) may not be combined, and thusinvestments in transferable securities or money market instruments issued by the samebody, in deposits or derivative instruments made with this body carried out in accordancewith section (i), (ii), (iii) and (iv) may not exceed a total of 35% of the assets of the Fund.

Companies which are included in the same group for the purposes of consolidated accounts,as defined in accordance with Directive 83/349/EEC or in accordance with recognisedinternational accounting rules, are regards as a single body for the purpose of calculating thelimits contained under d). A Fund may cumulatively invest up to 20% of its net assets intransferable securities and money market instruments within the same group.

(vi) where any Fund has invested in accordance with the principle of risk spreading intransferable securities and money market instruments issued or guaranteed by any EUMember State, its local authorities, or public international bodies of which one ormore EU Member States are members or by any other State of the OECD, theCompany may invest 100% of the assets of any Fund in such securities provided thatsuch Fund must hold securities from at least six different issues and securities fromone issue must not account for more than 30% of that Fund’s assets.

2. The Company may not purchase real estate, nor acquire any options, rights or interest in respectthereof, provided that the Company may invest for the account of any Fund in securities securedby real estate or interest therein or in securities of companies investing in real estate.

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3. The Company may not make investments in precious metals or certificates representing them.

4. The Company may not enter into transactions involving commodities or commodity contracts,except that the Company may, in order to hedge risks, enter into financial futures within the limitslaid down in clause 14 below.

5. The Company or any Fund may not invest in voting shares of companies allowing it to exercise asignificant influence in the management of the issuer. Further, the Company may acquire no morethan (i) 10% of the non-voting shares of any single issuing body, (ii) 10% of the debt securities ofany single issuing body, (iii) 25% of the units of any single collective investment undertaking, (iv)10% of the money market instruments of any single issuing body . However, the limits laid downunder (ii), (iii) and (iv) may be disregarded at the time of acquisition if, at that time, the grossamount of the bonds or of the money market instruments or the net amount of the instruments inissue cannot be calculated.

The limits under this section 5. shall not apply to (i) transferable securities or money marketinstruments issued or guaranteed by a Member State of the E.U., its local authorities, or publicinternational bodies of which one or more Member States of the E.U. are members or by any otherState, nor to (ii) shares held by the Company in the capital of a company incorporated in a Statewhich is not a Member State of the E.U. investing its assets mainly in the securities of issuingbodies having their registered offices in that State, where under the legislation of that State such aholding represents the only way in which the Company can invest in the securities of issuingbodies of that State, provided that, however, the Company, in its investment policy, complies withthe limits laid down in Articles 43 and 46 and in paragraphs (1) and (2) of Article 48 of the Lawrelating to collective investment undertakings.

6. (a) Unless otherwise provided in the investment policy of a specific Fund, each Fund will notinvest more than 10% of its net assets in UCITS and other UCIs.

(b) Each Fund may acquire units of the UCITS and/or other UCIs referred to in paragraph 1. a)(vi), provided that no more than 20% of a Fund’s net assets be invested in the units of asingle UCITS or other UCI.

For the purpose of the application of this investment limit, each compartment of a UCITSand/or other UCI with multiple compartments is to be considered as a separate issuerprovided that the principle of segregation of the obligations of the various compartmentsvis-a'-vis third parties is ensured.

(c) Investments made in units of UCIs other than UCITS may not in aggregate exceed 30% ofthe net asset of a Fund.

(d) When a Fund invests in the units of UCITS and/or other UCIs linked to the Company bycommon management or control, or by a substantial direct or indirect holding, nosubscription or redemption fees may be charged to the Company on account of itsinvestment in the units of such other UCITS and/or UCIs.

In respect of a Fund’s investments in UCITS and other UCIs linked to the Company asdescribed in the preceding paragraph, the total management fee (excluding any performancefee, if any) charged to such Fund and each of the UCITS or other UCIs concerned shall notexceed 2% of the value of the relevant investments. The Company will indicate in its annualreport the total management fees charged both to the relevant Fund and to the UCITS andother UCIs in which such Fund has invested during the relevant period.

(e) The Company may acquire no more than 25% of the units of the same UCITS and/or otherUCI. This limit may be disregarded at the time of acquisition if at that time the gross amountof the units in issue cannot be calculated. In case of a UCITS or other UCI with multiplecompartments, this restriction is applicable by reference to all units issued by the UCITS/UCI concerned, all compartments combined.

(f) The underlying investments held by the UCITS or other UCIs in which the Funds invest donot have to be considered for the purpose of the investment restrictions set forth under 1.(d) above.

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7. The Company may not purchase any securities on margin (except that the Company may, withinthe limits set forth in clause 9 below, obtain such short-term credit as may be necessary for theclearance of purchases or sales of securities) or make uncovered sales of transferable securities,money market instruments or other financial instruments referred to above; except that theCompany may make initial and maintenance margin deposits in respect of futures and forwardcontracts (and options thereon).

8. The Company may not make loans to other persons or act as a guarantor on behalf of third partiesor assume, endorse or otherwise become directly or contingently liable for, or in connection with,any obligation or indebtedness or any person in respect of borrowed monies, provided that for thepurpose of this restriction:

(a) the acquisition of bonds, debentures or other corporate or sovereign debt obligations(whether wholly or partly paid) and investment in securities issued or guaranteed by amember country of the OECD or by any supranational institution, organisation or authority,short-term commercial paper, certificates of deposit and bankers’ acceptances of primeissuers or other traded debt instruments shall not be deemed to be the making of a loan;and

(b) the purchase of foreign currency by way of a back-to-back loan shall not be deemed to bethe making of a loan.

9. The Company may not borrow for the account of any Fund, other than amounts which do not inaggregate exceed 10% of the net assets of the Fund, taken at market value and then only as atemporary measure. The Company may, however, acquire foreign currency by means of a back-to-back loan.

10. The Company may not mortgage, pledge, hypothecate or in any manner transfer as security forindebtedness, any of the securities or other assets of any Fund, except as may be necessary inconnection with the borrowings mentioned in clause 9 above. The purchase or sale of securities ona when-issued or delayed-delivery basis, and collateral arrangements with respect to the writing ofoptions or the purchase or sale of forward or futures contracts are not deemed the pledge of theassets.

11. The Company may not (a) acquire for the benefit of any Fund securities which are partly paid ornot paid or involving liability (contingent or otherwise) unless according to the terms of issue suchsecurities will or may at the option of the holder become free of such liabilities within one year ofsuch acquisition and (b) underwrite or subunderwrite securities of other issuers for any Fund.

12. The Company may not purchase or otherwise acquire any investment in which the liability of theholder is unlimited.

13. The Company may not purchase securities or debt instruments issued by the Investment Managersor any Connected Person or by the Custodian or Registrar and Transfer, Corporate, Domiciliaryand Administrative Agent of the Company.

14. The Company may, in respect of each Fund, for the purpose of hedging currency risks, haveoutstanding commitments in forward currency contracts, currency futures, written call optionsand purchased put options on currencies and currency swaps.

Commitments in one currency may not exceed the aggregate value of securities and other assetsheld by the Company denominated in such currency (or other currencies that fluctuate in asubstantially similar manner to such currency). However, the Company may also enter into suchcommitments through cross transactions when entered into through the same counterpartiesshould the costs thereof be more advantageous to the Company. Guidelines followed indetermining that one currency moves in a substantially similar manner to another currencyinclude the following: (i) the correlation of one currency to another currency is proven over asignificant period of time to be over 85%; (ii) the two currencies are, by explicit governmentpolicy, scheduled to participate in European Monetary Union on a set future date (which would

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include using the Euro itself as a proxy for hedging bond positions denominated in othercurrencies scheduled to become part of the Euro on a set future date) ; and iii) the currency used asthe hedging vehicle against the other currency is part of a currency basket against which thecentral bank for that other currency explicitly manages its currency within a band or corridor thatis either stable or sloping at a predetermined rate.

15. The Company may, in respect of each Fund, for the purpose of efficiently managing its assets andfor providing protection against exchange rate risks, employ techniques and instruments under theconditions and within the limits described below.

(a) Options on Securities :

The total premiums paid for the acquisition of call and put options, together with thepremiums paid for the acquisition of call and put options on financial instruments, may notexceed 15% of any Fund’s net assets.

The Company only writes call options on securities where the Company holds suchsecurities or appropriate instruments capable of ensuring adequate coverage of the openoption positions, provided however that the Company may, in respect of any Fund, writeuncovered call options if the exercise price thereof does not exceed 25% of the net assets ofthe relevant Fund and the Company must be at any time in a position to ensure the coverageof such positions.

The Company may not write put options on securities unless the Company holds sufficientliquid assets to cover the aggregate exercise price of such put options.

(b) Dealing in Forward Contracts, Financial and Index Futures:

In order to hedge against the risk of fluctuations in the value of securities held by theCompany, the Company may enter into financial and index futures sale contracts notexceeding the corresponding risk of such fluctuations and provided that there existssufficient correlation between the composition of the index used and the correspondingportfolio of the relevant Fund.

For the purpose of efficient portfolio management, the Company may also enter intoforward contracts or financial and index futures purchase contracts, provided that theCompany has sufficient cash, short-term debt securities and instruments (other than liquidassets held by the Company against put options it has written under paragraph (a) above)and securities to be disposed of at predetermined prices to match the underlying exposurecreated by such contracts.

(c) Dealings in Index-Based Financial Derivatives:

The Company may, in respect of each Fund, enter into index-based financial derivativeinstruments, provided that the composition of the index to which the relevant derivativeinstruments relate to is sufficiently diversified, that the index represents an adequatebenchmark for the market to which it refers and that it is published in an appropriatemanner. The investments in index-based financial derivative instruments by the relevantFund do not have to be combined with the limits laid down in 1 (.d) above.

(d) Interest Rate Transactions:

In order to hedge against interest rate fluctuations, the Company may sell interest ratefutures contracts, write interest rate call options or purchase interest rate put options orenter into interest rate swaps with financial institutions of high standing experienced in suchtransactions. In principle, the aggregate of the commitments of any Fund relating to futurescontracts, options and swap transactions on interest rates may not exceed the aggregateestimated market value of the assets to be hedged and held by the Company for the relevantFund in the currency corresponding to those contracts.

(e) Overall Limits :

The Company will only enter into the transactions referred to in this clause (other thanforward currency contracts and currency and interest rate swap agreements as described

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above) if the relevant contracts or options are traded on a regulated market that operatesregularly and is recognised and open to the public except that options may also be OTCoptions entered into with broker-dealers who make markets in these options and who arefinancial institutions of high standing that specialise in these types of transactions and areparticipants in the over-the-counter markets.

The global exposure arising for any Fund from the above transactions may not, at any time,exceed this Fund’s net assets.

Notwithstanding the above, if and for so long as the Company is authorised by the Securitiesand Futures Bureau in Taiwan and in respect of any Fund registered with it, the aggregatecommitments arising from the transactions described in paragraphs 14 and 15, and otherderivative instruments may not, at any time, exceed 15% of the relevant Fund’s net assets.

16. The Company may lend each Fund’s portfolio securities to specialised banks, credit institutionsand other financial institutions of high standing, or through recognised clearing institutions suchas Clearstream or Euroclear. The lending of securities will be made for periods not exceeding thirty(30) calendar days. Loans will be secured continuously by collateral consisting of cash, and/orsecurities issued or guaranteed by member states of the OECD or by their local authorities whichat the conclusion of the lending agreement, must be at least equal to the value of the globalvaluation of the securities of each Fund lent. The collateral must be blocked in favour of theCompany until the termination of the lending contract. Lending transactions may not be carriedout on more than 50% of the aggregate market value of the securities of each Fund’s portfolio;provided, however, that this limit is not applicable where the Company has the right to terminatethe lending contract at any time and obtain restitution of the securities lent. Any transactionexpenses in connection with such loans may be charged to the concerned Fund.

17. If and for so long as the Company is authorised by the Securities and Futures Commission inHong Kong then in so far as any Fund concerned which qualifies as a ‘‘money market fund’’ asdefined in the Code on Unit Trusts and Mutual Funds, being a fund which has the sole objectiveof investing in short-term deposits and debt securities, the following shall apply:

(b) the assets of such Fund may only be invested in deposits with banks or financial institutions,or in debt or loan instruments, subject to the provisions set out below;

(c) the weighted average period to maturity of all deposits and instruments comprised in suchFund shall not exceed 90 calendar days and, for this purpose, each deposit and instrumentshall be weighted according to the proportion which its value bears to the aggregate value ofall such deposits and instruments ;

(d) such Fund shall not purchase any instruments with a remaining maturity of more than:

(i) in the case of government and other public securities ^ two years ;

(ii) in any other case ^ one year ;

(e) the aggregate value of such Fund’s holding of instruments issued by a single issuer may notexceed 10% of the total net asset value of the Fund except:

(i) where the issuer is a substantial financial institution (being a financial institutionhaving a paid-up capital of not less than HKD 150 million (or its equivalent in anothercurrency) and the total amount does not exceed 10% of the issuer’s paid-up capitaland published reserves, the limit may be increased to 25%;

(ii) in the case of government and other public securities, up to 30% may be invested inthe same issue;

(iii) in respect of any deposit of less than USD 1,000,000 (or its equivalent in the basecurrency of the Fund), where the Fund cannot otherwise diversify as a result of itssize.

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For the purpose of the limits referred to above:

^ ‘‘government and other public securities’’ means any investment issued by, or thepayment of principal and interest on, which is guaranteed by the Government of anymember state of the Organisation For Economic Co-operation and Development(OECD) or any fixed interest investment issued in any OECD country by a public orlocal authority or nationalised industry of any OECD country or anywhere in theworld by an other body which is, in the opinion of the custodian, of similar standing;

^ government and other public securities will be regarded as being of a different issue if,even though they are issued by the same person, they are issued on different termswhether as to repayment dates, interest rates, the identity of the guarantor, orotherwise.

The Company need not comply with the limits laid down above when exercisingsubscription rights attaching to transferable securities, which form part of its assets.

If the limits referred to in the preceding paragraphs are exceeded for reasons beyond thecontrol of the Company or as a result of the exercise of subscription rights, it must take, as apriority objective, all steps as necessary within a reasonable period of time to remedy thesituation, taking due account of the interests of its Shareholders.

Risk ManagementThe Company will employ a risk-management process which enables it with the Investment

Managers to monitor and measure at any time the risk of the positions and their contribution to theoverall risk profile of each portfolio. The Company or the Investment Managers will employ a process foraccurate and independent assessment of the value of OTC derivative instruments.

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APPEND IX B

General Information1. The Company is an investment company with limited liability organised as a socie¤te¤ anonyme

under the laws of the Grand Duchy of Luxembourg and is qualified as a socie¤te¤ d’investissement a'capital variable. The Company was incorporated in Luxembourg on November 6, 1990, for anundetermined period. The Articles were published in the Me¤morial on January 2, 1991.Amendments to the Articles were published in the Me¤morial on October 25, 1994, November 4,1996, May 22, 2000 and June 16, 2004. The Company is registered with the Registre de Commerceet des Socie¤te¤s de et a' Luxembourg, under number B 35 177. Copies of the Articles as amended areavailable for inspection at the Registre de Commerce et des Socie¤te¤s de et a' Luxembourg and theregistered office of the Company.

2. The minimum capital of the Company is 1,250,000 Euro or the equivalent in USD.

3. The Company may be dissolved upon decision of an extraordinary general meeting of itsShareholders. If the capital of the Company falls below two thirds of the minimum capital, theBoard of Directors must submit the question of the dissolution of the Company to a generalmeeting for which no quorum shall be prescribed and which shall be decided by a simple majorityof the holders of Shares represented at the meeting. If the capital of the Company falls below one-fourth of the minimum capital, the Board of Directors must submit the question of the dissolutionof the Company to a general meeting for which no quorum shall be prescribed; dissolution maybe resolved by Shareholders holding one-fourth of the Shares at the meeting. If the Companyshould be liquidated, its liquidation will be carried out in accordance with the provisions of thelaws of the Grand Duchy of Luxembourg which specifies the steps to be taken to enableShareholders to participate in the liquidation distribution(s) and in that connection provides fordeposit in escrow at the Caisse de Consignation of any such amounts which have not beenpromptly claimed by any Shareholders. Amounts not claimed from escrow within the prescriptionperiod would be liable to be forfeited in accordance with the provisions of the laws of the GrandDuchy of Luxembourg .

4. The Board of Directors may decide to liquidate a Fund if the net assets of such Fund fall belowUSD 20 million or if a change in the economic or political situation relating to the Fund concernedwould justify such liquidation. The decision of the liquidation will be published by the Companyprior to the effective date of the liquidation and the publication will indicate the reasons for, andthe procedures of, the liquidation operations. Unless the Board of Directors otherwise decides inthe interests of, or to keep equal treatment between, the Shareholders, the Shareholders of theFund concerned may continue to request redemption or conversion of their Shares. Assets whichcould not be distributed to their beneficiaries upon the close of the liquidation period of the Fundwill be deposited with the custodian for a period of six (6) months after the closed of liquidation.After such time, the assets will be deposited with the Caisse de Consignation on behalf of theirbeneficiaries.

Under the same circumstances as described in the preceding paragraph, the Board of Directorsmay decide to close down one Fund by contributions into another Fund. In addition, such mergermay be decided by the Board of Directors if required by the interests of the Shareholders of therelevant Funds. Such decision will be published in the same manner as described in the precedingparagraph and, in addition, the publication will contain information in relation to the other Fund.Such publication will be made within one month before the date on which the merger becomeseffective in order to enable Shareholders to request redemption or exchange of their Shares, free ofcharge, before the operation involving contributions into another Fund becomes effective.

Under the same circumstances as provided above, the Board of Directors may also decide to closedown one Fund by contributions into another undertaking for collective investment governed byPart I of the Law relating to collective investment undertakings. In addition, such merger may bedecided by the Board of Directors if required by the interests of the Shareholders of the relevantFund. Such decision will be published in the same manner as described above and, in addition,

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the publication will contain information in relation to the other undertaking for collectiveinvestment. Such publication will be made within one (1) month before the date on which themerger becomes effective in order to enable Shareholders to request redemption or exchange oftheir Shares, free of charge, before the operation involving contributions into another undertakingfor collective investment becomes effective.

If the circumstances so require, the provisions described above apply mutatis mutandis tocontributions of a Class existing within a Fund into another Fund or into another undertaking forcollective investment governed by Part I of the Law relating to collective investment undertakings.

The Board of Directors may also decide upon the reorganisation of any Fund by means of adivision into two or more separate Funds, if required by the interests of the Shareholders of theFund concerned or if a change in the economic or political situation relating to the Fundconcerned would justify such reorganisation. Such decision will be published in the same manneras described above and, in addition, the publication will contain information in relation to the twoor more separate Funds resulting from the reorganisation. Such publication will be made withinone (1) month before the date on which the reorganisation becomes effective in order to enableShareholders to request redemption or exchange of their Shares, free of charge, before thereorganisation becomes effective.

5. The following contracts, not being contracts entered into in the ordinary course of business, havebeen entered into and are, or may, be material :

(a) An Investment Management Agreement dated March 1, 1997, as amended, made betweenthe Company and Franklin Templeton Investment Management Limited. An InvestmentManagement Agreement dated February 2, 1995, as amended, made between the Companyand Templeton Asset Management Ltd. An Investment Management Agreement datedFebruary 15, 1996, as amended, made between the Company and Franklin Advisers, Inc.An Investment Management Agreement dated February 15, 1996, as amended, madebetween the Company and Templeton Global Advisors Limited. An InvestmentManagement Agreement dated July 7, 1997, as amended, made between the Companyand Franklin Mutual Advisers, LLC. An Investment Management Agreement dated August7, 2000 as amended, made between the Company and Franklin Templeton InvestmentsJapan Limited. An Investment Management Agreement dated September 9, 2002, madebetween the Company and Franklin Templeton Alternative Strategies, Inc. An InvestmentManagement Agreement dated March 1, 2004 between the Company and FranklinTempleton Investments Corp. An Investment Management Agreement dated December 30,2005 between the Company and Fiduciary Trust Company International. An InvestmentManagement Agreement dated December 30, 2005 between the Company and FiduciaryInternational Inc. An Investment Management Agreement dated December 30, 2005between the Company, Franklin Advisers, Inc. and Fiduciary Trust International Limited.An Investment Management Agreement dated December 30, 2005 between the Company,Franklin Templeton Alternative Strategies, Inc., Fiduciary Trust Company International andTempleton Investment Counsel, LLC. These Agreements may be terminated by any party bygiving three (3) months written notice to the other party(ies).

(b) An Agreement dated August 31, 1994, as amended, made between the Company and J.P.Morgan Bank Luxembourg S.A., pursuant to which the latter was appointed custodian of theassets of the Company. The Agreement contains a provision for the Company to indemnifyJ.P. Morgan Bank Luxembourg S.A. against all costs, liabilities and expenses resulting from ithaving acted as custodian and upon receipt of proper instructions. The Agreement may beterminated by either party by giving not less than ninety (90) calendar days’ written notice tothe other.

(c) An Agreement dated June 1, 1994, as amended, made between the Company and FranklinTempleton International Services S.A. pursuant to which the latter was appointed Registrarand Transfer, Corporate, Domiciliary and Administrative Agent. The Agreement contains aprovision for the Company to indemnify Franklin Templeton International Services S.A.

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against all costs, liabilities and expenses resulting from it having acted upon the instructionsof the Company. The Agreement may be terminated by either party by giving three (3)months’ notice to the other.

(d) An Assignment dated October 30, 1992, of a Distribution Agreement dated November 6,1990, made between the Company and Templeton, Galbraith & Hansberger Ltd., a CaymanIslands corporation, under which the latter assigns its obligations under the DistributionAgreement to Templeton Global Advisors Limited, a Bahamian corporation.

Any such contract may be amended by mutual consent of the parties thereto, any decisionon behalf of the Company being made by its Board of Directors.

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Append i x C

Determination of the Net Asset Value of Shares

Calculation of the Net Asset ValueThe net asset value of each Class of Shares of each Fund shall be expressed in the currency of the

relevant Fund or of the relevant Class as a per Share figure, and shall be determined in respect of anyValuation Day by dividing the net assets of the Company corresponding to each Class of Shares of eachFund, being the value of the assets of the Company corresponding to such Fund less liabilitiesattributable to such Fund, by the number of Fund Shares then outstanding and shall be rounded up ordown to two decimal places as the Board of Directors may decide. If, since the close of business on therelevant date, there has been a material change in the quotations on the markets on which a substantialportion of the investments of the Company attributable to a particular Fund are dealt or quoted, theCompany may, in order to safeguard the interests of Shareholders and the Company, cancel the firstvaluation and carry out a second valuation.

ValuationThe assets of the Company shall be deemed to include:

(a) all cash on hand or on deposit, including any interest accrued thereon;

(b) all bills and demand notes and accounts receivable (including proceeds of securities sold but notdelivered);

(c) all bonds, time notes, shares, stock, debenture stocks, subscription rights, warrants, options andother investments and securities owned or contracted for by the Company;

(d) all stock, stock dividends, cash dividends and cash distributions receivable by the Company(provided that the Company may make adjustments with regard to fluctuations in the marketvalue of securities caused by trading ex-dividends, ex-rights, or by similar practices) ;

(e) all interest accrued on any interest-bearing securities owned by the Company, except to the extentthat the same is included or reflected in the principal amount of such security ;

(f) the formation expenses of the Company in so far as the same have not been written off ; and

(g) all other assets of every kind and nature, including prepaid expenses.

Total liabilities include:

(a) all loans, bills and accounts payable;

(b) all accrued or payable administrative expenses (including investment advisory fees, custodian fees,and corporate agents’ fees) ;

(c) all known liabilities, present and future, including all matured contractual obligations forpayments of money or property, including the amount of any unpaid dividends declared by theCompany where the Valuation Day falls on the record date for determination of the person entitledthereto or is subsequent thereto;

(d) an appropriate provision for future taxes based on capital and income to the Valuation Day, asdetermined from time to time by the Company, and other provisions, if any, authorised andapproved by the Board of Directors covering among other liabilities liquidation expenses; and,

(e) all other liabilities of the Company of whatsoever kind and nature except liabilities represented byShares in the Company. In determining the amount of such liabilities the Company shall take intoaccount all expenses payable by the Company comprising formation expenses, fees payable to theInvestment Managers, the Custodian, the Registrar and Transfer, Corporate, Domiciliary andAdministrative Agent, the Principal Paying Agent and local Paying Agents and permanentrepresentatives in places of registration, any other agent employed by the Company, fees for legaland auditing services, insurance premiums, printing, reporting and publishing expenses, includingthe cost of preparing and printing of the prospectuses, explanatory memoranda or registrationstatements, taxes or governmental charges, all other operating expenses, including the cost of

80

buying and selling assets, interest, bank charges and brokerage, postage, telephone and facsimile.The Company may calculate administrative and other expenses of a regular or recurring nature onan estimated figure for yearly or other periods in advance, and may accrue the same in equalproportions over any such period.

Foreign exchange hedging may be utilised for the benefit of Hedged Share Classes. As such, costand related liabilities and/or benefits of such hedging activities shall be for the account of that class only.Accordingly, such costs and related liabilities and/or benefits will be reflected in the net asset value perShare for shares of any such Hedged Share Class. The currency exposures of the assets of the relevantFund will not be allocated to separate classes. Foreign exchange hedging shall not be used for speculativepurposes. The periodic reports of the Company will indicate how hedging transactions have beenutilised.

In determining the value of the assets of the Company, each security which is quoted or dealt in ona stock exchange will be valued at its latest available price on the stock exchange which is normally theprincipal market for such security, and each security dealt in on an organised market will be valued in amanner as near as possible to that for quoted securities.

The value of securities not quoted or dealt in on a stock exchange or an organised market and ofsecurities which are so quoted or dealt in, but in respect of which no price quotation is available or theprice quoted is not representative of the securities’ fair market value shall be determined by the Board ofDirectors and/or the Investment Managers.

Trading in securities on European and Far Eastern securities exchanges and over-the-countermarkets is normally completed well before the New York Stock Exchange closing time on each day thatthe New York Stock Exchange is open. Trading in European or Far Eastern securities generally, or in aparticular country or countries, may not take place on every Valuation Day. Furthermore, trading maytake place in various foreign markets on days that are not Valuation Day and on which the Fund’s netasset value is not calculated. Thus, the calculation of the Shares’ net asset value does not take placecontemporaneously with the determination of the prices of many of the portfolio securities used in thecalculation and, if events materially affecting the values of these foreign securities occur, the securitieswill be valued at fair value as determined and approved in good faith by the Board of Directors and/orthe Investment Managers.

Suspension of Calculation of Net Asset Value

1. The Company may suspend the determination of the net asset value of the Shares of any particularFund and the issue and redemption of the Shares and the exchange of Shares from and to suchFund during:

(a) any period when any of the principal stock exchanges or markets of which any substantialportion of the investments of the Company attributable to such Class of Shares from time totime are quoted is closed otherwise than for ordinary holidays, or during which dealingstherein are restricted or suspended;

(b) the existence of any state of affairs which constitutes an emergency as a result of whichdisposal or valuation of assets owned by the Company attributable to such Class of Shareswould be impracticable;

(c) any breakdown in the means of communication normally employed in determining theprice or value of any of the investments of any particular Class of Shares or the current priceor values on any stock exchange or market ; or

(d) any period when the Company is unable to repatriate funds for the purpose of makingpayments due on redemption of such Shares or any period when the transfer of fundsinvolved in the realisation or acquisition of investments or payments due on redemption ofsuch Shares cannot, in the opinion of the Board of Directors, be effected at normal rates ofexchange;

(e) any period when the net asset value of Shares of any Class of the Company may not bedetermined accurately.

81

2. Any such suspension shall be publicised by the Company and shall be notified to Shareholdersrequesting redemption or exchange of their Shares by the Company at the time of the filing of theirrevocable written request for such redemption or exchange.

Allocation of Assets and Liabilities

The Board of Directors shall establish a pool of assets for the Shares of each Fund in the followingmanner:

1. (a) the proceeds from the issue of Shares of each Class of each Fund shall be applied in thebooks of the Company to the pool of assets established for that Fund, and the assets andliabilities and income and expenditure attributable thereto shall be applied to such pool;

(b) where any asset is derived from another asset, such derivative asset shall be applied in thebooks of the Company to the same pool as the assets from which it was derived and in eachrevaluation of an asset, the increase or diminution in value shall be applied to the relevantpool ;

(c) where the Company incurs a liability which relates to any asset of a particular pool or to anyaction taken in connection with an asset of a particular pool, such liability shall be allocatedto the relevant pool;

(d) in the case where any asset or liability of the Company cannot be considered as beingattributable to a particular pool, such asset or liability shall be equally divided between allthe pools or, as in so far as justified by the amounts, shall be allocated to the pools pro ratato the net asset value of the relevant pool ;

(e) upon the record date for determination of the person entitled to any dividend on the Sharesof each Class of any Fund, the net asset value of the Shares of such Fund shall be reduced bythe amount of such dividend declared.

2. If there have been created within any Fund two or several Classes of Shares, the allocation rules setout above apply, mutatis mutandis, to such Classes.

3. For the purpose of the calculation of the net asset value, the valuation and the allocation asaforesaid, Shares of the Company to be redeemed shall be treated as existing and taken intoaccount until immediately after the close of business on the Valuation Day, and from time to time,until paid the price therefore, shall be deemed to be a liability of the Company; all investments,cash balances and other assets of the Company expressed in currencies other than the currency ofthe relevant Fund shall be valued after taking into account the market rate or rates of exchange inforce at the date and time for determination of the net asset value of Shares ; and effect shall begiven on any Valuation Day to any purchases or sales of securities contracted for by the Companyon such Valuation Day, to the extent practicable.

82

Append i x D

Investor’s Profile

Fund This fund is suitable for investors:

Planning to

hold their

investment for:

Franklin Aggressive Growth

Fund

^ seeking capital appreciation by investing in equity securities

^ seeking a growth investment in sectors showing above average growth or

growth potential as compared with the overall economy

^ seeking an investment concentrated in equities of U.S. issuers

the medium to

long term

Franklin Biotechnology

Discovery Fund

^ seeking capital appreciation by investing in equity securities

^seeking a growth investment in the biotechnology sector in the U.S. and

around the world

the medium to

long term

Franklin European Growth

Fund

^ seeking capital appreciation by investing in equity securities

^ seeking a growth investment concentrated in companies of any European

country

the medium to

long term

Franklin European Small-Mid

Cap Growth Fund

^ seeking capital appreciation by investing in equity securities

^ seeking a growth investment concentrated in small or mid-cap companies of

any European country

the medium to

long term

Franklin Global Growth Fund ^ seeking capital appreciation by investing in equity securities

^ seeking a growth investment in companies around the world

the medium to

long term

Franklin Global Real Estate

(Euro) Fund

^ seeking interest income and capital appreciation

^ seeking to invest in companies across a wide range of real estate sectors and

countries

the medium to

long term

Franklin Global Real Estate

(USD) Fund

^ seeking interest income and capital appreciation

^ seeking to invest in companies across a wide range of real estate sectors and

countries

the medium to

long term

Franklin Global Small-Mid Cap

Growth Fund

^ seeking capital appreciation by investing in equity securities

^ seeking a growth investment in small or mid-cap companies around the world

the medium to

long term

Franklin High Yield Fund ^ wishing to earn a high level of income, and to a lesser extent, some capital

appreciation

^ seeking investment primarily in high-yielding fixed income securities of U.S.

and non-U.S. issuers

the medium to

long term

Franklin High Yield (Euro)

Fund

^ wishing to earn a high level of income, and to a lesser extent, some capital

appreciation in a Fund with the Euro as its base currency

^ seeking investment primarily in Euro-denominated high-yielding fixed

income securities

the medium to

long term

Franklin Income Fund ^ seeking a high level of income and prospects of some capital appreciation

^ wishing to access a portfolio of both equity and fixed income securities via a

single Fund

the medium to

long term

Franklin India Fund ^ seeking capital appreciation by investing in equity securities of companies

located in India

the medium to

long term

Franklin Technology Fund ^ seeking capital appreciation by investing in equity securities

^ seeking a growth investment in the technology sector in the U.S. and around

the world

the medium to

long term

Franklin U.S. Equity Fund ^ seeking capital appreciation through a blend style investment in a well-

diversified U.S. equity fund

the medium to

long term

Franklin U.S. Government

Fund

^ wishing a degree of safety of initial investments as well as income

^ seeking investment primarily debt securities of the U.S. government and it

agencies

the medium to

long term

Franklin U.S. Growth Fund ^ seeking capital appreciation by investing in a growth-style investment

concentrated in U.S. equity securities

the medium to

long term

Franklin U.S. Ultra Short Bond

Fund

^ seeking a high level of income consistent with capital preservation

^ wishing to invest in fixed income securities from U.S. issuers with a duration

of less than 3 years

the medium to

long term

83

Fund This fund is suitable for investors:

Planning to

hold their

investment for:

Franklin U.S. Small-Mid Cap

Growth Fund

^ seeking capital appreciation by investing in U.S. small-mid cap growth

companies

the medium to

long term

Franklin U.S. Total Return

Fund

^ seeking a high level of income and capital preservation, and to a lesser extent,

capital growth

^ wishing to invest in fixed income securities of the U.S. government or

corporate issuers

the medium to

long term

Franklin Mutual Beacon Fund ^ seeking capital appreciation and to a lesser extent income by investing in

undervalued companies based primarily in the U.S.

the medium to

long term

Franklin Mutual European

Fund

^ seeking capital appreciation, which may occasionally be short term and to a

lesser extent, income

^ seeking investment in undervalued companies of any European country

the medium to

long term

Franklin Mutual Global

Discovery Fund

^ seeking capital appreciation by investing in undervalued companies

worldwide

the medium to

long term

Franklin Templeton Global

Growth and Value Fund

^ seeking capital appreciation by investing in a portfolio combining both

‘‘growth’’ and ‘‘value’’ equities from around the world

the medium to

long term

Franklin Templeton Japan

Fund

^ seeking capital appreciation by investing in a growth-style investment

concentrated in Japanese equity securities

the medium to

long term

Templeton Asian Bond Fund ^ seeking total investment return consisting of interest income, capital

appreciation and currency gains by investing primarily in debt securities of

issuers located throughout Asia

the medium to

long term

Templeton Asian Growth Fund ^ seeking capital appreciation by investing in securities of companies in Asia,

including emerging markets

the medium to

long term

Templeton BRIC Fund ^ seeking capital appreciation by investing in securities of companies in Brazil,

Russia, India and China, including Hong Kong and Taiwan

the medium to

long term

Templeton China Fund ^ seeking capital appreciation by investing in equity securities of China the medium to

long term

Templeton Eastern Europe

Fund

^ seeking capital appreciation by investing in the Eastern European region,

including emerging markets

the medium to

long term

Templeton Emerging Markets

Fund

^ seeking capital appreciation by investing in emerging markets the medium to

long term

Templeton Emerging Markets

Bond Fund

^ seeking potentially above-average levels of income and capital appreciation by

investing in emerging markets fixed income securities.

the medium to

long term

Templeton Euro Liquid Reserve

Fund

^ seeking current income and safety of principal by investing in high-quality

fixed income securities, primarily Euro-denominated or hedged back to the

Euro.

the short term

Templeton Euroland Fund ^ seeking capital appreciation by investing in undervalued equity securities

issued by the member countries of the European Monetary Union

the medium to

long term

Templeton Euroland Bond

Fund

^ seeking to maximise total investment return, through a combination of

interest income and capital appreciation

^ primarily interested in current income from debt securities of any issuer from

member countries of the European Monetary Union

the medium to

long term

Templeton European Fund ^ seeking capital appreciation by investing in undervalued securities of any

European country

the medium to

long term

Templeton European Total

Return Fund

^ seeking a high level of income and capital preservation, and to a lesser extent,

capital growth

^ wishing to invest in fixed income securities from European governments or

corporate issuers

the medium to

long term

Templeton Global Fund ^ seeking capital appreciation by investing in undervalued securities in a well-

diversified global equity fund

the medium to

long term

Templeton Global (Euro) Fund ^ seeking capital appreciation by investing in undervalued securities in a well-

diversified global equity fund with the Euro as its base currency

the medium to

long term

84

Fund This fund is suitable for investors:

Planning to

hold their

investment for:

Templeton Global Balanced

Fund

^ seeking a combination of capital appreciation and a level of income

^ wishing to access a portfolio of both equity and fixed income securities via a

single fund

the medium to

long term

Templeton Global Bond Fund ^ seeking to maximise total investment return consisting of a combination of

interest income, capital appreciation and currency gains

the medium to

long term

Templeton Global Bond (Euro)

Fund

^ seeking to maximise total investment return consisting of a combination of

interest income, capital appreciation and currency gains

the medium to

long term

Templeton Global Equity

Income Fund

^ seeking capital appreciation and current income from their equity investments the medium to

long term

Templeton Global Income

Fund

^ seeking a combination of current income and capital appreciation from a

portfolio of both equity and fixed income securities via a single fund

the medium to

long term

Templeton Global Smaller

Companies Fund

^ seeking long-term capital appreciation by investing in undervalued equity

securities of small-cap companies from around the world

the medium to

long term

Templeton Global Total Return

Fund

^ seeking a high level of income and capital preservation, and to a lesser extent,

capital growth

^ wishing to invest in fixed income securities of any global government or

corporate issuers

the medium to

long term

Templeton Growth (Euro)

Fund

^ seeking capital appreciation by investing in undervalued securities in a well-

diversified global equity fund with the Euro as its base currency

the medium to

long term

Templeton Japan Fund ^ seeking capital appreciation by investing in undervalued equity securities of

Japan

the medium to

long term

Templeton Korea Fund ^ seeking capital appreciation by investing in equity securities of Korea the medium to

long term

Templeton Latin America Fund ^ seeking capital appreciation by investing in equity securities in Latin America,

including emerging markets

the medium to

long term

Templeton Thailand Fund ^ seeking capital appreciation by investing in equity securities of Thailand the medium to

long term

Templeton U.S. Dollar Liquid

Reserve Fund

^ seeking safety of principal and current income

^ seeking investments in high-quality securities, primarily U.S. dollar

denominated or hedged back to the U.S. dollar

the short term

Templeton U.S. Value Fund ^ seeking capital appreciation by investing in undervalued equity securities of

issuers concentrated in the U.S.

the medium to

long term

85

Append i x E

Class I ( dis) Shares and Class I (acc) Shares ç Management FeesIn respect of Class I Shares, the following Management fees apply:

Name of the Funds Class of Shares Management fees

^ Franklin Aggressive Growth Fund Class I (acc) 0.70%^ Franklin Biotechnology Discovery Fund Class I (acc) 0.70%^ Franklin European Growth Fund Class I (acc) 0.70%^ Franklin European Small-Mid Cap

Growth Fund Class I (acc) 0.70%^ Franklin Global Real Estate (Euro) Fund Class I (acc) 0.70%^ Franklin Global Real Estate (USD) Fund Class I (acc)/I (dis) 0.70%^ Franklin High Yield Fund Class I (dis) 0.60%^ Franklin High Yield (Euro) Fund Class I (acc)/I (dis) 0.60%^ Franklin India Fund Class I (acc) USD/I (acc) EUR 0.70%^ Franklin Income Fund Class I (acc) 0.60%^ Franklin U.S. Equity Fund Class I (acc)USD/I (acc) EUR 0.70%^ Franklin U.S. Government Fund Class I (dis) 0.40%^ Franklin U.S. Growth Fund Class I (acc) 0.70%^ Franklin U.S. Total Return Fund Class I (acc) 0.55%^ Franklin U.S. Ultra Short Bond Fund Class I (acc) 0.40%^ Franklin Mutual Beacon Fund Class I (acc) 0.70%^ Franklin Mutual Global Discovery Fund Class I (acc) USD/I(acc)EUR 0.70%^ Franklin Mutual European Fund Class I (acc) 0.70%^ Franklin Templeton Japan Fund Class I (acc) USD/I (acc) EUR 0.70%^ Franklin Templeton Global Growth and

Value Fund Class I (acc) 0.70%^ Templeton Asian Bond Fund Class I (acc) USD 0.55%^ Templeton Asian Growth Fund Class I (acc)USD/I (acc) EUR 0.90%^ Templeton BRIC Fund Class I (acc) 1.10%^ Templeton China Fund Class I (acc) 1.10%^ Templeton Eastern Europe Fund Class I (acc) 1.10%^ Templeton Emerging Markets Fund Class I (acc) 1.10%^ Templeton Emerging Markets Bond Fund Class I (acc) 0.70%^ Templeton Euroland Fund Class I (acc) 0.70%^ Templeton Euroland Bond Fund Class I (acc) 0.45%^ Templeton European Fund Class I (acc) 0.70%^ Templeton European Total Return Fund Class I (acc) 0.55%^ Templeton Global Fund Class I (acc) 0.70%^ Templeton Global (Euro) Fund Class I (acc) 0.70%^ Templeton Global Bond Fund Class I (acc)USD/I(acc) EUR 0.55%^ Templeton Global Bond (Euro) Fund Class I (acc) 0.55%^ Templeton Global Equity Income Fund Class I (acc) 0.70%^ Templeton Global Income Fund Class I (acc) 0.60%^ Templeton Global Smaller

Companies Fund Class I (acc) 0.70%^ Templeton Global Total Return Fund Class I (acc) USD/I (dis) CHF 0.55%^ Templeton Growth (Euro) Fund Class I (acc) EUR/I (dis) EUR/I (dis) USD 0.70%^ Templeton Latin America Fund Class I (acc) 0.95%^ Templeton U.S. Value Fund Class I (acc) 0.70%

86

Append i x F

Franklin Templeton Investment Funds ^ ISIN Codes

Class No Fund Name and Class Fund/Class Currency ISIN Code

799 Franklin Aggressive Growth Fund Class A (acc) USD USD LU0109391861

550 Franklin Aggressive Growth Fund Class A (dis) GBP GBP LU0229938369

858 Franklin Aggressive Growth Fund Class B (acc) USD USD LU0109391945

616 Franklin Aggressive Growth Fund Class I (acc) USD USD LU0195948665

625 Franklin Aggressive Growth Fund Class N (acc) USD USD LU0188150956

796 Franklin Biotechnology Discovery Fund Class A (acc) USD LU0109394709

853 Franklin Biotechnology Discovery Fund Class B (acc) USD LU0109394881

617 Franklin Biotechnology Discovery Fund Class I (acc) USD LU0195948822

733 Franklin Biotechnology Discovery Fund Class N (acc) USD LU0122613499

798 Franklin European Growth Fund Class A (acc) EUR LU0122612848

618 Franklin European Growth Fund Class I (acc) EUR LU0195949390

740 Franklin European Growth Fund Class N (acc) EUR LU0122612764

775 Franklin European Small-Mid Cap Growth Fund Class A (acc) EUR EUR LU0138075311

762 Franklin European Small-Mid Cap Growth Fund Class B (acc) USD USD LU0140364158

619 Franklin European Small-Mid Cap Growth Fund Class I (acc) EUR EUR LU0195949473

626 Franklin European Small-Mid Cap Growth Fund Class N (acc) EUR EUR LU0188151095

789 Franklin Global Growth Fund Class A (acc) USD LU0122613069

741 Franklin Global Growth Fund Class N (acc) USD LU0122612921

371 Franklin Global Real Estate (Euro) Fund Class A (acc) EUR EUR LU0229947436

373 Franklin Global Real Estate (Euro) Fund Class N (acc) EUR EUR LU0229947782

372 Franklin Global Real Estate (Euro) Fund Class I (acc) EUR EUR LU0229947600

374 Franklin Global Real Estate (Euro) Fund Class A (dis) GBP GBP LU0229947949

375 Franklin Global Real Estate (USD) Fund Class A (acc) USD USD LU0229948087

376 Franklin Global Real Estate (USD) Fund Class A (dis) USD USD LU0229948244

378 Franklin Global Real Estate (USD) Fund Class B (dis) USD USD LU0229948673

379 Franklin Global Real Estate (USD) Fund Class N (acc) USD USD LU0229948756

380 Franklin Global Real Estate (USD) Fund Class N (dis) USD USD LU0229948913

381 Franklin Global Real Estate (USD) Fund Class I (acc) USD USD LU0229949309

382 Franklin Global Real Estate (USD) Fund Class I (dis) USD USD LU0229949481

383 Franklin Global Real Estate (USD) Fund Class C (dis) USD USD LU0229949648

722 Franklin Global Small-Mid Cap Growth Fund Class A (acc) USD LU0144644332

723 Franklin Global Small-Mid Cap Growth Fund Class B (acc) USD LU0144647434

724 Franklin Global Small-Mid Cap Growth Fund Class N (acc) USD LU0144648085

750 Franklin High Yield Fund Class A (acc) USD LU0131126228

825 Franklin High Yield Fund Class A (dis) USD LU0065014192

864 Franklin High Yield Fund Class B (dis) USD LU0098868697

682 Franklin High Yield Fund Class C (acc) USD LU0152906094

694 Franklin High Yield Fund Class I (dis) USD LU0152908892

729 Franklin High Yield Fund Class N (acc) USD LU0109402817

751 Franklin High Yield (Euro) Fund Class A (acc) EUR LU0131126574

795 Franklin High Yield (Euro) Fund Class A (dis) EUR LU0109395268

716 Franklin High Yield (Euro) Fund Class I (acc) EUR LU0195952261

299 Franklin High Yield (Euro) Fund Class I (dis) EUR LU0229041164

732 Franklin High Yield (Euro) Fund Class N (acc) EUR LU0122613572

839 Franklin Income Fund Class A (dis) USD LU0098860793

760 Franklin Income Fund Class B (dis) USD LU0128532388

683 Franklin Income Fund Class C (acc) USD LU0152906334

551 Franklin Income Fund Class C (dis) USD LU0229938799

700 Franklin Income Fund Class I (acc) USD LU0195951883

850 Franklin Income Fund Class N (acc) USD LU0098864514

361 Franklin India Fund Class A (acc) USD USD LU0231203729

367 Franklin India Fund Class A (acc) EUR EUR LU0231205187

370 Franklin India Fund Class A (dis) GBP GBP LU0231206078

363 Franklin India Fund Class B (acc) USD USD LU0231204297

364 Franklin India Fund Class C (acc) USD USD LU0231204453

365 Franklin India Fund Class N (acc) USD USD LU0231204966

369 Franklin India Fund Class N (acc) EUR EUR LU0231205856

366 Franklin India Fund Class I (acc) USD USD LU0231204701

87

Class No Fund Name and Class Fund/Class Currency ISIN Code

368 Franklin India Fund Class I (acc) EUR EUR LU0231205427

797 Franklin Technology Fund Class A (acc) USD USD LU0109392836

862 Franklin Technology Fund Class B (acc) USD USD LU0109734730

755 Franklin Technology Fund Class N (acc) EUR EUR LU0140363697

734 Franklin Technology Fund Class N (acc) USD USD LU0122613655

772 Franklin U.S. Equity Fund Class A (acc) EUR EUR LU0139291818

709 Franklin U.S. Equity Fund Class A (acc) EUR-HG EUR-HG LU0211333967

838 Franklin U.S. Equity Fund Class A (acc) USD USD LU0098860363

861 Franklin U.S. Equity Fund Class B (acc) USD USD LU0098863896

686 Franklin U.S. Equity Fund Class C (acc) USD USD LU0152907068

602 Franklin U.S. Equity Fund Class I (acc) EUR EUR LU0195950216

620 Franklin U.S. Equity Fund Class I (acc) USD USD LU0181995647

756 Franklin U.S. Equity Fund Class N (acc) EUR EUR LU0139292113

728 Franklin U.S. Equity Fund Class N (acc) USD USD LU0109402494

812 Franklin U.S. Government Fund Class A (dis) USD LU0029872446

708 Franklin U.S. Government Fund Class AX (acc) USD LU0138076046

693 Franklin U.S. Government Fund Class B (acc) USD LU0152908629

863 Franklin U.S. Government Fund Class B (dis) USD LU0098868937

687 Franklin U.S. Government Fund Class C (acc) USD LU0152907142

707 Franklin U.S. Government Fund Class I (dis) USD LU0139222334

749 Franklin U.S. Government Fund Class N (acc) USD LU0128529913

847 Franklin U.S. Government Fund Class N (dis) USD LU0098867376

656 Franklin U.S. Growth Fund Class A (acc) USD LU0170466246

657 Franklin U.S. Growth Fund Class B (acc) USD LU0170466675

659 Franklin U.S. Growth Fund Class C (acc) USD LU0170466915

660 Franklin U.S. Growth Fund Class I (acc) USD LU0170467053

658 Franklin U.S. Growth Fund Class N (acc) USD LU0170466832

638 Franklin U.S. Ultra Short Bond Fund Class A (dis) USD LU0170467566

635 Franklin U.S. Ultra Short Bond Fund Class AX (acc) USD LU0170468614

637 Franklin U.S. Ultra Short Bond Fund Class B (acc) USD LU0170467301

639 Franklin U.S. Ultra Short Bond Fund Class B (dis) USD LU0170467723

640 Franklin U.S. Ultra Short Bond Fund Class C (dis) USD LU0170468291

632 Franklin U.S. Ultra Short Bond Fund Class I (acc) USD LU0195953400

641 Franklin U.S. Ultra Short Bond Fund Class N (dis) USD LU0170468374

790 Franklin U.S. Small-Mid Cap Growth Fund Class A (acc) USD LU0122613226

670 Franklin U.S. Small-Mid Cap Growth Fund Class B (acc) USD LU0152927330

555 Franklin U.S. Small-Mid Cap Growth Fund Class C (acc) USD LU0229939508

742 Franklin U.S. Small-Mid Cap Growth Fund Class N (acc) USD LU0122613143

642 Franklin U.S. Total Return Fund Class A (acc) USD LU0170468960

643 Franklin U.S. Total Return Fund Class A (dis) USD LU0170469265

644 Franklin U.S. Total Return Fund Class B (acc) USD LU0170469695

645 Franklin U.S. Total Return Fund Class B (dis) USD LU0170470271

647 Franklin U.S. Total Return Fund Class C (dis) USD LU0170470784

717 Franklin U.S. Total Return Fund Class I (acc) USD LU0195952345

646 Franklin U.S. Total Return Fund Class N (dis) USD LU0170470511

769 Franklin Mutual Beacon Fund Class A (acc) EUR EUR LU0140362707

828 Franklin Mutual Beacon Fund Class A (acc) USD USD LU0070302665

767 Franklin Mutual Beacon Fund Class A (dis) USD USD LU0208291251

860 Franklin Mutual Beacon Fund Class B (acc) USD USD LU0098868267

684 Franklin Mutual Beacon Fund Class C (acc) USD USD LU0152906508

600 Franklin Mutual Beacon Fund Class I (acc) USD USD LU0195949986

753 Franklin Mutual Beacon Fund Class N (acc) EUR EUR LU0140362889

846 Franklin Mutual Beacon Fund Class N (acc) USD USD LU0094041471

770 Franklin Mutual European Fund Class A (acc) EUR EUR LU0140363002

794 Franklin Mutual European Fund Class A (acc) USD USD LU0109981661

552 Franklin Mutual European Fund Class A (dis) EUR EUR LU0229938955

554 Franklin Mutual European Fund Class A (dis) GBP GBP LU0229939250

866 Franklin Mutual European Fund Class B (acc) USD USD LU0109981828

553 Franklin Mutual European Fund Class C (acc) EUR EUR LU0229939094

685 Franklin Mutual European Fund Class C (acc) USD USD LU0152906920

601 Franklin Mutual European Fund Class I (acc) EUR EUR LU0195950059

754 Franklin Mutual European Fund Class N (acc) EUR EUR LU0140363267

743 Franklin Mutual European Fund Class N (acc) USD USD LU0128530259

88

Class No Fund Name and Class Fund/Class Currency ISIN Code

593 Franklin Mutual Global Discovery Fund Class A (acc) EUR EUR LU0211333025

592 Franklin Mutual Global Discovery Fund Class A (acc) USD USD LU0211331839

573 Franklin Mutual Global Discovery Fund Class A (dis) GBP GBP LU0229944847

595 Franklin Mutual Global Discovery Fund Class B (acc) USD USD LU0211332134

574 Franklin Mutual Global Discovery Fund Class C (acc) USD USD LU0229945067

598 Franklin Mutual Global Discovery Fund Class I (acc) USD USD LU0211332308

599 Franklin Mutual Global Discovery Fund Class I (acc) EUR EUR LU0211333454

597 Franklin Mutual Global Discovery Fund Class N (acc) EUR EUR LU0211333298

596 Franklin Mutual Global Discovery Fund Class N (acc) USD USD LU0211332217

710 Franklin Templeton Global Growth And Value Fund Class A (acc) USD LU0152903588

711 Franklin Templeton Global Growth And Value Fund Class B (acc) USD LU0152904040

713 Franklin Templeton Global Growth And Value Fund Class C (acc) USD LU0152904719

714 Franklin Templeton Global Growth And Value Fund Class I (acc) USD LU0152904982

712 Franklin Templeton Global Growth And Value Fund Class N (acc) USD LU0152904479

791 Franklin Templeton Japan Fund Class A (acc) YEN JPY LU0116920520

351 Franklin Templeton Japan Fund Class A (acc) EUR EUR LU0231790675

352 Franklin Templeton Japan Fund Class A (acc) USD USD LU0231790832

353 Franklin Templeton Japan Fund Class C (acc) USD USD LU0231791210

354 Franklin Templeton Japan Fund Class I (acc) EUR EUR LU0231791483

355 Franklin Templeton Japan Fund Class I (acc) USD USD LU0231791996

696 Franklin Templeton Japan Fund Class N (acc) EUR EUR LU0152983168

392 Templeton Asian Bond Fund Class A (acc) EUR EUR LU0229951891

384 Templeton Asian Bond Fund Class A (acc) USD USD LU0229949994

385 Templeton Asian Bond Fund Class A (dis) USD USD LU0229950067

387 Templeton Asian Bond Fund Class B (dis) USD USD LU0229950570

391 Templeton Asian Bond Fund Class C (dis) USD USD LU0229951461

390 Templeton Asian Bond Fund Class I (acc) USD USD LU0229951032

394 Templeton Asian Bond Fund Class N (acc) EUR EUR LU0229952352

388 Templeton Asian Bond Fund Class N (acc) USD USD LU0229950653

389 Templeton Asian Bond Fund Class N (dis) USD USD LU0229950810

786 Templeton Asian Growth Fund Class A (acc) USD USD LU0128522157

395 Templeton Asian Growth Fund Class A (acc) EUR EUR LU0229940001

805 Templeton Asian Growth Fund Class A (dis) USD USD LU0029875118

556 Templeton Asian Growth Fund Class A (dis) EUR EUR LU0229939763

396 Templeton Asian Growth Fund Class A (dis) GBP GBP LU0229940183

621 Templeton Asian Growth Fund Class C (acc) USD USD LU0181998153

622 Templeton Asian Growth Fund Class I (acc) USD USD LU0181996454

606 Templeton Asian Growth Fund Class I (acc) EUR EUR LU0195950992

674 Templeton Asian Growth Fund Class N (acc) USD USD LU0152928064

575 Templeton BRIC Fund Class A (acc) USD USD LU0229945570

360 Templeton BRIC Fund Class A (dis) GBP GBP LU0229946545

576 Templeton BRIC Fund Class A (acc) EUR EUR LU0229946628

768 Templeton BRIC Fund Class B (acc) USD USD LU0229945737

377 Templeton BRIC Fund Class C (acc) USD USD LU0229947279

774 Templeton BRIC Fund Class I (acc) USD USD LU0229946115

771 Templeton BRIC Fund Class N (acc) USD USD LU0229945810

362 Templeton BRIC Fund Class N (acc) EUR EUR LU0229946891

822 Templeton China Fund Class A (acc) USD USD LU0052750758

557 Templeton China Fund Class A (dis) GBP GBP LU0229940423

607 Templeton China Fund Class I (acc) USD USD LU0195951024

627 Templeton China Fund Class N (acc) USD USD LU0188151178

833 Templeton Eastern Europe Fund Class A (acc) EUR EUR LU0078277505

358 Templeton Eastern Europe Fund Class A (acc) USD USD LU0231793349

558 Templeton Eastern Europe Fund Class A (dis) EUR EUR LU0229940696

560 Templeton Eastern Europe Fund Class A (dis) GBP GBP LU0229940936

559 Templeton Eastern Europe Fund Class C (acc) EUR EUR LU0229940779

359 Templeton Eastern Europe Fund Class C (acc) USD USD LU0231793935

608 Templeton Eastern Europe Fund Class I (acc) EUR EUR LU0195951297

737 Templeton Eastern Europe Fund Class N (acc) EUR EUR LU0122613903

785 Templeton Emerging Markets Fund Class A (acc) USD USD LU0128522744

806 Templeton Emerging Markets Fund Class A (dis) USD USD LU0029874905

854 Templeton Emerging Markets Fund Class B (acc) USD USD LU0098868341

689 Templeton Emerging Markets Fund Class C (acc) USD USD LU0152908033

89

Class No Fund Name and Class Fund/Class Currency ISIN Code

609 Templeton Emerging Markets Fund Class I (acc) USD USD LU0195951610

612 Templeton Emerging Markets Fund Class N (acc) EUR EUR LU0188151921

727 Templeton Emerging Markets Fund Class N (acc) USD USD LU0109402221

698 Templeton Emerging Markets Bond Fund Class A (dis) EUR EUR LU0152984307

813 Templeton Emerging Markets Bond Fund Class A (dis) USD USD LU0029876355

859 Templeton Emerging Markets Bond Fund Class B (dis) USD USD LU0099120023

688 Templeton Emerging Markets Bond Fund Class C (acc) USD USD LU0152907654

715 Templeton Emerging Markets Bond Fund Class I (acc) USD USD LU0195951966

744 Templeton Emerging Markets Bond Fund Class N (acc) USD USD LU0128530416

783 Templeton Euro Liquid Reserve Fund Class A (acc) EUR LU0128517660

818 Templeton Euro Liquid Reserve Fund Class A (dis) EUR LU0052769774

745 Templeton Euro Liquid Reserve Fund Class N (acc) EUR LU0128518122

836 Templeton Euroland Fund Class A (acc) EUR LU0093666013

561 Templeton Euroland Fund Class A (dis) EUR LU0229941660

562 Templeton Euroland Fund Class C (acc) EUR LU0229941744

603 Templeton Euroland Fund Class I (acc) EUR LU0195950489

746 Templeton Euroland Fund Class N (acc) EUR LU0128521001

837 Templeton Euroland Bond Fund Class A (dis) EUR LU0093669546

633 Templeton Euroland Bond Fund Class I (acc) EUR LU0195953582

628 Templeton Euroland Bond Fund Class N (acc) EUR LU0188151251

773 Templeton European Fund Class A (acc) EUR EUR LU0139292543

782 Templeton European Fund Class A (acc) USD USD LU0128523122

563 Templeton European Fund Class A (dis) EUR EUR LU0229942049

809 Templeton European Fund Class A (dis) USD USD LU0029868097

564 Templeton European Fund Class C (acc) EUR EUR LU0229942395

604 Templeton European Fund Class I (acc) EUR EUR LU0195950646

757 Templeton European Fund Class N (acc) EUR EUR LU0139292972

736 Templeton European Fund Class N (acc) USD USD LU0122614117

648 Templeton European Total Return Fund Class A (acc) EUR EUR LU0170473374

649 Templeton European Total Return Fund Class A (dis) EUR EUR LU0170473531

356 Templeton European Total Return Fund Class A (dis) USD USD LU0231792887

566 Templeton European Total Return Fund Class A (dis) GBP GBP LU0229943013

565 Templeton European Total Return Fund Class C (acc) EUR EUR LU0229942551

357 Templeton European Total Return Fund Class C (dis) USD USD LU0231793000

718 Templeton European Total Return Fund Class I (acc) EUR EUR LU0195952774

650 Templeton European Total Return Fund Class N (acc) EUR EUR LU0170474000

779 Templeton Global Fund Class A (acc) USD LU0128525929

801 Templeton Global Fund Class A (dis) USD LU0029864427

852 Templeton Global Fund Class B (acc) USD LU0098868002

690 Templeton Global Fund Class C (acc) USD LU0152908116

701 Templeton Global Fund Class I (acc) USD LU0109395698

725 Templeton Global Fund Class N (acc) USD LU0109401686

778 Templeton Global (Euro) Fund Class A (acc) EUR LU0128520375

802 Templeton Global (Euro) Fund Class A (dis) EUR LU0029873410

636 Templeton Global (Euro) Fund Class I (acc) EUR LU0195953749

629 Templeton Global (Euro) Fund Class N (acc) EUR LU0188151335

634 Templeton Global Balanced Fund Class A (acc) EUR EUR LU0195953822

781 Templeton Global Balanced Fund Class A (acc) USD USD LU0128525689

815 Templeton Global Balanced Fund Class A (dis) USD USD LU0052756011

867 Templeton Global Balanced Fund Class B (acc) USD USD LU0128531653

567 Templeton Global Balanced Fund Class C (dis) USD USD LU0229943104

758 Templeton Global Balanced Fund Class N (acc) EUR EUR LU0140420323

675 Templeton Global Bond Fund Class A (acc) EUR EUR LU0152980495

676 Templeton Global Bond Fund Class A (dis) EUR EUR LU0152981543

810 Templeton Global Bond Fund Class A (dis) USD USD LU0029871042

568 Templeton Global Bond Fund Class A (dis) GBP GBP LU0229943369

614 Templeton Global Bond Fund Class AX (acc) USD USD LU0188152226

761 Templeton Global Bond Fund Class B (dis) USD USD LU0128533279

623 Templeton Global Bond Fund Class C (dis) USD USD LU0181997775

720 Templeton Global Bond Fund Class I (acc) EUR EUR LU0195953079

624 Templeton Global Bond Fund Class I (acc) USD USD LU0181997262

735 Templeton Global Bond Fund Class N (acc) USD USD LU0122614208

679 Templeton Global Bond (Euro) Fund Class A (acc) EUR LU0170474422

90

Class No Fund Name and Class Fund/Class Currency ISIN Code

680 Templeton Global Bond (Euro) Fund Class A (dis) EUR LU0170474935

719 Templeton Global Bond (Euro) Fund Class I (acc) EUR LU0195952857

631 Templeton Global Bond (Euro) Fund Class N (acc) EUR LU0170475155

586 Templeton Global Equity Income Fund Class A (acc) EUR EUR LU0211332647

585 Templeton Global Equity Income Fund Class A (acc) USD USD LU0211327993

587 Templeton Global Equity Income Fund Class A (dis) USD USD LU0211328371

588 Templeton Global Equity Income Fund Class B (dis) USD USD LU0211330435

589 Templeton Global Equity Income Fund Class C (dis) USD USD LU0211330948

590 Templeton Global Equity Income Fund Class N (acc) USD USD LU0211331243

591 Templeton Global Equity Income Fund Class I (acc) USD USD LU0211331755

579 Templeton Global Income Fund Class A (acc) EUR EUR LU0211332563

578 Templeton Global Income Fund Class A (acc) USD USD LU0211326755

580 Templeton Global Income Fund Class A (dis) USD USD LU0211326839

581 Templeton Global Income Fund Class B (dis) USD USD LU0211327134

582 Templeton Global Income Fund Class C (dis) USD USD LU0211327217

584 Templeton Global Income Fund Class I (acc) USD USD LU0211327647

583 Templeton Global Income Fund Class N (acc) USD USD LU0211327480

777 Templeton Global Smaller Companies Fund Class A (acc) USD USD LU0128526141

803 Templeton Global Smaller Companies Fund Class A (dis) USD USD LU0029874061

569 Templeton Global Smaller Companies Fund Class C (acc) EUR EUR LU0229943526

605 Templeton Global Smaller Companies Fund Class I (acc) USD USD LU0195950729

726 Templeton Global Smaller Companies Fund Class N (acc) USD USD LU0109401926

651 Templeton Global Total Return Fund Class A (acc) USD USD LU0170475312

652 Templeton Global Total Return Fund Class A (dis) USD USD LU0170475585

349 Templeton Global Total Return Fund Class A (dis) EUR EUR LU0234926953

653 Templeton Global Total Return Fund Class B (acc) USD USD LU0170477102

654 Templeton Global Total Return Fund Class B (dis) USD USD LU0170477284

570 Templeton Global Total Return Fund Class C (dis) USD USD LU0229943799

721 Templeton Global Total Return Fund Class I (acc) USD USD LU0195953152

330 Templeton Global Total Return Fund Class I (dis) CHF CHF LU0229041750

655 Templeton Global Total Return Fund Class N (acc) USD USD LU0170477797

793 Templeton Growth (Euro) Fund Class A (acc) EUR EUR LU0114760746

613 Templeton Growth (Euro) Fund Class A (dis) EUR EUR LU0188152069

704 Templeton Growth (Euro) Fund Class I (acc) EUR EUR LU0114763096

577 Templeton Growth (Euro) Fund Class I (dis) EUR EUR LU0211333702

350 Templeton Growth (Euro) Fund Class I (dis) USD USD LU0234924669

731 Templeton Growth (Euro) Fund Class N (acc)EUR EUR LU0122614380

832 Templeton Japan Fund Class A (acc) USD LU0078278065

630 Templeton Japan Fund Class N (acc) USD LU0188151418

824 Templeton Korea Fund Class A (acc) USD LU0057567074

610 Templeton Korea Fund Class N (acc) USD LU0188151509

776 Templeton Latin America Fund Class A (acc) USD USD LU0128526570

804 Templeton Latin America Fund Class A (dis) USD USD LU0029865408

572 Templeton Latin America Fund Class A (dis) GBP GBP LU0229944680

571 Templeton Latin America Fund Class I (acc) USD USD LU0229944334

842 Templeton Latin America Fund Class N (acc) USD USD LU0094040077

830 Templeton Thailand Fund Class A (acc) USD LU0078275988

611 Templeton Thailand Fund Class N (acc) USD LU0188151681

788 Templeton U.S. Dollar Liquid Reserve Fund Class A (acc) USD LU0128526901

817 Templeton U.S. Dollar Liquid Reserve Fund Class A (dis) USD LU0052767562

865 Templeton U.S. Dollar Liquid Reserve Fund Class B (dis) USD LU0098869075

691 Templeton U.S. Dollar Liquid Reserve Fund Class C (acc) USD LU0152908389

739 Templeton U.S. Dollar Liquid Reserve Fund Class N (acc) USD LU0122614463

664 Templeton U.S. Value Fund Class A (acc) USD LU0170478092

665 Templeton U.S. Value Fund Class B (acc) USD LU0170478332

668 Templeton U.S. Value Fund Class C (acc) USD LU0170478928

669 Templeton U.S. Value Fund Class I (acc) USD LU0170479223

667 Templeton U.S. Value Fund Class N (acc) USD LU0170478761

91

FRANKLIN TEMPLETON INVESTMENT FUNDSSocie¤te¤ d’investissement a' capital variable

Registered office: 26, boulevard Royal, L-2449 LuxembourgGrand Duchy of LuxembourgR.C.S. Luxembourg B 35 177 P

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FTIF PGB 12/05