497 1 gofsa2090107.txt GOF SA-2 SUPPLEMENT DATED SEPTEMBER 1, 2007 TO THE CURRENTLY EFFECTIVE STATEMENT OF ADDITIONAL INFORMATION OF EACH OF THE LISTED FUNDS FRANKLIN CALIFORNIA TAX-FREE TRUST Franklin California Insured Tax-Free Income Fund Franklin California Intermediate-Term Tax-Free Income Fund Franklin California Limited-Term Tax-Free Income Fund Franklin California Tax-Exempt Money Fund FRANKLIN CAPITAL GROWTH FUND FRANKLIN CUSTODIAN FUNDS, INC. Franklin DynaTech Fund Franklin Growth Fund Franklin Income Fund Franklin U.S. Government Securities Fund Franklin Utilities Fund FRANKLIN GLOBAL TRUST Franklin International Smaller Companies Growth Fund Fiduciary Large Capitalization Growth and Income Fund Fiduciary Small Capitalization Equity Fund Franklin Templeton Core Fixed Income Fund Franklin Templeton Core Plus Fixed Income Fund Franklin Templeton High Income Fund Franklin Global Real Estate Fund Franklin Templeton Emerging Market Debt Opportunities Fund FRANKLIN GOLD & PRECIOUS METALS FUND FRANKLIN HIGH INCOME TRUST Franklin High Income Fund FRANKLIN INVESTORS SECURITIES TRUST Franklin Adjustable U.S. Government Securities Fund Franklin Balance Fund Franklin Convertible Securities Fund Franklin Equity Income Fund Franklin Floating Rate Daily Access Fund Franklin Limited Maturity U.S. Government Securities Fund Franklin Low Duration Total Return Fund Franklin Real Return Fund Franklin Total Return Fund FRANKLIN MANAGED TRUST Franklin Rising Dividends Fund FRANKLIN MONEY FUND FRANKLIN MUNICIPAL SECURITIES TRUST Franklin California High Yield Municipal Fund Franklin Tennessee Municipal Bond Fund FRANKLIN MUTUAL SERIES FUND INC. Mutual Beacon Fund Mutual Discovery Fund Mutual European Fund Mutual Financial Services Fund Mutual Qualified Fund Mutual Shares Fund FRANKLIN NEW YORK TAX-FREE INCOME FUND FRANKLIN NEW YORK TAX-FREE TRUST Franklin New York Insured Tax-Free Income Fund Franklin New York Intermediate-Term Tax-Free Income Fund Franklin New York Limited-Term Tax-Free Income Fund Franklin New York Tax-Exempt Money Fund FRANKLIN TAX-EXEMPT MONEY FUND FRANKLIN TEMPLETON FUND ALLOCATOR SERIES Franklin Templeton Conservative Target Fund Franklin Templeton Corefolio Allocation Fund Franklin Templeton Founding Funds Allocation Fund Franklin Templeton Growth Target Fund Franklin Templeton Moderate Target Fund Franklin Templeton Perspectives Allocation Fund Franklin Templeton 2015 Retirement Target Fund Franklin Templeton 2025 Retirement Target Fund Franklin Templeton 2035 Retirement Target Fund Franklin Templeton 2045 Retirement Target Fund FRANKLIN TEMPLETON GLOBAL TRUST Franklin Templeton Hard Currency Fund FRANKLIN TEMPLETON INTERNATIONAL TRUST Templeton Foreign Smaller Companies Fund Templeton Global Long-Short Fund FRANKLIN TEMPLETON MONEY FUND TRUST Franklin Templeton Money Fund INSTITUTIONAL FIDUCIARY TRUST Money Market Portfolio Franklin Cash Reserves Fund THE MONEY MARKET PORTFOLIOS TEMPLETON CHINA WORLD FUND TEMPLETON DEVELOPING MARKETS TRUST TEMPLETON FUNDS, INC. Templeton Foreign Fund Templeton World Fund TEMPLETON GLOBAL SMALLER COMPANIES FUND TEMPLETON INCOME TRUST Templeton Global Bond Fund The Statement of Additional Information is amended as follows: Shareholders of each of the above listed funds have approved amendments to, and eliminations of, its fundamental investment restrictions (excluding any fundamental investment goals and 80% policies regarding investments in securities that are exempt from federal and/or state income taxes). Each Fund's numbered fundamental investment restrictions as listed under "Fundamental Investment Policies" are revised as follows: BORROWING, UNDERWRITING, MAKING LOANS, INVESTING IN REAL ESTATE AND ISSUING SENIOR SECURITIES No Fund may: 1. Borrow money, except to the extent permitted by the Investment Company Act of 1940, as amended (the "1940 Act"), or any rules, exemptions or interpretations thereunder that may be adopted, granted or issued by the U.S. Securities and Exchange Commission (the "SEC"). 2. Act as an underwriter except to the extent the Fund may be deemed to be an underwriter when disposing of securities it owns or when selling its own shares. 3. Make loans if, as a result, more than 33 1/3% of its total assets would be lent to other persons, including other investment companies to the extent permitted by the 1940 Act or any rules, exemptions or interpretations thereunder that may be adopted, granted or issued by the SEC. This limitation does not apply to (i) the lending of portfolio securities, (ii) the purchase of debt securities, other debt instruments, loan participations and/or engaging in direct corporate loans in accordance with its investment goals and policies, and (iii) repurchase agreements to the extent the entry into a repurchase agreement is deemed to be a loan. 4. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments and provided that this restriction does not prevent the Fund from (i) purchasing or selling securities or instruments secured by real estate or interests therein, securities or instruments representing interests in real estate or securities or instruments of issuers that invest, deal or otherwise engage in transactions in real estate or interests therein, and (ii) making, purchasing or selling real estate mortgage loans. 5. Issue senior securities, except to the extent permitted by the 1940 Act or any rules, exemptions or interpretations thereunder that may be adopted, granted or issued by the SEC. INVESTING IN COMMODITIES In addition, no Fund, other than Mutual Beacon Fund, Mutual Discovery Fund, Mutual European Fund, Mutual Financial Services Fund, Mutual Qualified Fund and Mutual Shares Fund, may purchase or sell physical commodities, unless acquired as a result of ownership of securities or other instruments and provided that this restriction does not prevent the Fund from (i) engaging in transactions involving currencies and futures contracts and options thereon or (ii) investing in securities or other instruments that are secured by physical commodities or, WITH RESPECT TO FRANKLIN GOLD AND PRECIOUS METALS FUND ONLY (iii) investing in gold bullion and foreign currency in the form of gold coins. Mutual Beacon Fund, Mutual Discovery Fund, Mutual European Fund, Mutual Financial Services Fund, Mutual Qualified Fund and Mutual Shares Fund may not purchase or sell commodities or commodity contracts (except in conformity with regulations of the Commodity Futures Trading Commission such that the Fund would not be considered a commodity pool). Securities or other instruments backed by commodities are not considered commodities or commodity contracts for purposes of this restriction. INDUSTRY CONCENTRATION No Fund, other than Mutual Financial Services Fund, Franklin Global Real Estate Fund, Franklin Floating Rate Daily Access Fund, Franklin Utilities Fund, and Franklin Gold and Precious Metals Fund, may invest more than 25% of the Fund's net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies or FOR MONEY MARKET FUNDS ONLY certificates of deposit, bankers' acceptances and other similar obligations of domestic banks.)(1) The Mutual Financial Services Fund may not invest more than 25% of its net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies), except that, under normal market conditions, the Fund will invest more than 25% of its net assets in the securities issued by companies operating in the financial services industry.(2) The Franklin Global Real Estate Fund may not invest more than 25% of its net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies), except that, under normal market conditions, the Fund will invest more than 25% of its net assets in the securities issued by companies operating within the real estate industry and related industries.(3) The Franklin Floating Rate Daily Access Fund may not invest more than 25% of its net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies), except that, under normal market conditions, the Fund will invest more than 25% of its net assets in the securities of companies operating in the industry group consisting of financial institutions and their holding companies, including commercial banks, thrift institutions, insurance companies and finance companies.(4) The Franklin Utilities Fund may not invest more than 25% of its net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies), except that, under normal market conditions, the Fund will invest more than 25% of its net assets in the securities issued by companies operating in the utilities industries.(5) The Franklin Gold and Precious Metals Fund may not invest more than 25% of its net assets in securities of issuers in any one industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities or securities of other investment companies), except that, under normal market conditions, the Fund will invest more than 25% of its net assets in the securities issued by companies engaged in the mining, processing or dealing in gold or other precious metals. DIVERSIFICATION Each Fund, other than Franklin Global Real Estate Fund, Franklin Templeton Core Plus Fixed Income Fund, Franklin Templeton Emerging Market Debt Opportunities Fund, Franklin New York Limited-Term Tax Free Income Fund, Franklin Templeton Hard Currency Fund, Templeton China World Fund and Templeton Global Bond Fund may not purchase the securities of any one issuer (other than the U.S. government or any of its agencies or instrumentalities or securities of other investment companies, whether registered or excluded from registration under Section 3(c) of the 1940 Act) if immediately after such investment (i) more than 5% of the value of the Fund's total assets would be invested in such issuer or (ii) more than 10% of the outstanding voting securities of such issuer would be owned by the Fund, except that up to 25% of the value of the Fund's total assets may be invested without regard to such 5% and 10% limitations.(6) 1. For each tax-free income fund, tax-exempt fund and municipal bond fund, although not part of such Fund's fundamental investment restriction, consistent with SEC Staff interpretations and guidance, governments or their political subdivisions that issue tax-exempt municipal securities are not considered by the Fund to be members of any industry. 2. Although not part of the Fund's fundamental investment restriction, for illustration purposes, such industries currently include, but are not limited to, banking, savings and loans, credit cards, securities brokerage, sub-prime lending, investment management and insurance. 3. Although not part of the Fund's fundamental investment restriction, for illustration purposes, such companies currently include, but are not limited to, real estate investment trusts, real estate operating or service companies, homebuilders, real estate developers and lodging providers. 4. For purposes of this restriction, the Fund currently considers such companies to include the Borrower, the Agent Bank and any Intermediate Participant (as defined in the Fund's prospectus). 5. Although not part of the Fund's fundamental investment restriction, for illustration purposes, such industries currently include, but are not limited to, electricity, natural gas, water, and communication services. 6. For each of Franklin California Tax-Exempt Money Fund, Franklin Money Fund, Franklin New York Tax-Exempt Money Fund, Franklin Tax-Exempt Money Fund, Franklin Templeton Money Fund, The Money Market Portfolios, Money Market Portfolio and Franklin Cash Reserve Fund (the series of Institutional Fiduciary Trust), such Fund will be considered to have satisfied this restriction if it is in compliance with Rule 2a-7(c)(4) and (c)(5) under the 1940 Act (or any successor rule thereto). In addition the following investment policies for the specified Funds are now non-fundamental investment policies: FUND INVESTMENT POLICY Franklin New York Tax-Free Income The Fund also normally invests at least 65% Fund of its total assets in securities that pay interest free from New York City personal income taxes, and at least 65% of its total assets in New York municipal securities. Franklin Limited Maturity U.S. The Fund normally invests at least 65% of Government Securities Fund its net assets in U.S. government securities. (Institutional Fiduciary Trust) The Fund will invest primarily in various Money Market Portfolio types of money market instruments, such as U.S. government and federal agency obligations, certificates of deposit, bankers' acceptances, time deposits of major financial institutions, high grade commercial paper, high grade short-term corporate obligations, taxable municipal securities and repurchase agreements (secured by U.S. government securities) and may seek its objectives by investing all or substantially all of its assets in anopen- end management investment company with the same investment objectives and policies. The Fund will invest 100% of its assets in securities with remaining maturities of 397 days or less, or in another open-end management investment company that has the same fundamental investment policy. Franklin Templeton Hard Currency The Fund will not buy common stocks, Fund preferred stocks, warrants or other equity securities, or buy municipal bonds or industrial revenue bonds. Franklin Rising Dividends Fund The Fund will normally invest at least 65% of its total assets in securities of companies that meet all of these criteria. The Fund's investments are primarily in companies that have: o consistently increased dividends in at least 8 out of the past 10 years and have not decreased dividends during that time o increased dividends at least 100% over the past 10 years o reinvested earnings, and paid out less than 65% of current earnings in dividends (except for utilitycompanies) o either long-term debt that is no more than 50% of total capitalization (except for utility companies) or senior debt that has been rated investment grade by at least one of the major bond rating agencies o attractive prices, with prices at the time of purchase either in the lower half of the stock's price/earnings ratio range for the past 10 years or less than the average current market price/earnings ratio of the stocks comprising the Standard & Poor's(R) 500 Stock Index. Each of the following Funds have adopted, as a non-fundamental policy, a policy of not investing more than 15% of its net assets (10% for the money market funds) in illiquid securities: Franklin California Insured Tax-Free Income Fund Franklin California Intermediate-Term Tax-Free Income Fund Franklin California Tax-Exempt Money Fund Franklin Money Fund Franklin New York Tax-Free Income Fund Franklin New York Tax-Exempt Money Fund Franklin Tax-Exempt Money Fund Templeton Foreign Smaller Companies Fund Franklin Templeton Money Fund Franklin Cash Reserves Fund Money Market Portfolio (Institutional Fiduciary Trust) The Money Market Portfolio (The Money Market Portfolios) PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE.