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Understanding Your Account

What is a Mutual Fund Prospectus?

A prospectus is your owners manual for a mutual fund. It provides detailed information on a funds goals, investment strategies, principal risks, performance history, fund management, fees, and expenses. A summary prospectus may also be available for a mutual fund.

The summary prospectus provides a brief summaryin plain Englishof the key information about a mutual fund. A concise version of the prospectus, it covers the basic information required to allow an investor to make an informed investment decision.

The statutory prospectus is the traditional, long-form prospectus with which most mutual fund investors are familiar.

If you receive a summary prospectus and would like to read more about a fund, the long-form prospectus is available through the mutual fund companys web site, and a paper copy is available upon request and without charge.

The Summary Prospectus

The format of the summary prospectus requires key information be presented in the same order, written in plain, easy-to-read English by every mutual fund company. This allows investors to make apples-to-apples comparisons of the mutual funds they might be considering.

Investment goal. Goals vary from fund to fund, and theyre important to understand so you can decide if they match your personal investment objectives. Some funds attempt to generate income for their shareholders, while others concentrate on capital appreciation. Some focus on a combination of the two, and others are geared toward tax benefits or preservation of capital.

Fees and expenses. This section describes the fees and expenses you may pay if you buy and hold shares of the fund. An example is provided to help you compare the cost of investing in the fund with the cost of investing in other mutual funds.

Portfolio turnover. Mutual funds pay transaction costs, such as commissions, when they buy and sell securities (or turn over their portfolio). A higher portfolio turnover many indicate higher transaction costs and may result in higher taxes when mutual fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the funds performance.

Principal investment strategies. This section describes a mutual funds portfolio management approach under normal market conditions.

Principal risks. As with all investments, each mutual fund, whether domestic, sector specific or international, carries different risks. The principal risks section explains the primary types of risks associated with the securities in a particular fund. This information may help you decide what level of risk youre comfortable having in your investment portfolio.

Performance. While historical performance doesnt predict how a fund will do in the future, you may be interested to know how it performed in past market environments. Depending on the age of the mutual fund, its one-, five- and 10-year average annual returns will be provided, including a comparison with its benchmark index over the same period.

Investment and portfolio managers. The management section provides a brief biography of the mutual funds managers, including how long theyve managed the fund.

Purchase and sale of fund shares. This section provides information on how to buy and redeem shares of the mutual fund, along with initial minimum purchase information.

Taxes. The distributions and taxes section outlines the types of distributions a mutual fund may make and specifies when distributions are paid out. It also provides a summary of tax considerations relevant to these distributions and the fund in general.

Payments to broker-dealer and other financial intermediaries. When a mutual fund is purchased through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of the fund shares and related services.

The Statutory Prospectus

The first section of a statutory prospectus includes the information contained in the summary prospectus. In the middle section investors will find more detailed information on many of the topics included in the summary prospectus, including: investment strategies, risks, fund management and distributions. The final section of the statutory prospectus contains shareholder account and servicing information.

Understanding Your Account

This section of Franklin Templetons statutory prospectuses provide details on shareholder accounts, policies and services.

Choosing a share class. Many Franklin Templeton funds offer Class A, C, R and Advisor shares, each with different fees, expenses and sales charge structures. This section can help you select the class that best matches your investment objectives.

How to buy shares. You can buy shares of a fund in a number of ways. This section describes initial and subsequent investment minimums along with the various types of accounts. It also gives you information on purchasing shares by phone, mail, wire or through an exchange from an existing Franklin Templeton account.

Types of services. Franklin Templeton offers a variety of ways to access your account. The Investor Services section tells you how to automatically purchase shares through an Automatic Investment Plan or automatically redeem them through a Systematic Withdrawal Plan. If youd rather access your account online, this section explains how to set up your account for online access.

How to sell shares. You may sell shares in your account at any time when the fund is open for business. The Selling Shares section lists all the ways you can request a redemption, along with any account requirements for a specific request.

Account policies. The Account Policies section contains information on how the daily share price of the mutual fund is calculated, and how the value of each security in the portfolio is determined. Also discussed are minimum account balance requirements, the statements, reports and prospectuses published for the fund, account types, and detailed information on dealer compensation.

Additional questions. If you have further questions about a fund, its policies or your account, write or call Franklin Templeton Investments. Our address and specific telephone numbers are listed under the Questions section of the prospectus for your convenience.

Important Legal Information

All investments involve risks, including possible loss of principal.

For more information on any of our funds, contact your financial advisor or download a free prospectus. Investors should carefully consider a funds investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.

This material is provided for educational purposes only and is not intended as investment advice or an offer or solicitation to buy or sell securities.

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