Templeton Institutional Funds

Transcription

1 Statement of Additional Information May 1, 2017 Templeton Institutional s Class Primary Emerging Markets Series TEEMX Foreign Smaller Companies Series TFSCX Global Equity Series TGESX Service International Equity Series (formerly, Foreign Equity Series) TFEQX TFESX This Statement of Additional Information (SAI) is not a prospectus. It contains information in addition to the information in the s (hereafter the ) prospectus. The s prospectus, dated May 1, 2017, which we may amend from time to time, contains the basic information you should know before investing in the. You should read this SAI together with the s prospectus. The audited financial statements and Report of Independent Registered Public Accounting Firm in the s Annual Report to shareholders, for the fiscal year ended December 31, 2016, are incorporated by reference (are legally a part of this SAI). For a free copy of the current prospectus or annual report, contact your investment representative or call (800) CONTENTS Goals, Strategies and Risks... 2 Officers and Trustees Fair Valuation and Liquidity Proxy Voting Policies and Procedures. 34 Management and Other Services Portfolio Transactions Distributions and Taxes Organization, Voting Rights and Principal Holders Buying and Selling Shares The Underwriter Performance Miscellaneous Information Description of Ratings Mutual funds, annuities, and other investment products: are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency of the U.S. government; are not deposits or obligations of, or guaranteed or endorsed by, any bank; and are subject to investment risks, including the possible loss of principal. P.O. Box 33030, St. Petersburg, FL (800) (FTI Institutional Services) 1 ZTIF SAI 05/17

2 GOF SA8 03/18 SUPPLEMENT DATED MARCH 2, 2018 TO THE CURRENTLY EFFECTIVE STATEMENTS OF ADDITIONAL INFORMATION OF EACH OF THE FUNDS LISTED BELOW Franklin Alternative Strategies s Franklin K2 Alternative Strategies Franklin K2 Global Macro Opportunities Franklin K2 Long Short Credit Franklin Pelagos Commodities Strategy Franklin California Tax-Free Income Franklin California Tax-Free Trust Franklin California Intermediate-Term Tax- Free Income Franklin California Ultra-Short Tax-Free Income Franklin Custodian s Franklin Dynatech Franklin Focused Growth Franklin Growth Franklin Income Franklin U.S. Government Securities Franklin Utilities Franklin Federal Tax-Free Income Franklin Allocator Series Franklin Corefolio Allocation Franklin Founding s Allocation Franklin LifeSmart Retirement Income Franklin LifeSmart 2020 Retirement Target Franklin LifeSmart 2025 Retirement Target Franklin LifeSmart 2030 Retirement Target Franklin LifeSmart 2035 Retirement Target Franklin LifeSmart 2040 Retirement Target Franklin LifeSmart 2045 Retirement Target Franklin LifeSmart 2050 Retirement Target Franklin LifeSmart 2055 Retirement Target Franklin Conservative Allocation Franklin Moderate Allocation Franklin Growth Allocation Franklin NextStep Conservative Franklin NextStep Moderate Franklin NextStep Growth Franklin Payout 2018 Franklin Payout 2019 Franklin Payout 2020 Franklin Payout 2021 Franklin Payout 2022 Franklin Payout 2023 Franklin Global Trust Franklin Emerging Markets Debt Opportunities Franklin Global Listed Infrastructure Franklin Global Real Estate Franklin International Growth Franklin International Small Cap Growth Franklin Gold and Precious Metals Franklin Investors Securities Trust Franklin Adjustable U.S. Government Securities Franklin Balanced Franklin Convertible Securities Franklin Equity Income Franklin Floating Rate Daily Access Franklin Low Duration Total Return Franklin Real Return Franklin Total Return Franklin Managed Trust Franklin Rising Dividends Franklin Municipal Securities Trust Franklin California High Yield Municipal Franklin Tennessee Municipal Bond Franklin Mutual Series s Franklin Mutual Beacon Franklin Mutual European Franklin Mutual Financial Services Franklin Mutual Global Discovery Franklin Mutual International Franklin Mutual Quest Franklin Mutual Shares Franklin New York Tax-Free Income Franklin New York Tax-Free Trust Franklin New York Intermediate-Term Tax- Free Income Franklin Strategic Mortgage Portfolio Franklin Strategic Series Franklin Biotechnology Discovery Franklin Flexible Alpha Franklin Focused Core Equity Franklin Growth Opportunities Franklin Natural Resources Franklin Small Cap Growth Franklin Small-Mid Cap Growth Franklin Strategic Income Franklin High Income Trust Franklin High Income Franklin Real Estate Securities Trust Franklin Real Estate Securities Franklin Tax-Free Trust Franklin Federal Intermediate-Term Tax- Free Income Franklin Federal Limited-Term Tax-Free Income Franklin High Yield Tax-Free Income Franklin Massachusetts Tax-Free Income Franklin New Jersey Tax-Free Income Franklin Alabama Tax-Free Income Franklin Florida Tax-Free Income Franklin Georgia Tax-Free Income Franklin Kentucky Tax-Free Income Franklin Louisiana Tax-Free Income Franklin Maryland Tax-Free Income Franklin Missouri Tax-Free Income Franklin North Carolina Tax-Free Income Franklin Virginia Tax-Free Income Franklin Arizona Tax-Free Income Franklin Colorado Tax-Free Income Franklin Connecticut Tax-Free Income Franklin Michigan Tax-Free Income 1 Franklin Minnesota Tax-Free Income Franklin Ohio Tax-Free Income Franklin Oregon Tax-Free Income Franklin Pennsylvania Tax-Free Income Franklin Templeton Global Trust Templeton Global Currency Franklin Templeton International Trust Franklin India Growth Franklin Templeton Money Trust Franklin Templeton U.S. Government Money Franklin U.S. Government Money Franklin Value Investors Trust Franklin Balance Sheet Investment Franklin Microcap Value Franklin Small Cap Value Institutional Fiduciary Trust Money Market Portfolio Templeton China World Templeton Developing Markets Trust Templeton s Templeton Foreign Templeton World Templeton Global Investment Trust Templeton Dynamic Equity Templeton Emerging Markets Balanced Templeton Emerging Markets Small Cap Templeton Foreign Smaller Companies Templeton Frontier Markets Templeton Global Balanced Templeton Global Opportunities Trust Templeton Global Smaller Companies Templeton Growth, Inc. Templeton Income Trust Templeton Emerging Markets Bond Templeton Global Bond Templeton Global Total Return Templeton International Bond Templeton Institutional s Emerging Markets Series Foreign Smaller Companies Series Global Equity Series International Equity Series

3 I. For all s, the following is added to the Goals, Strategies and Risks Glossary of Investments, Techniques, Strategies and Their Risks Foreign securities section of the Statement of Additional Information ( SAI ): For purposes of the s prospectus and SAI, foreign securities refers to non-u.s. securities. II. For Franklin Corefolio Allocation, Franklin Founding s Allocation, Franklin LifeSmart Retirement Income, Franklin LifeSmart 2020 Retirement Target, Franklin LifeSmart 2025 Retirement Target Fun, Franklin LifeSmart 2030 Retirement Target, Franklin LifeSmart 2035 Retirement Target, Franklin LifeSmart 2040 Retirement Target, Franklin LifeSmart 2045 Retirement Target, Franklin LifeSmart 2050 Retirement Target, Franklin LifeSmart 2055 Retirement Target, Franklin Conservative Allocation, Franklin Moderate Allocation, Franklin Growth Allocation, Franklin K2 Alternative Strategies, Franklin Mutual Beacon, Franklin Mutual European, Franklin Mutual Financial Services, Franklin Mutual Global Discovery, Franklin Mutual International, Franklin Mutual Quest, Franklin Mutual Shares, Templeton China World, Templeton Developing Markets Trust, Templeton Dynamic Equity, Templeton Emerging Markets Balanced, Templeton Emerging Markets Small Cap, Templeton Foreign, Templeton World, Templeton Foreign Smaller Companies, Templeton Frontier Markets, Templeton Global Balanced, Templeton Global Currency, Templeton Global Smaller Companies, Templeton Global Opportunities Trust, Templeton Growth, Inc., Emerging Markets Series, Foreign Smaller Companies Series, Global Equity Series, International Equity Series, Templeton Emerging Markets Bond, Templeton Global Bond, Templeton Global Total Return and Templeton International Bond, the following is added to the Goals, Strategies and Risks Glossary of Investments, Techniques, Strategies and Their Risks Developing markets or emerging markets section of the SAI: Investing through the Bond Connect Program. Foreign investors may invest in China Interbank bonds traded on the China Interbank Bond Market ( CIBM ) through the China Hong Kong Bond Connect program ( Bond Connect ). In China, the Hong Kong Monetary Authority Central Money Markets Unit holds Bond Connect securities on behalf of ultimate investors (such as the ) in accounts maintained with a China-based custodian (either the China Central Depository & Clearing Co. or the Shanghai Clearing House). This recordkeeping system subjects the to various risks, including the risk that the may have a limited ability to enforce rights as a bondholder and the risks of settlement delays and counterparty default of the Hong Kong sub-custodian. In addition, enforcing the ownership rights of a beneficial holder of Bond Connect securities is untested and courts in China have limited experience in applying the concept of beneficial ownership. Bond Connect uses the trading infrastructure of both Hong Kong and China and is not available on trading holidays in Hong Kong. As a result, prices of securities purchased through Bond Connect may fluctuate at times when a is unable to add to or exit its position. Securities offered through Bond Connect may lose their eligibility for trading through the program at any time. If Bond Connect securities lose their eligibility for trading through the program, they may be sold but can no longer be purchased through Bond Connect. Bond Connect is subject to regulation by both Hong Kong and China and there can be no assurance that further regulations will not affect the availability of securities in the program, the frequency of redemptions or other limitations. Bond Connect trades are settled in Chinese currency, the renminbi ( RMB ). It cannot be guaranteed that investors will have timely access to a reliable supply of RMB in Hong Kong. Bond Connect is relatively new and its effects on the Chinese interbank bond market are uncertain. In addition, the trading, settlement and IT systems required for non-chinese investors in Bond Connect are relatively new. In the event of systems malfunctions, trading via Bond Connect could be disrupted. In addition, the Bond Connect program may be subject to further interpretation and guidance. There can be no assurance as to the program s continued existence or whether future developments regarding the program may restrict or adversely affect the s investments or returns. Finally, uncertainties in China tax rules governing taxation of income and gains from investments via Bond Connect could result in unexpected tax liabilities for a. III. The following is added to the Officers and Trustees Independent Board Members section of the SAI for all s except Franklin Mutual Beacon, Franklin Mutual European, Franklin Mutual Financial Services, Franklin Mutual Global Discovery, Franklin Mutual International, Franklin Mutual Quest, Franklin Mutual Shares, Franklin Balance Sheet Investment, Franklin Microcap Value, Franklin Small Cap Value, Franklin K2 Alternative Strategies, Franklin K2 Global Macro Opportunities, Franklin K2 Long Short Credit, Franklin Pelagos Commodities Strategy, Templeton Global Currency, Templeton China World, Templeton Developing Markets Trust, Templeton Foreign, Templeton World, Templeton Dynamic Equity, Templeton Emerging Markets Balanced, Templeton Emerging Markets Small Cap, Templeton Foreign Smaller Companies, Templeton Frontier Markets, Templeton Global Balanced, Templeton Global Opportunities Trust, Templeton Global Smaller Companies, Templeton Growth, Inc., Templeton Emerging Markets Bond, Templeton Global Bond, Templeton Global 2

4 Total Return, Templeton International Bond, Emerging Markets Series, Foreign Smaller Companies Series, Global Equity Series and International Equity Series: Terrence J. Checki (1945) One Franklin Parkway San Mateo, CA Trustee Since December Hess Corporation (exploration of oil and gas) (2014-present). Principal Occupation During at Least the Past 5 Years: Member of the Council on Foreign Relations (1996-present); Member of the National Committee on U.S.-China Relations (1999-present); member of the Board of Trustees of the Economic Club of New York (2013 -present); member of the Board of Trustees of the Foreign Policy Association (2005-present) and member of various other boards of trustees and advisory boards; and formerly, Executive Vice President of the Federal Reserve Bank of New York and Head of its Emerging Markets and Internal Affairs Group and Member of Management Committee ( ); and Visiting Fellow at the Council on Foreign Relations (2014). IV. The following replaces the first paragraph under the Officers and Trustees Board committees section of the SAI for all s except Franklin Mutual Beacon, Franklin Mutual European, Franklin Mutual Financial Services, Franklin Mutual Global Discovery, Franklin Mutual International, Franklin Mutual Quest, Franklin Mutual Shares, Franklin Balance Sheet Investment, Franklin Microcap Value, Franklin Small Cap Value, Franklin K2 Alternative Strategies, Franklin K2 Global Macro Opportunities, Franklin K2 Long Short Credit, Franklin Pelagos Commodities Strategy, Templeton Global Currency, Templeton China World, Templeton Developing Markets Trust, Templeton Foreign, Templeton World, Templeton Dynamic Equity, Templeton Emerging Markets Balanced, Templeton Emerging Markets Small Cap, Templeton Foreign Smaller Companies, Templeton Frontier Markets, Templeton Global Balanced, Templeton Global Opportunities Trust, Templeton Global Smaller Companies, Templeton Growth, Inc., Templeton Emerging Markets Bond, Templeton Global Bond, Templeton Global Total Return, Templeton International Bond, Emerging Markets Series, Foreign Smaller Companies Series, Global Equity Series and International Equity Series: Board committees The board maintains two standing committees: the Audit Committee and the Nominating Committee. The Audit Committee is generally responsible for recommending the selection of the Trust's independent registered public accounting firm (auditors), including evaluating their independence and meeting with such auditors to consider and review matters relating to the Trust's financial reports and internal controls. The Audit Committee is comprised of the following independent trustees of the Trust: Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, J. Michael Luttig, Larry D. Thompson and John B. Wilson. The Nominating Committee is comprised of the following independent trustees of the Trust: Harris J. Ashton, Terrence J. Checki, Mary C. Choksi, Edith E. Holiday, J. Michael Luttig, Larry D. Thompson and John B. Wilson. V. The following replaces the first paragraph under the Officers and Trustees Trustee Qualifications section of the SAI for all s except Franklin Mutual Beacon, Franklin Mutual European, Franklin Mutual Financial Services, Franklin Mutual Global Discovery, Franklin Mutual International, Franklin Mutual Quest, Franklin Mutual Shares, Franklin Balance Sheet Investment, Franklin Microcap Value, Franklin Small Cap Value, Franklin K2 Alternative Strategies, Franklin K2 Global Macro Opportunities, Franklin K2 Long Short Credit, Franklin Pelagos Commodities Strategy, Templeton Global Currency, Templeton China World, Templeton Developing Markets Trust, Templeton Foreign, Templeton World, Templeton Dynamic Equity, Templeton Emerging Markets Balanced, Templeton Emerging Markets Small Cap, Templeton Foreign Smaller Companies, Templeton Frontier Markets, Templeton Global Balanced, Templeton Global Opportunities Trust, Templeton Global Smaller Companies, Templeton Growth, Inc., Templeton Emerging Markets Bond, Templeton Global Bond, Templeton Global Total Return, Templeton International Bond, Emerging Markets Series, Foreign Smaller Companies Series, Global Equity Series and International Equity Series: Trustee qualifications Information on the s officers and board members appears above including information on the business activities of board members during the past five years and beyond. In addition to personal qualities, such as integrity, the role of an effective board member inherently requires the ability to comprehend, discuss and critically analyze materials and issues presented in exercising judgments and reaching informed conclusions relevant to his or her duties and fiduciary obligations. The board believes that the specific background of each board member evidences such ability and is appropriate to his or her serving on the s board. As indicated, Harris J. Ashton has served as a chief executive officer of a NYSE-listed public corporation; Terrence J. Checki has served as a senior executive of a Federal Reserve Bank and has vast experience evaluating economic forces and their impact on markets, including emerging markets; Mary C. Choksi has an extensive background in asset management, including founding an investment 3

5 management firm; Larry D. Thompson and Edith E. Holiday each have legal backgrounds, including high level legal positions with departments of the U.S. government; J. Michael Luttig has fifteen years of judicial experience as a Federal Appeals Court Judge and eleven years of experience as Executive Vice President and General Counsel of a major public company; John B. Wilson has served as President of International for a Fortune 150 company, chief operating officer of a NYSE-listed public corporation, chief financial officer of a NASDAQ-listed public corporation and partner of a global strategy consulting firm; and Gregory E. Johnson and Rupert H. Johnson, Jr. are both high ranking executive officers of Franklin Templeton Investments. Please keep this supplement with your prospectus for future reference. 4

6 GOF SA7 02/18 SUPPLEMENT DATED FEBRUARY 1, 2018 TO THE CURRENTLY EFFECTIVE STATEMENT OF ADDITIONAL INFORMATION OF EACH OF THE FUNDS LISTED BELOW Franklin Alternative Strategies s Franklin K2 Alternative Strategies Franklin K2 Global Macro Opportunities Franklin K2 Long Short Credit Franklin Pelagos Commodities Strategy Franklin California Tax-Free Income Franklin California Tax-Free Trust Franklin California Intermediate-Term Tax- Free Income Franklin California Ultra-Short Tax-Free Income Franklin Custodian s Franklin Dynatech Franklin Focused Growth Franklin Growth Franklin Income Franklin U.S. Government Securities Franklin Utilities Franklin Federal Tax-Free Income Franklin Allocator Series Franklin Corefolio Allocation Franklin Founding s Allocation Franklin LifeSmart Retirement Income Franklin LifeSmart 2020 Retirement Target Franklin LifeSmart 2025 Retirement Target Franklin LifeSmart 2030 Retirement Target Franklin LifeSmart 2035 Retirement Target Franklin LifeSmart 2040 Retirement Target Franklin LifeSmart 2045 Retirement Target Franklin LifeSmart 2050 Retirement Target Franklin LifeSmart 2055 Retirement Target Franklin Conservative Allocation Franklin Moderate Allocation Franklin Growth Allocation Franklin NextStep Conservative Franklin NextStep Growth Franklin NextStep Moderate Franklin Payout 2018 Franklin Payout 2019 Franklin Payout 2020 Franklin Payout 2021 Franklin Payout 2022 Franklin Payout 2023 Franklin Global Trust Franklin Global Listed Infrastructure Franklin Global Real Estate Franklin International Growth Franklin International Small Cap Growth Franklin Gold and Precious Metals Franklin Investors Securities Trust Franklin Adjustable U.S. Government Securities Franklin Balanced Franklin Convertible Securities Franklin Equity Income Franklin Floating Rate Daily Access Franklin Low Duration Total Return Franklin Real Return Franklin Total Return Franklin Managed Trust Franklin Rising Dividends Franklin Mutual Series s Franklin Mutual Beacon Franklin Mutual European Franklin Mutual Financial Services Franklin Mutual Global Discovery Franklin Mutual International Franklin Mutual Quest Franklin Mutual Shares Franklin New York Tax-Free Trust Franklin New York Intermediate-Term Tax- Free Income Franklin Strategic Mortgage Portfolio Franklin Strategic Series Franklin Biotechnology Discovery Franklin Flexible Alpha Franklin Focused Core Equity Franklin Global Government Bond Franklin Growth Opportunities Franklin Natural Resources Franklin Small Cap Growth Franklin Small-Mid Cap Growth Franklin Strategic Income Franklin Real Estate Securities Trust Franklin Real Estate Securities Franklin High Income Trust Franklin High Income Franklin New York Tax-Free Income Franklin Municipal Securities Trust Franklin California High Yield Municipal Franklin Tennessee Municipal Bond Franklin Tax-Free Trust Franklin Alabama Tax-Free Income Franklin Arizona Tax-Free Income Franklin Colorado Tax-Free Income Franklin Connecticut Tax-Free Income Franklin Federal Intermediate-Term Tax- Free Income Franklin Federal Limited-Term Tax-Free Income Franklin Florida Tax-Free Income Franklin Georgia Tax-Free Income Franklin High Yield Tax-Free Income Franklin Kentucky Tax-Free Income Franklin Louisiana Tax-Free Income Franklin Maryland Tax-Free Income Franklin Massachusetts Tax-Free Income Franklin Michigan Tax-Free Income Franklin Minnesota Tax-Free Income Franklin Missouri Tax-Free Income Franklin New Jersey Tax-Free Income Franklin North Carolina Tax-Free Income Franklin Ohio Tax-Free Income Franklin Oregon Tax-Free Income Franklin Pennsylvania Tax-Free Income Franklin Virginia Tax-Free Income Franklin Templeton Global Trust Templeton Global Currency Franklin Templeton International Trust Franklin India Growth Franklin Templeton Money Trust Franklin Templeton U.S. Government Money Franklin U.S. Government Money Franklin Value Investors Trust Franklin Balance Sheet Investment Franklin Microcap Value Franklin Small Cap Value Templeton China World Templeton Developing Markets Trust Templeton s Templeton Foreign Templeton World Templeton Global Investment Trust Templeton Dynamic Equity Templeton Emerging Markets Balanced Templeton Emerging Markets Small Cap Templeton Foreign Smaller Companies Templeton Frontier Markets Templeton Global Balanced Templeton Global Opportunities Trust Templeton Global Smaller Companies Templeton Growth, Inc. Templeton Income Trust Templeton Emerging Markets Bond Templeton Global Bond Templeton Global Total Return Templeton International Bond Templeton Institutional s Emerging Markets Series Foreign Smaller Companies Series Global Equity Series International Equity Series 1

7 The statement of additional information is amended as follows: I. The Buying and Selling Shares Share certificates section is revised as follows: Share certificates We will credit your shares to your account and we do not issue share certificates. This eliminates the costly problem of replacing lost, stolen or destroyed certificates. Any outstanding share certificates must be returned to the if you want to sell, exchange or reregister those shares or if you would like to start a systematic withdrawal plan. The certificates should be properly endorsed. You can do this either by signing the back of the certificate or by completing a share assignment form. For your protection, you may prefer to complete a share assignment form and to send the certificate and assignment form in separate envelopes. We do not issue new share certificates if any outstanding share certificates are returned to the. If a certificate is lost, stolen or destroyed, you may have to pay an insurance premium of up to 2% of the value of the certificate to cancel it. II. The eleventh paragraph under Buying and Selling Shares General Information section is revised as follows: The or its transfer agent may be required (i) pursuant to a validly issued levy, garnishment or other form of legal process, to sell your shares and remit the proceeds to a levying officer or other recipient; or (ii) pursuant to a final order of forfeiture or other form of legal process, to sell your shares and remit the proceeds to the U.S. or state government as directed. Please keep this supplement with your statement of additional information for future reference. 2

8 GOF SA3 06/17 SUPPLEMENT DATED JUNE 12, 2017 TO THE CURRENTLY EFFECTIVE STATEMENT OF ADDITIONAL INFORMATION OF EACH OF THE FUNDS LISTED BELOW Franklin Alternative Strategies s Franklin K2 Alternative Strategies Franklin K2 Global Macro Opportunities Franklin K2 Long Short Credit Franklin Pelagos Commodities Strategy Franklin California Tax-Free Income Franklin California Tax-Free Trust Franklin California Intermediate-Term Tax-Free Income Franklin California Ultra-Short Tax-Free Income Franklin Custodian s Franklin Dynatech Franklin Focused Growth Franklin Growth Franklin Income Franklin U.S. Government Securities Franklin Utilities Franklin Federal Tax-Free Income Franklin Allocator Series Franklin Corefolio Allocation Franklin Founding s Allocation Franklin LifeSmart Retirement Income Franklin LifeSmart 2020 Retirement Target Franklin LifeSmart 2025 Retirement Target Franklin LifeSmart 2030 Retirement Target Franklin LifeSmart 2035 Retirement Target Franklin LifeSmart 2040 Retirement Target Franklin LifeSmart 2045 Retirement Target Franklin LifeSmart 2050 Retirement Target Franklin LifeSmart 2055 Retirement Target Franklin Conservative Allocation Franklin Moderate Allocation Franklin Growth Allocation Franklin NextStep Conservative Franklin NextStep Moderate Franklin NextStep Growth Franklin Payout 2017 Franklin Payout 2018 Franklin Payout 2019 Franklin Payout 2020 Franklin Payout 2021 Franklin Payout 2022 Franklin Payout 2023 Franklin Global Trust Franklin Emerging Markets Debt Opportunities Franklin Global Listed Infrastructure Franklin Global Real Estate Franklin International Growth Franklin International Small Cap Growth Franklin Gold and Precious Metals Franklin Investors Securities Trust Franklin Adjustable U.S. Government Securities Franklin Balanced Franklin Convertible Securities Franklin Equity Income Franklin Floating Rate Daily Access Franklin Low Duration Total Return Franklin Real Return Franklin Total Return Franklin Managed Trust Franklin Rising Dividends Franklin Mutual Series s Franklin Mutual Beacon Franklin Mutual European Franklin Mutual Financial Services Franklin Mutual Global Discovery Franklin Mutual International Franklin Mutual Quest Franklin Mutual Shares Franklin New York Tax-Free Trust Franklin New York Intermediate-Term Tax-Free Income Franklin Strategic Mortgage Portfolio Franklin Strategic Series Franklin Biotechnology Discovery Franklin Flexible Alpha Franklin Focused Core Equity Franklin Growth Opportunities Franklin Natural Resources Franklin Small Cap Growth Franklin Small-Mid Cap Growth Franklin Strategic Income Franklin Real Estate Securities Trust Franklin Real Estate Securities Franklin High Income Trust Franklin High Income Franklin New York Tax-Free Income Franklin Municipal Securities Trust Franklin California High Yield Municipal Franklin Tennessee Municipal Bond Franklin Templeton Global Trust Templeton Global Currency Franklin Templeton International Trust Franklin India Growth Franklin Templeton Money Trust Franklin Templeton U.S. Government Money Franklin U.S. Government Money Franklin Value Investors Trust Franklin Balance Sheet Investment Franklin Microcap Value Franklin Midcap Value Franklin Small Cap Value Institutional Fiduciary Trust Money Market Portfolio Templeton China World Templeton Developing Markets Trust Templeton s Templeton Foreign Templeton World Templeton Global Investment Trust Templeton Dynamic Equity Templeton Emerging Markets Balanced Templeton Emerging Markets Small Cap Templeton Foreign Smaller Companies Templeton Frontier Markets Templeton Global Balanced Templeton Global Opportunities Trust Templeton Global Smaller Companies Templeton Growth, Inc. Templeton Income Trust Templeton Emerging Markets Bond Templeton Global Bond Templeton Global Total Return Templeton International Bond Templeton Institutional s Emerging Markets Series Foreign Smaller Companies Series Global Equity Series International Equity Series

9 The Statement of Additional Information (SAI) is amended as follows: I. For the Franklin Income, the following is added to the Goals, Strategies and Risks - Glossary of Investments, Techniques, Strategies and Their Risks Convertible securities section of the SAI: Contingent convertible securities (CoCos). A contingent convertible security, or CoCo, is a hybrid debt security typically issued by a non-u.s. bank that, upon the occurrence of a specified trigger event, may be (i) convertible into equity securities of the issuer at a predetermined share price; or (ii) written down in liquidation value. Trigger events are identified in the documents that govern the CoCo and may include a decline in the issuer s capital below a specified threshold level, an increase in the issuer s risk weighted assets, the share price of the issuer falling to a particular level for a certain period of time and certain regulatory events, such as a change in regulatory capital requirements. CoCos are designed to behave like bonds in times of economic health yet absorb losses when the trigger event occurs. With respect to CoCos that provide for conversion of the CoCo into common shares of the issuer in the event of a trigger event, the conversion would deepen the subordination of the investor, subjecting the to a greater risk of loss in the event of bankruptcy. In addition, because the common stock of the issuer may not pay a dividend, investors in such instruments could experience reduced yields (or no yields at all). With respect to CoCos that provide for the write down in liquidation value of the CoCo in the event of a trigger event, it is possible that the liquidation value of the CoCo may be adjusted downward to below the original par value or written off entirely under certain circumstances. For instance, if losses have eroded the issuer s capital levels below a specified threshold, the liquidation value of the CoCo may be reduced in whole or in part. The write-down of the CoCo s par value may occur automatically and would not entitle holders to institute bankruptcy proceedings against the issuer. In addition, an automatic write-down could result in a reduced income rate if the dividend or interest payment associated with the CoCo is based on par value. Coupon payments on CoCos may be discretionary and may be cancelled by the issuer for any reason or may be subject to approval by the issuer s regulator and may be suspended in the event there are insufficient distributable reserves. CoCos are subject to the credit, interest rate, high yield securities, foreign securities and market risks associated with bonds and equity securities, and to the risks specific to convertible securities in general. They are also subject to other specific risks. CoCos typically are structurally subordinated to traditional convertible bonds in the issuer s capital structure, which increases the risk that the may experience a loss. In certain scenarios, investors in CoCos may suffer a loss of capital ahead of equity holders or when equity holders do not. CoCos are generally speculative and the prices of CoCos may be volatile. There is no guarantee that the will receive return of principal on CoCos. II. For the Franklin Income, the following is added to the Goals, Strategies and Risks - Glossary of Investments, Techniques, Strategies and Their Risks section of the SAI: Municipal securities Municipal securities are issued by U.S. state and local governments and their agencies, instrumentalities, authorities and political subdivisions, as well as by the District of Columbia and U.S. territories and possessions. The issuer pays a fixed, floating or variable rate of interest, and must repay the amount borrowed (the "principal") at maturity. Municipal securities are issued to raise money for a variety of public or private purposes, including financing state or local government, specific projects or public facilities. Municipal securities generally are classified as general or revenue obligations. General obligations are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue obligations are debt securities payable only from the revenues derived from a particular facility or class of facilities, or a specific excise tax or other revenue source. As a result, an investment in revenue obligations is subject to greater risk of delay or non-payment if revenue does not accrue as expected or if other conditions are not met for reasons outside the control of the. Conversely, if revenue accrues more quickly than anticipated, the may receive payment before expected and have difficulty re-investing the proceeds on equally favorable terms. The value of the municipal securities may be highly sensitive to events affecting the fiscal stability of the municipalities, agencies, authorities and other instrumentalities that issue securities. In particular, economic, legislative, regulatory or political developments affecting the ability of the issuers to pay interest or repay principal may significantly affect the value of the 's investments. These developments can include or arise from, for example, insolvency of an issuer, uncertainties related to the tax status of municipal securities, tax base erosion, state or federal constitutional limits on tax increases or other actions, budget deficits and other financial 2

10 difficulties, or changes in the credit ratings assigned to municipal issuers. There will be a limited market for certain municipal securities, and the could face illiquidity risks. III. IV. For all s, the first paragraph of the Liquidity risk under the Goals, Strategies and Risks - Glossary of Investments, Techniques, Strategies and Their Risks section of the SAI is replaced with the following: Liquidity Liquidity risk exists when particular investments are or become difficult to purchase or sell at the price at which the has valued the security, whether because of current market conditions, the financial condition of the issuer, or the specific type of investment. If the market for a particular security becomes illiquid (for example, due to changes in the issuer's financial condition), the may be unable to sell such security at an advantageous time or price due to the difficulty in selling such securities. To the extent that the and its affiliates hold a significant portion of an issuer's outstanding securities, the may also be subject to greater liquidity risk than if the issuer's securities were more widely held. The may also need to sell some of the 's more liquid securities when it otherwise would not do so in order to meet redemption requests, even if such sale of the liquid holdings would be disadvantageous from an investment standpoint. Reduced liquidity may also have an adverse impact on a security's market value and the sale of such securities often results in higher brokerage charges or dealer discounts and other selling expenses. Reduced liquidity in the secondary market for certain securities will also make it more difficult for the to obtain market quotations based on actual trades for purposes of valuing the 's portfolio and thus pricing may be prone to error when market quotations are volatile, infrequent and/or subject to large spreads between bid and ask prices. In addition, prices received by the for securities may be based on institutional round lot sizes, but the may purchase, hold or sell smaller, odd lot sizes, which may be harder to sell. Odd lots may trade at lower prices than round lots, which may affect the s ability to accurately value its investments. For all s, the information under the Officers and Trustees Interested Board Members and Officers section of the SAI regarding Laura F. Fergerson is replaced with the following: Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA Chief Executive Officer Finance and Administration Since June 2017 Not Applicable Not Applicable Principal Occupation During Past 5 Years: Senior Vice President, U.S. Administration Reporting & Tax, Franklin Templeton Investments; officer of 45 of the investment companies in Franklin Templeton Investments; and formerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton Investments ( ). V. For all of the Templeton s, the information under the Officers and Trustees Interested Board Members and Officers section of the SAI regarding Mark H. Otani is replaced with the following: Robert G. Kubilis (1973) 300 S.E. 2nd Street Fort Lauderdale, FL Treasurer, Chief Financial Officer and Chief Accounting Officer Since June 2017 Not Applicable Not Applicable Principal Occupation During Past 5 Years: Treasurer, U.S. Administration & Reporting, Franklin Templeton Investments; and officer of eighteen of the investment companies in Franklin Templeton Investments. VI. For Templeton Developing Markets Trust, Templeton China World and Templeton Institutional s, the information under the Officers and Trustees Interested Board Members and Officers section of the SAI regarding Dr. Mark Mobius is deleted. In addition, the following information is added for Templeton Developing Markets Trust and Templeton China World : Stephen H. Dover (1961) One Franklin Parkway San Mateo, President and Chief Executive Officer - Investment Management Since June 2017 Not Applicable Not Applicable 3

11 CA Principal Occupation During Past 5 Years: Chief Investment Officer, Templeton Emerging Market Group; Executive Vice President, Franklin Advisers, Inc.; and officer of four of the investment companies in Franklin Templeton Investments. VII. For Franklin Alternative Strategies s, the information under the Officers and Trustees Interested Board Members and Officers section of the SAI regarding William Yun is replaced with the following: Madison S. Gulley (1964) 300 S.E. 2 nd Street Fort Lauderdale, FL President and Chief Executive Officer - Investment Management Since June 2017 Not Applicable Not Applicable Principal Occupation During Past 5 Years: Executive Vice President, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Templeton Institutional, LLC; Templeton Global Advisors Limited and Templeton Investment Counsel, LLC; Senior Vice President, Franklin Templeton Companies, LLC; officer of some of the other subsidiaries of Franklin Resources, Inc. and of one of the investment companies in Franklin Templeton Investments. VIII. Effective on July 1, 2017, for Franklin Value Investors Trust, the information under the Officers and Trustees Interested Board Members and Officers section of the SAI regarding Donald G. Taylor is replaced with the following:: Peter Langerman (1955) 101 John F. Kennedy Parkway Short Hills, NJ President and Chief Executive Officer - Investment Management Since July 2017 Not Applicable Not Applicable Principal Occupation During Past 5 Years: Chairman of the Board, Chief Executive Officer and President, Franklin Mutual Advisers, LLC; officer and/or director, as the case may be, of four of the investment companies in Franklin Templeton Investments. IX. For Templeton Growth, Inc., the first paragraph under the section Officers and Directors Board committees is replaced with the following: Board committees The board maintains two standing committees: the Audit Committee and the Nominating Committee. The Audit Committee is generally responsible for recommending the selection of the 's independent registered public accounting firm (auditors), including evaluating their independence and meeting with such auditors to consider and review matters relating to the 's financial reports and internal controls. The Audit Committee is comprised of the following independent directors of the : Ann Torre Bates, J. Michael Luttig, David W. Niemiec and Constantine D. Tseretopoulos. The Nominating Committee is comprised of the following independent directors of the : Edith E. Holiday, J. Michael Luttig and Larry D. Thompson. X. For Templeton Global Smaller Companies, the dollar range of securities owned for Harlan Hodes under Management and Other Services Portfolio managers Ownership of shares is revised to be in the $100,001-$500,000 range. XI. For the Templeton Growth, Inc., the first paragraph under the section Management and Other Services Administrator and services provided is replaced with the following: Administrator and services provided Franklin Templeton Services, LLC (FT Services) has an agreement with the investment manager to provide certain administrative services and facilities for the. FT Services is an indirect, wholly owned subsidiary of Resources and is an affiliate of the 's investment manager and principal underwriter. 4

12 XII. XIII. For the Templeton World and Templeton Foreign, the first paragraph under the section Management and Other Services Administrator and services provided is replaced with the following: Administrator and services provided Franklin Templeton Services, LLC (FT Services) has an agreement with the investment manager to provide certain administrative services and facilities for the. FT Services is an indirect, wholly owned subsidiary of Resources and is an affiliate of the 's investment manager and principal underwriter. For all s, as applicable, the Buying and Selling Shares - Dealer and financial intermediary compensation section is replaced with the following: Purchases of Certain Share Classes through Financial Intermediaries (Class R6 and Advisor Class) There are no associated sales charges or Rule 12b-1 distribution and service fees for the purchase of Class R6 and Advisor Class shares. However, pursuant to SEC guidance, certain financial intermediaries acting as agents on behalf of their customers may directly impose on shareholders sales charges or transaction fees determined by the financial intermediary related to the purchase of these shares. These charges and fees are not disclosed in this prospectus. You should consult with your financial advisor or visit your financial intermediary s website for more information. The s service providers also may pay financial intermediaries for marketing support and other related services as disclosed below for Advisor Class shares, but not for Class R6 shares. These payments may create a conflict of interest by influencing the financial intermediary and your salesperson to recommend one share class over another. There is some uncertainty concerning whether marketing support or other similar payments may be made or received in connection with Advisor Class shares where a financial intermediary has imposed its own sales charges or transaction fees. Based on future regulatory developments, such payments may be terminated. Financial intermediary compensation Financial intermediaries may at times receive the entire sales charge. A financial intermediary who receives 90% or more of the sales charge may be deemed an underwriter under the Securities Act of 1933, as amended. Financial institutions or their affiliated brokers may receive an agency transaction fee in the percentages indicated in the financial intermediary compensation table in the s prospectus. Distributors may pay the following commissions to financial intermediaries who initiate and are responsible for purchases of Class A shares of $1 million or more: 1% (for mutual funds with a maximum initial sales charge of 5.75%) and 0.75% (for mutual funds with a maximum initial sales charge less than 5.75%) on sales of $1 million or more but less than $4 million, plus 0.50% on sales of $4 million or more but less than $50 million, plus 0.25% on sales of $50 million or more. Consistent with the provisions and limitations set forth in its Class A Rule 12b-1 distribution plan, the may reimburse Distributors for the cost of these commission payments. These payments may be made in the form of contingent advance payments, which may be recovered from the financial intermediary or set off against other payments due to the financial intermediary if shares are sold within 18 months of the calendar month of purchase. Other conditions may apply. Other terms and conditions may be imposed by an agreement between Distributors, or one of its affiliates, and the financial intermediary. In addition to the sales charge payments described above and the distribution and service (12b-1) fees described below under The Underwriter - Distribution and service (12b-1) fees, Distributors and/or its non-fund affiliates may make the following additional payments to financial intermediaries that sell shares of Franklin Templeton mutual funds: Marketing support payments (applicable to all classes of shares except Class R6). Distributors may make payments to certain financial intermediaries in connection with their efforts to educate financial advisors and provide services which may facilitate, directly or indirectly, investment in Franklin Templeton mutual funds. A financial intermediary s marketing support services may include business planning assistance, advertising, educating financial intermediary personnel about Franklin Templeton mutual funds and shareholder financial planning needs, placement on the financial intermediary s list of offered funds, and access to sales meetings, sales representatives and management representatives of the financial intermediary. Distributors compensates financial intermediaries differently depending upon, among other factors, sales and assets levels, redemption rates and the level and/or type of marketing and educational activities provided by the financial intermediary. Such compensation may include financial assistance to financial intermediaries that enable Distributors to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events and other financial intermediary-sponsored events. These payments may vary depending upon the nature of the event. Distributors will, on an annual basis, determine whether to 5

13 continue such payments. In the case of any one financial intermediary, marketing support payments will generally not exceed 0.05% of the total assets of Franklin Templeton mutual funds attributable to that financial intermediary, on an annual basis. For a financial intermediary exceeding $15 billion in total assets of Franklin Templeton mutual funds, Distributors may agree to make annual marketing support payments exceeding 0.05% of such assets. For a financial intermediary exceeding $50 billion in total assets of Franklin Templeton mutual funds, Distributors may agree to make annual marketing support payments up to a limit of 0.06% of such assets. Any assets held on behalf of Employer Sponsored Retirement Plans for which payment is made to a financial intermediary pursuant to the following paragraph will be excluded from the calculation of marketing support payments pursuant to this paragraph. Distributors may also make marketing support payments to financial intermediaries in connection with their activities that are intended to assist in the sale of shares of Franklin Templeton mutual funds, directly or indirectly, to certain Employer Sponsored Retirement Plans that have retained such financial intermediaries as plan service providers. Payments may be made on account of activities that may include, but are not limited to, one or more of the following: business planning assistance for financial intermediary personnel, educating financial intermediary personnel about Franklin Templeton mutual funds, access to sales meetings, sales representatives, wholesalers, and management representatives of the financial intermediary, and detailed sales reporting. A financial intermediary may perform the services itself or may arrange with a third party to perform the services. In the case of any one financial intermediary, such payments will not exceed 0.10% of the total assets of Franklin Templeton mutual funds held, directly or indirectly, by such Employer Sponsored Retirement Plans, on an annual basis. Distributors will, on an annual basis, determine whether to continue such payments. Consistent with the provisions and limitations set forth in its Rule 12b-1 distribution plans, the may reimburse Distributors for the cost of a portion of these marketing support payments. Marketing support payments may be in addition to any servicing and other fees paid by Investor Services, as described further below and under Management and Other Services Shareholder servicing and transfer agent above. The following list includes FINRA member firms (or, in some instances, their respective affiliates) that, as of March 31, 2017, Distributors anticipates will receive marketing support payments. Any firm indicated by one asterisk receives annual marketing support payments exceeding 0.05% of the total assets of Franklin Templeton mutual funds attributable to that firm. Any firm indicated by two asterisks receives annual marketing support payments of up to a limit of 0.06% of the total assets of Franklin Templeton mutual funds attributable to that firm. In addition to member firms of FINRA, Distributors also makes marketing support payments, and Distributors non-fund affiliates may make administrative services payments, to certain other financial intermediaries, such as banks, insurance companies, and plan administrators, that sell mutual fund shares or provide services to Franklin Templeton mutual funds and shareholders. These firms may not be included in this list. You should ask your financial intermediary if it receives such payments. 1st Global Capital Corporation, ADP Retirement Services, American Portfolios Financial Services, Inc., American Enterprise Investment Services, Inc., American United Life Insurance Company, Ascensus, Inc., AXA Advisors, LLC, BBVA Securities, Inc., Benjamin F. Edwards & Company, Inc., Cadaret Grant & Co., Inc., Cambridge Investment Research, Inc., Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Financial Specialists LLC, Cetera Investment Services LLC, Citigroup Global Markets Inc., Citizens Securities, Inc., Commonwealth Financial Network, CUNA Brokerage Services, Inc., CUSO Financial Services, L.P., Digital Retirement Solutions, Edward D. Jones & Co., L.P. (dba Edward Jones)**, Empower Retirement, eplan Services, Inc., Fidelity Investments Institutional Services Company, Inc., Fifth Third Securities, Inc., First Allied Securities, Inc., First Command Financial Planning, Inc., FSC Securities Corporation, Girard Securities, Inc., Goldman, Sachs & Co., Group 3 Financial, LLC, IFC Holdings Inc. D/B/A INVEST Financial Corporation, Investacorp, Inc., Investment Centers of America, Inc., J.J.B. Hilliard, W.L. Lyons LLC, J.P. Morgan Securities LLC, Janney Montgomery Scott LLC, John Hancock Distributors LLC, KMS Financial Services, Inc., Legend Equities Corporation, Lincoln Financial Advisors Corporation, Lincoln Financial Securities Corporation, Lincoln Investment Planning, Inc., Lincoln Retirement Services Company LLC, LPL Financial LLC, M&T Securities, Inc., Massachusetts Mutual Life Insurance Company, Merrill Lynch, Pierce, Fenner & Smith, Inc., Minnesota Life Insurance Company, MML Investors Services, LLC, Morgan Stanley, MSCS Financial Services LLC, National Planning Corporation, Nationwide Financial Services, Inc., Newport Retirement Services, Inc., Northwestern Mutual Investment Services, LLC, Paychex Securities Corporation, PFS Investments Inc., PNC Investments LLC, Principal Financial Group, Prudential Insurance Company of America, Raymond James & Associates, Inc., Raymond James Financial Services, Inc., RBC Capital Markets LLC, Richard D. Schubert, Inc., Robert W. Baird & Co., Inc., Royal 6