Templeton Institutional Funds

Transcription

1 Prospectus May 1, 2017 Templeton Institutional Funds The U.S. Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. Primary Shares Service Shares Emerging Markets Series TEEMX Foreign Smaller Companies Series TFSCX Global Equity Series TGESX International Equity Series (formerly, Foreign Equity Series) TFEQX TFESX ZTIF P 05/17

2 ZTIF P2 12/17 SUPPLEMENT DATED DECEMBER 14, 2017 TO THE PROSPECTUS DATED MAY 1, 2017 OF TEMPLETON INSTITUTIONAL FUNDS (Emerging Markets Series, International Equity Series, Foreign Smaller Companies Series, Global Equity Series) The Emerging Markets Series Prospectus is amended as follows: The following paragraphs are added to the Fund Summary section above Investment Goal on page 2 and to the Fund Details section above Investment Goal on page 30: On December 7, 2017, the Board of Trustees of Templeton Institutional Funds, on behalf of Emerging Markets Series (Fund), approved a proposal to terminate and liquidate the Fund. The liquidation is anticipated to occur on or about March 16, 2018 (Liquidation Date), but may be delayed if unforeseen circumstances arise. Effective at the close of market (1:00 p.m. Pacific time or close of the New York Stock Exchange, whichever is earlier) on January 5, 2018, the Fund will be closed to all new investors except as noted below. Existing investors who had an open and funded account on January 5, 2018 can continue to invest in the Fund through exchanges and additional purchases after such date. The following categories of investors may continue to open new accounts in the Fund after the close of market on January 5, 2018, (1) clients of discretionary investment allocation programs where such programs had investments in the Fund prior to the close of market on January 5, 2018, and (2) employer sponsored retirement plans or benefit plans and their participants where the Fund was available to participants prior to the close of market on January 5, The Fund will not accept any additional purchases after the close of market on or about March 9, The Fund reserves the right to change this policy at any time. Shareholders of the Fund on the Liquidation Date will have their accounts liquidated and the proceeds will be delivered to them. For those shareholders with taxable accounts and for Federal, state and local income tax purposes: (a) any liquidation proceeds paid to such shareholder should generally be treated as received by such shareholder in exchange for the shareholder s shares and the shareholder will therefore generally recognize a taxable gain or loss; (b) in connection with the liquidation, the Fund may declare taxable distributions of its income and/or capital gain; and (c) an exchange out of the Fund prior to the Liquidation Date may be considered a taxable transaction and such shareholders may recognize a gain or loss. Shareholders should consult their tax advisers regarding the effect of the Fund s liquidation in light of their individual circumstances. Participants in an employer sponsored retirement plan that is a Fund shareholder should consult with your plan sponsor for further information regarding the impact of the liquidation. In considering new purchases or exchanges, shareholders may want to consult with their financial advisors to consider their investment options. Please keep this supplement with your prospectus for future reference.

3 GOF P7 11/17 SUPPLEMENT DATED NOVEMBER 20, 2017 TO THE CURRENTLY EFFECTIVE PROSPECTUS OF EACH OF THE FUNDS LISTED BELOW Franklin Alternative Strategies Funds Franklin K2 Alternative Strategies Fund Franklin K2 Global Macro Opportunities Fund Franklin K2 Long Short Credit Fund Franklin Pelagos Commodities Strategy Fund Franklin California Tax-Free Income Fund Franklin California Tax-Free Trust Franklin California Intermediate-Term Tax- Free Income Fund Franklin California Ultra-Short Tax-Free Income Fund Franklin Custodian Funds Franklin Dynatech Fund Franklin Focused Growth Fund Franklin Growth Fund Franklin Income Fund Franklin U.S. Government Securities Fund Franklin Utilities Fund Franklin Federal Tax-Free Income Fund Franklin Fund Allocator Series Franklin Corefolio Allocation Fund Franklin Founding Funds Allocation Fund Franklin LifeSmart Retirement Income Fund Franklin LifeSmart 2020 Retirement Target Fund Franklin LifeSmart 2025 Retirement Target Fund Franklin LifeSmart 2030 Retirement Target Fund Franklin LifeSmart 2035 Retirement Target Fund Franklin LifeSmart 2040 Retirement Target Fund Franklin LifeSmart 2045 Retirement Target Fund Franklin LifeSmart 2050 Retirement Target Fund Franklin LifeSmart 2055 Retirement Target Fund Franklin Conservative Allocation Fund Franklin Moderate Allocation Fund Franklin Growth Allocation Fund Franklin NextStep Conservative Fund Franklin NextStep Growth Fund Franklin NextStep Moderate Fund Franklin Payout 2017 Fund Franklin Payout 2018 Fund Franklin Payout 2019 Fund Franklin Payout 2020 Fund Franklin Payout 2021 Fund Franklin Payout 2022 Fund Franklin Payout 2023 Fund Franklin Global Trust Franklin Emerging Markets Debt Opportunities Fund Franklin Global Listed Infrastructure Fund Franklin Global Real Estate Fund Franklin International Growth Fund Franklin International Small Cap Growth Fund Franklin Gold and Precious Metals Fund Franklin Investors Securities Trust Franklin Adjustable U.S. Government Securities Fund Franklin Balanced Fund Franklin Convertible Securities Fund Franklin Equity Income Fund Franklin Floating Rate Daily Access Fund Franklin Low Duration Total Return Fund Franklin Real Return Fund Franklin Total Return Fund Franklin Managed Trust Franklin Rising Dividends Fund Franklin Mutual Series Funds Franklin Mutual Beacon Fund Franklin Mutual European Fund Franklin Mutual Financial Services Fund Franklin Mutual Global Discovery Fund Franklin Mutual International Fund Franklin Mutual Quest Fund Franklin Mutual Shares Fund Franklin New York Tax-Free Trust Franklin New York Intermediate-Term Tax- Free Income Fund Franklin Strategic Mortgage Portfolio Franklin Strategic Series Franklin Biotechnology Discovery Fund Franklin Flexible Alpha Fund Franklin Focused Core Equity Fund Franklin Growth Opportunities Fund Franklin Natural Resources Fund Franklin Small Cap Growth Fund Franklin Small-Mid Cap Growth Fund Franklin Strategic Income Fund Franklin Real Estate Securities Trust Franklin Real Estate Securities Fund Franklin High Income Trust Franklin High Income Fund Franklin New York Tax-Free Income Fund Franklin Municipal Securities Trust Franklin California High Yield Municipal Fund Franklin Tennessee Municipal Bond Fund Franklin Tax-Free Trust Franklin Alabama Tax-Free Income Fund Franklin Arizona Tax-Free Income Fund Franklin Colorado Tax-Free Income Fund Franklin Connecticut Tax-Free Income Fund Franklin Federal Intermediate-Term Tax- Free Income Fund Franklin Federal Limited-Term Tax-Free Income Fund Franklin Florida Tax-Free Income Fund Franklin Georgia Tax-Free Income Fund Franklin High Yield Tax-Free Income Fund Franklin Kentucky Tax-Free Income Fund Franklin Louisiana Tax-Free Income Fund Franklin Maryland Tax-Free Income Fund Franklin Massachusetts Tax-Free Income Fund Franklin Michigan Tax-Free Income Fund Franklin Minnesota Tax-Free Income Fund Franklin Missouri Tax-Free Income Fund Franklin New Jersey Tax-Free Income Fund Franklin North Carolina Tax-Free Income Fund Franklin Ohio Tax-Free Income Fund Franklin Oregon Tax-Free Income Fund Franklin Pennsylvania Tax-Free Income Fund Franklin Virginia Tax-Free Income Fund Franklin Templeton Global Trust Templeton Global Currency Fund Franklin Templeton International Trust Franklin India Growth Fund Franklin Templeton Money Fund Trust Franklin Templeton U.S. Government Money Fund Franklin U.S. Government Money Fund Franklin Value Investors Trust Franklin Balance Sheet Investment Fund Franklin Microcap Value Fund Franklin Midcap Value Fund Franklin Small Cap Value Fund Institutional Fiduciary Trust Money Market Portfolio Templeton China World Fund Templeton Developing Markets Trust Templeton Funds Templeton Foreign Fund Templeton World Fund Templeton Global Investment Trust Templeton Dynamic Equity Fund Templeton Emerging Markets Balanced Fund Templeton Emerging Markets Small Cap Fund Templeton Foreign Smaller Companies Fund Templeton Frontier Markets Fund Templeton Global Balanced Fund Templeton Global Opportunities Trust Templeton Global Smaller Companies Fund Templeton Growth Fund, Inc. Templeton Income Trust Templeton Emerging Markets Bond Fund Templeton Global Bond Fund Templeton Global Total Return Fund Templeton International Bond Fund Templeton Institutional Funds Emerging Markets Series Foreign Smaller Companies Series Global Equity Series International Equity Series 1

4 The prospectus is amended as follows: I. For all Funds, the section Your Account Buying Shares Table is replaced with the following: Buying Shares Opening an account Adding to an account Through your investment representative Contact your investment representative Contact your investment representative By Phone/Online (800) franklintempleton.com Note: certain account types are not available for online account access. If you have another Franklin Templeton fund account with your bank account information on file, you may open a new identically registered account by phone. To make a same day investment, your phone order must be received and accepted by us prior to 1 p.m. Pacific time or the close of the New York Stock Exchange, whichever is earlier. Any orders after that time will receive the next day s NAV. You may open certain new accounts online at franklintempleton.com. Before requesting a telephone or online purchase into an existing account, please make sure we have your bank account information on file. If we do not have this information, you will need to send written instructions with your bank s name and address and a voided check or savings account deposit slip. All bank and Fund account owners must sign the request. If the bank and Fund accounts do not have at least one common owner, each individual must also have his or her signature notarized. By Mail Make your check payable to the Fund. Mail the check and your signed application to Investor Services. To make a same day investment, your phone or online order must be received and accepted by us prior to 1 p.m. Pacific time or the close of the New York Stock Exchange, whichever is earlier. Any orders after that time will receive the next day s NAV. Make your check payable to the Fund. Include your account number on the check. Fill out the deposit slip from your account statement. If you do not have a slip, include a note with your name, the Fund name, and your account number. By Wire (800) or (650) collect By Exchange franklintempleton.com Call to receive a wire control number and wire instructions. Wire the funds and mail your signed application to Investor Services. Please include the wire control number or your new account number on the application. To make a same day wire investment, the wired funds must be received and accepted by us prior to 1 p.m. Pacific time or the close of the New York Stock Exchange, whichever is earlier. Any orders after that time will receive the next day s NAV. Call Shareholder Services at (800) , or send signed written instructions. You also may place an online exchange order. Mail the check and deposit slip or note to Investor Services. Call to receive a wire control number and wire instructions. To make a same day wire investment, the wired funds must be received and accepted by us prior to 1 p.m. Pacific time or the close of the New York Stock Exchange, whichever is earlier. Any orders after that time will receive the next day s NAV. Call Shareholder Services at (800) , or send signed written instructions. You also may place an online exchange order. (Please see Exchanging Shares for more information on exchanges.) (Please see Exchanging Shares for more information on exchanges.) II. For all Funds, the paragraph under Your Account Selling Shares section is replaced with the following You can sell your shares at any time. To make a same day redemption, the redemption request must be received and accepted by us prior to 1 p.m. Pacific time or the close of the New York Stock Exchange, whichever is earlier. Any orders after that time will receive the next day s NAV. Please keep in mind that a contingent deferred sales charge (CDSC) may apply. 2

5 Please keep this supplement with your prospectus for future reference. 3

6 ZTIF P1 08/17 SUPPLEMENT DATED AUGUST 16, 2017 TO THE PROSPECTUS DATED MAY 1, 2017 OF TEMPLETON INSTITUTIONAL FUNDS (Emerging Markets Series, Foreign Smaller Companies Series, Global Equity Series, International Equity Series) The International Equity Series Prospectus is amended as follows: The FUND SUMMARIES Principal Investment Strategies first paragraph is revised as follows: Under normal market conditions, the Fund invests at least 80% of its net assets in foreign (non-u.s.) equity securities. The Fund predominantly invests in companies located outside the U.S. including companies located in developing markets countries. Please keep this supplement with your Prospectus for future reference.

7 GOF P4 07/17 SUPPLEMENT DATED JULY 11, 2017 TO THE CURRENTLY EFFECTIVE PROSPECTUS OF EACH OF THE LISTED FUNDS TEMPLETON INSTITUTIONAL FUNDS Emerging Markets Series Foreign Smaller Companies Series Global Equity Series International Equity Series TEMPLETON GLOBAL OPPORTUNITES TRUST The International Equity Series Prospectus is amended as follows: I. Cindy L. Sweeting, CFA, President of Investment Counsel and lead portfolio manager of the Fund, will be retiring effective December 31, Effective January 1, 2018, it is anticipated that she will no longer be a portfolio manager of the Fund, and Mr. Antonio T. Docal will become the lead portfolio manager, supported by Mr. Peter A. Nori and Mr. Matthew R. Nagle. II. Effective January 1, 2018, the portfolio management team under the FUND SUMMARIES International Equity Series Portfolio Managers section on page 28 is replaced with the following: Portfolio Managers Antonio T. Docal, CFA Executive Vice President/Portfolio Manager - Research Analyst of Investment Counsel and portfolio manager of the Fund since Peter A. Nori, CFA Executive Vice President/Portfolio Manager - Research Analyst of Investment Counsel and portfolio manager of the Fund since Matthew R. Nagle, CFA Portfolio Manager of Investment Counsel and portfolio manager of the Fund since January III. Effective January 1, 2018, the portfolio management team under the FUND DETAILS International Equity Series Management section beginning on page 67 is replaced with the following: The Fund is managed by a team of dedicated professionals focused on investments in foreign markets. The portfolio managers of the team are as follows: Antonio T. Docal, CFA Executive Vice President/Portfolio Manager-Research Analyst of Investment Counsel Mr. Docal has been a portfolio manager of the Fund since He has primary responsibility for the investments of the Fund. He has final authority over all aspects of the Fund s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio risk assessment, and the management of daily cash balances in accordance with anticipated investment management requirements. The degree to which he may perform these functions, and the nature of these functions, may change from time to time. He joined Franklin Templeton Investments in Peter A. Nori, CFA Executive Vice President/Portfolio Manager - Research Analyst of Investment Counsel Mr. Nori has been a portfolio manager of the Fund since 1999, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. He joined Franklin Templeton Investments in Matthew R. Nagle, CFA Portfolio Manager of Investment Counsel

8 Mr. Nagle has been a portfolio manager of the Fund since January 2018, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. He joined Franklin Templeton Investments in CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. The Global Equity Series Prospectus is amended as follows: IV. Cindy L. Sweeting, CFA, President of Investment Counsel and a portfolio manager of the Fund, will be retiring effective December 31, Effective January 1, 2018, it is anticipated that she will no longer be a portfolio manager of the Fund, and Mr. Peter A. Nori will continue to be lead portfolio manager, supported by Mr. Antonio T. Docal and Mr. Matthew R. Nagle. V. Effective January 1, 2018, the portfolio management team under the FUND SUMMARIES Global Equity Series Portfolio Managers section on page 21 is replaced with the following: Portfolio Managers Peter A. Nori, CFA Executive Vice President/Portfolio Manager - Research Analyst of Investment Counsel and portfolio manager of the Fund since inception (2008). Antonio T. Docal, CFA Executive Vice President/Portfolio Manager - Research Analyst of Investment Counsel and portfolio manager of the Fund since inception (2008). Matthew R. Nagle, CFA Portfolio Manager of Investment Counsel and portfolio manager of the Fund since January VI. Effective January 1, 2018, the portfolio management team under the FUND DETAILS Global Equity Series Management section beginning on page 58 is replaced with the following: The Fund is managed by a team of dedicated professionals focused on investments in equity securities. The portfolio managers of the team are as follows: Peter A. Nori, CFA Executive Vice President/Portfolio Manager - Research Analyst of Investment Counsel Mr. Nori has been a portfolio manager of the Fund since its inception. He has primary responsibility for the investments of the Fund. He has final authority over all aspects of the Fund s investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio risk assessment, and the management of daily cash balances in accordance with anticipated investment management requirements. The degree to which he may perform these functions, and the nature of these functions, may change from time to time. He joined Franklin Templeton Investments in Antonio T. Docal, CFA Executive Vice President/Portfolio Manager-Research Analyst of Investment Counsel Mr. Docal has been a portfolio manager of the Fund since its inception, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. He joined Franklin Templeton Investments in Matthew R. Nagle, CFA Portfolio Manager of Investment Counsel Mr. Nagle has been a portfolio manager of the Fund since January 2018, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. He joined Franklin Templeton Investments in The Templeton Global Opportunities Trust Prospectus is amended as follows:

9 VII. Cindy L. Sweeting, CFA, President of Investment Counsel and a portfolio manager of the Fund, will be retiring effective December 31, Effective January 1, 2018, it is anticipated that she will no longer be a portfolio manager of the Fund, and Alan Chua will continue to be lead portfolio manager, supported by Ms. Joanne Wong. VIII. Effective January 1, 2018, the portfolio management team under the FUND SUMMARY Templeton Global Opportunities Trust Portfolio Managers section on page 9 is replaced with the following: Portfolio Managers Alan Chua, CFA Portfolio Manager of Asset Management and portfolio manager of the Fund since Joanne Wong, CFA Portfolio Manager of FTIA and portfolio manager of the Fund since IX. Effective January 1, 2018, the portfolio management team under the FUND DETAILS Templeton Global Opportunities Trust Management section beginning on page 21 is replaced with the following: The Fund is managed by a team of dedicated professionals focused on investments in developing or emerging markets. The portfolio managers of the team are as follows: Alan Chua, CFA Portfolio Manager of Asset Management Mr. Chua has been the lead portfolio manager of the Fund since He has primary responsibility for the investments of the Fund. He has final authority over all aspects of the Fund's investment portfolio, including but not limited to, purchases and sales of individual securities, portfolio risk assessment, and the management of daily cash balances in accordance with anticipated investment management requirements. The degree to which he may perform these functions, and the nature of these functions, may change from time to time. He joined Franklin Templeton Investments in Joanne Wong, CFA Portfolio Manager of FTIA Ms. Wong has been a portfolio manager of the Fund since 2010, providing research and advice on the purchases and sales of individual securities, and portfolio risk assessment. She joined Franklin Templeton Investments in CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. Please keep this supplement with your Prospectus for future reference.

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44 Advisory Fee Programs

45 Please keep this supplement with your prospectus for future reference.

46 Contents Fund Summaries Information about the Fund you should know before investing Fund Details Emerging Markets Series... 2 Foreign Smaller Companies Series Global Equity Series International Equity Series More information on investment policies, practices and risks/financial highlights Your Account Emerging Markets Series Foreign Smaller Companies Series Global Equity Series International Equity Series Distributions and Taxes Information about qualified investors, account transactions and services For More Information Where to learn more about the Fund Qualified Investors Buying Shares Investor Services Selling Shares Exchanging Shares Account Policies Questions Back Cover

47 EMERGING MARKETS SERIES FUND SUMMARIES EMERGING MARKETS SERIES FUND SUMMARIES Emerging Markets Series Investment Goal Long-term capital growth. Fees and Expenses of the Fund These tables describe the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (fees paid directly from your investment) Maximum Sales Charge (Load) Imposed on Purchases Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees % Other expenses 0.26% Total annual Fund operating expenses 1.44% Fee waiver and/or expense reimbursement % Total annual Fund operating expenses after fee waiver and/or expense reimbursement % 1. The investment manager has contractually agreed to waive its fee so that the management fee for the Fund does not exceed 1.05% through April 30, Total annual Fund operating expenses after fee waiver and/or expense reimbursement reflects the management fee waiver for a full fiscal year and as a result differs from the ratio of expenses net of waiver and payments by affiliates to average net assets shown in the Financial Highlights. Example This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund s operating expenses remain the same. The Example reflects adjustments made to the Fund s operating expenses due to the fee waivers and/or expense reimbursements by management for the 1 Year numbers only. Although your actual costs may be higher or lower, based on these assumptions your costs would be: None 1 Year 3 Years 5 Years 10 Years $133 $443 $775 $1,714 Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Fund s performance. During the most recent fiscal year, the Fund s portfolio turnover rate was 17.55% of the average value of its portfolio. Principal Investment Strategies Under normal market conditions, the Fund invests at least 80% of its net assets in securities issued by emerging market companies, as defined below. Emerging market countries include those considered to be emerging or developing by the World Bank, the International Finance Corporation, the United Nations, or the countries authorities, or countries with a stock market capitalization of less than 3% of the MSCI World Index. These countries typically are located in the Asia- Pacific region, Eastern Europe, Central and South America, and Africa. The Fund invests predominantly in the equity securities of emerging market companies of any size. The equity securities in which the Fund primarily invests are common and preferred stock. In addition to the Fund s main investments, the Fund may invest a portion of its assets in the equity securities of issuers in developed market countries and may invest a portion of its assets in illiquid securities. The Fund also invests in depositary receipts. Depositary receipts are certificates typically issued by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic company. The Fund may invest a substantial portion of its assets in smaller and midsize companies. From time to time, based on economic conditions, the Fund may have significant investments in one or more countries or in particular sectors such as technology (including computer hardware and software and electronics) or financial institutions. Emerging market companies are (i) companies whose principal securities trading markets are in emerging market countries; or (ii) companies that derive 50% or more of their total revenue or profit from either goods or services produced or sales made in emerging market countries; or (iii) companies that have 50% or more of their assets in emerging market countries; or (iv) companies that have 2 Prospectus ftinstitutional.com ftinstitutional.com Prospectus 3

48 EMERGING MARKETS SERIES FUND SUMMARIES EMERGING MARKETS SERIES FUND SUMMARIES a substantial link to currencies of emerging market countries; or (v) companies that are organized under the laws of, or with principal offices in, emerging market countries. When choosing equity investments for the Fund, the investment manager applies a fundamental research, value-oriented, long-term approach, focusing on the market price of a company s securities relative to the investment manager s evaluation of the company s long-term earnings, asset value and cash flow potential. The investment manager also considers a company s profit and loss outlook, balance sheet strength, cash flow trends and asset value in relation to the current price of the company s securities. The investment manager may consider selling an equity security when it believes the security has become overvalued due to either its price appreciation or changes in the company s fundamentals, or when the investment manager believes another security is a more attractive investment opportunity. Principal Risks You could lose money by investing in the Fund. Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency of the U.S. government. Market The market values of securities or other investments owned by the Fund will go up or down, sometimes rapidly or unpredictably. The market value of a security or other investment may be reduced by market activity or other results of supply and demand unrelated to the issuer. This is a basic risk associated with all investments. When there are more sellers than buyers, prices tend to fall. Likewise, when there are more buyers than sellers, prices tend to rise. Stock prices tend to go up and down more dramatically than those of debt securities. A slower-growth or recessionary economic environment could have an adverse effect on the prices of the various stocks held by the Fund. Foreign Securities Investing in foreign securities typically involves more risks than investing in U.S. securities, and includes risks associated with: (i) internal and external political and economic developments e.g., the political, economic and social policies and structures of some foreign countries may be less stable and more volatile than those in the U.S. or some foreign countries may be subject to trading restrictions or economic sanctions; (ii) trading practices e.g., government supervision and regulation of foreign securities and currency markets, trading systems and brokers may be less than in the U.S.; (iii) availability of information e.g., foreign issuers may not be subject to the same disclosure, accounting and financial reporting standards and practices as U.S. issuers; (iv) limited markets e.g., the securities of certain foreign issuers may be less liquid (harder to sell) and more volatile; and (v) currency exchange rate fluctuations and policies. The risks of foreign investments may be greater in developing or emerging market countries. Emerging Market Countries The Fund s investments in emerging market countries are subject to all of the risks of foreign investing generally, and have additional heightened risks due to a lack of established legal, political, business and social frameworks to support securities markets, including: delays in settling portfolio securities transactions; currency and capital controls; greater sensitivity to interest rate changes; pervasiveness of corruption and crime; currency exchange rate volatility; and inflation, deflation or currency devaluation. Value Style Investing A value stock may not increase in price as anticipated by the investment manager if other investors fail to recognize the company s value and bid up the price, the markets favor faster-growing companies, or the factors that the investment manager believes will increase the price of the security do not occur or do not have the anticipated effect. Smaller and Midsize Companies Securities issued by smaller and midsize companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Such risks may include greater sensitivity to economic conditions, less certain growth prospects, lack of depth of management and funds for growth and development, and limited or less developed product lines and markets. In addition, smaller and midsize companies may be particularly affected by interest rate increases, as they may find it more difficult to borrow money to continue or expand operations, or may have difficulty in repaying any loans. Focus To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Liquidity From time to time, the trading market for a particular security or type of security or other investments in which the Fund invests may become less liquid or even illiquid. Reduced liquidity will have an adverse impact on the Fund s ability to sell such securities or other investments when necessary to meet the 4 Prospectus ftinstitutional.com ftinstitutional.com Prospectus 5

49 EMERGING MARKETS SERIES FUND SUMMARIES EMERGING MARKETS SERIES FUND SUMMARIES Fund s liquidity needs or in response to a specific economic event and will also generally lower the value of a security or other investments. Market prices for such securities or other investments may be volatile. Depositary Receipts Depositary receipts are subject to many of the risks of the underlying securities. For some depositary receipts, the custodian or similar financial institution that holds the issuer s shares in a trust account is located in the issuer s home country. In these cases if the issuer s home country does not have developed financial markets, the Fund could be exposed to the credit risk of the custodian or financial institution and greater market risk. In addition, the depository institution may not have physical custody of the underlying securities at all times and may charge fees for various services. The Fund may experience delays in receiving its dividend and interest payments or exercising rights as a shareholder. There may be an increased possibility of untimely responses to certain corporate actions of the issuer in an unsponsored depositary receipt program. Accordingly, there may be less information available regarding issuers of securities underlying unsponsored programs and there may not be a correlation between this information and the market value of the depositary receipts. Management The Fund is subject to management risk because it is an actively managed investment portfolio. The Fund s investment manager applies investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these decisions will produce the desired results. Performance The following bar chart and table provide some indication of the risks of investing in the Fund. The bar chart shows changes in the Fund s performance from year to year. The table shows how the Fund s average annual returns for 1 year, 5 years, 10 years or since inception, as applicable, compared with those of a broad measure of market performance. The Fund s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. You can obtain updated performance information at ftinstitutional.com or by calling (800) The additional index in the table below shows how the Fund s performance compares to a group of securities that aligns more closely with the Fund s investment strategies. Annual Total Returns 30.10% % % % % 15.77% Year 0.72% % % % Best Quarter: Q % Worst Quarter: Q % As of March 31, 2017, the Fund s year-to-date return was 13.55%. Average Annual Total Returns For the periods ended December 31, Year 5 Years 10 Years Emerging Markets Series Return Before Taxes 19.45% 0.77% 1.18% Return After Taxes on Distributions 19.17% -2.80% -1.62% Return After Taxes on Distributions and Sale of Fund Shares 11.67% 1.14% 1.78% S&P/IFCI Composite Index (index reflects no deduction for fees, expenses or taxes) 10.79% 2.56% 2.67% MSCI Emerging Markets Index (index reflects no deduction for fees, expenses or taxes) 11.60% 1.64% 2.17% The after-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts Prospectus ftinstitutional.com ftinstitutional.com Prospectus 7

50 EMERGING MARKETS SERIES FUND SUMMARIES FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES Investment Manager Templeton Asset Management Ltd. (Asset Management) Portfolio Managers Chetan Sehgal, CFA Director of Global Emerging Markets/Small Cap Strategies of Templeton Emerging Markets Group and portfolio manager of Asset Management and portfolio manager of the Fund since April Purchase and Sale of Fund Shares You may purchase shares of the Fund on any business day by mail (Franklin Templeton Institutional Services, P.O. Box 33030, St. Petersburg, FL ). You may redeem shares of the Fund on any business day by mail at the address listed above, or by telephone at (800) The minimum initial purchase varies depending on the type of investor and could be up to $1,000,000. More information about eligibility to invest in the Fund and the applicable minimum requirements is under Your Account in the detail section of the Fund s prospectus. There is no minimum investment for subsequent purchases. Taxes The Fund s distributions are generally taxable to you as ordinary income, capital gains, or some combination of both, unless you are investing through a taxdeferred arrangement, such as a 401(k) plan or an individual retirement account, in which case your distributions would generally be taxed when withdrawn from the tax-deferred account. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the Fund 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 Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your financial advisor or visit your financial intermediary s website for more information. Foreign Smaller Companies Series Effective at the close of market on December 10, 2013, the Fund was closed to new investors. Existing investors who had an open and funded account on December 10, 2013 can continue to invest through exchanges and additional purchases. The following limited exceptions apply: (1) clients of discretionary investment allocation programs where such programs had investments in the Fund prior to the close of business on December 10, 2013, (2) employer sponsored retirement plans or benefit plans and their participants where the Fund was available to participants prior to the close of business on December 10, 2013, (3) employer sponsored retirement plans or benefit plans that approved the Fund as an investment option as of December 10, 2013, but have not opened an account as of that date, may open accounts and make purchases of Fund shares, provided that the initial account is opened with the Fund on or prior to February 10, 2014, (4) other Franklin Templeton Funds, (5) trustees and officers of the Trust, (6) members of the Fund s portfolio management team, and (7) certain assets which were previously committed by new investors for investment in the near future which the Board has specifically approved. The Fund may restrict, reject or cancel any purchase order, including an exchange request, and reserves the right to modify this policy at any time. Investment Goal Long-term capital growth. Fees and Expenses of the Fund These tables describe the fees and expenses that you may pay if you buy and hold shares of the Fund. Shareholder Fees (fees paid directly from your investment) Maximum Sales Charge (Load) Imposed on Purchases None 8 Prospectus ftinstitutional.com ftinstitutional.com Prospectus 9

51 FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.95% Other expenses 0.04% Total annual Fund operating expenses 0.99% Fee waiver and/or expense reimbursement % Total annual Fund operating expenses after fee waiver and/or expense reimbursement % 1. The investment manager has contractually agreed in advance to reduce its fee as a result of the Fund s investment in a Franklin Templeton money fund (acquired fund) for the next 12-month period. Contractual fee waiver and/or expense reimbursement agreements may not be changed or terminated during the time period set forth above. Example This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund s operating expenses remain the same. The Example reflects adjustments made to the Fund s operating expenses due to the fee waivers and/or expense reimbursements by management for the 1 Year numbers only. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Portfolio Turnover 1 Year 3 Years 5 Years 10 Years $100 $314 $546 $1,213 The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the Example, affect the Fund s performance. During the most recent fiscal year, the Fund s portfolio turnover rate was 21.36% of the average value of its portfolio. Principal Investment Strategies Under normal market conditions, the Fund invests at least 80% of its net assets in investments of smaller companies located outside the U.S., including emerging markets. For purposes of this 80% policy, smaller companies are defined as those with market capitalizations that do not exceed $4 billion. However, under normal conditions, when making an initial purchase of securities of a company, the investment manager will only invest in securities of companies with a market capitalization of not more than $2 billion. Once a security qualifies for initial purchase, it continues to qualify for additional purchases as long as it is held by the Fund, provided that the issuer s market capitalization does not exceed $4 billion. In addition, the Fund may continue to hold securities that have grown to have a market capitalization in excess of $4 billion. The result may be that the Fund could hold a significant percentage of its net assets in securities of companies that have market capitalizations in excess of $2 billion. The Fund predominantly invests in equity securities, primarily common stock. The Fund may invest more than 25% of its assets in the securities of issuers located in any one country. When choosing equity investments for the Fund, the investment manager applies a bottom-up, value-oriented, long-term approach, focusing on the market price of a company s securities relative to the investment manager s evaluation of the company s long-term earnings, asset value and cash flow potential. The investment manager also considers a company s price/earnings ratio, profit margins and liquidation value. The investment manager may consider selling an equity security when it believes the security has become overvalued due to either its price appreciation or changes in the company s fundamentals, when the investment manager believes that the market capitalization of a security has become too large, or when the investment manager believes another security is a more attractive investment opportunity. Principal Risks You could lose money by investing in the Fund. Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency of the U.S. government. Market The market values of securities or other investments owned by the Fund will go up or down, sometimes rapidly or unpredictably. The market value of a security or other investment may be reduced by market activity or other results of supply and demand unrelated to the issuer. This is a basic risk associated with all investments. When there are more sellers than buyers, prices tend to fall. Likewise, when there are more buyers than sellers, prices tend to rise. 10 Prospectus ftinstitutional.com ftinstitutional.com Prospectus 11

52 FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES Stock prices tend to go up and down more dramatically than those of debt securities. A slower-growth or recessionary economic environment could have an adverse effect on the prices of the various stocks held by the Fund. Smaller Companies Securities issued by smaller companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Such risks may include greater sensitivity to economic conditions, less certain growth prospects, lack of depth of management and funds for growth and development and limited or less developed product lines and markets. In addition, smaller companies may be particularly affected by interest rate increases, as they may find it more difficult to borrow money to continue or expand operations, or may have difficulty in repaying any loans. Foreign Securities Investing in foreign securities typically involves more risks than investing in U.S. securities, and includes risks associated with: (i) internal and external political and economic developments e.g., the political, economic and social policies and structures of some foreign countries may be less stable and more volatile than those in the U.S. or some foreign countries may be subject to trading restrictions or economic sanctions; (ii) trading practices e.g., government supervision and regulation of foreign securities and currency markets, trading systems and brokers may be less than in the U.S.; (iii) availability of information e.g., foreign issuers may not be subject to the same disclosure, accounting and financial reporting standards and practices as U.S. issuers; (iv) limited markets e.g., the securities of certain foreign issuers may be less liquid (harder to sell) and more volatile; and (v) currency exchange rate fluctuations and policies. The risks of foreign investments may be greater in developing or emerging market countries. Value Style Investing A value stock may not increase in price as anticipated by the investment manager if other investors fail to recognize the company s value and bid up the price, the markets favor faster-growing companies, or the factors that the investment manager believes will increase the price of the security do not occur or do not have the anticipated effect. Liquidity From time to time, the trading market for a particular security or type of security or other investments in which the Fund invests may become less liquid or even illiquid. Reduced liquidity will have an adverse impact on the Fund s ability to sell such securities or other investments when necessary to meet the Fund s liquidity needs or in response to a specific economic event and will also generally lower the value of a security or other investments. Market prices for such securities or other investments may be volatile. Regional Focus Because the Fund may invest at least a significant portion of its assets in companies in a specific region, including Europe, the Fund is subject to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Political, social or economic disruptions in the region, even in countries in which the Fund is not invested, may adversely affect the value of investments held by the Fund. Current political uncertainty surrounding the European Union (EU) and its membership, including the 2016 referendum in which the United Kingdom voted to exit the EU, may increase market volatility. The financial instability of some countries in the EU, including Greece, Italy and Spain, together with the risk of that impacting other more stable countries may increase the economic risk of investing in companies in Europe. Focus To the extent that the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Management The Fund is subject to management risk because it is an actively managed investment portfolio. The Fund s investment manager applies investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these decisions will produce the desired results. Performance The following bar chart and table provide some indication of the risks of investing in the Fund. The bar chart shows changes in the Fund s performance from year to year. The table shows how the Fund s average annual returns for 1 year, 5 years, 10 years or since inception, as applicable, compared with those of a broad measure of market performance. The Fund s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. You can obtain updated performance information at ftinstitutional.com or by calling (800) Prospectus ftinstitutional.com ftinstitutional.com Prospectus 13

53 FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES FOREIGN SMALLER COMPANIES SERIES FUND SUMMARIES Annual Total Returns 15.09% % % % % 2011 Year 21.56% % % % % Best Quarter: Q % Worst Quarter: Q % As of March 31, 2017, the Fund s year-to-date return was 10.14%. Average Annual Total Returns For the periods ended December 31, 2016 Foreign Smaller Companies Series Year 5 Years 10 Years Return Before Taxes -0.85% 7.73% 4.77% Return After Taxes on Distributions -1.63% 7.34% 3.92% Return After Taxes on Distributions and Sale of Fund Shares 0.37% 6.24% 3.91% MSCI All Country World ex-us Small Cap Index (index reflects no deduction for fees, expenses or taxes) 4.29% 8.12% 3.26% The after-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. Investment Manager Templeton Investment Counsel, LLC (Investment Counsel) Portfolio Managers Harlan B. Hodes Executive Vice President/Portfolio Manager-Research Analyst of Investment Counsel and portfolio manager of the Fund since Purchase and Sale of Fund Shares You may purchase shares of the Fund on any business day by mail (Franklin Templeton Institutional Services, P.O. Box 33030, St. Petersburg, FL ). You may redeem shares of the Fund on any business day by mail at the address listed above, or by telephone at (800) The minimum initial purchase varies depending on the type of investor and could be up to $1,000,000. More information about eligibility to invest in the Fund and the applicable minimum requirements is under Your Account in the detail section of the Fund s prospectus. There is no minimum investment for subsequent purchases. Taxes The Fund s distributions are generally taxable to you as ordinary income, capital gains, or some combination of both, unless you are investing through a taxdeferred arrangement, such as a 401(k) plan or an individual retirement account, in which case your distributions would generally be taxed when withdrawn from the tax-deferred account. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares of the Fund 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 Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your financial advisor or visit your financial intermediary s website for more information. 14 Prospectus ftinstitutional.com ftinstitutional.com Prospectus 15