MARCH 1, 2012

The 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.

Class A Advisor Class ICPHX ICHHX

FRANKLIN TEMPLETON GLOBAL TRUST PROSPECTUS Franklin Templeton Hard Currency Fund GOF P-8 12/12 SUPPLEMENT DATED JANUARY 1, 2013 TO THE CURRENTLY EFFECTIVE PROSPECTUS OF EACH OF THE LISTED FUND

Franklin Custodian Funds Franklin Mutual Recovery Fund Franklin Strategic Series Franklin Income Fund Franklin Mutual Series Funds Franklin Strategic Income Fund Franklin Global Trust Mutual Beacon Fund Franklin Biotechnology Discovery Fund Franklin Global Real Estate Fund Mutual European Fund Franklin Natural Resources Fund Franklin Templeton Emerging Market Mutual Financial Services Fund Franklin Templeton Global Trust Debt Opportunities Fund Mutual Global Discovery Fund Franklin Templeton Hard Currency Fund Franklin High Income Trust Mutual International Fund Franklin Templeton International Trust Franklin High Income Fund Mutual Quest Fund Franklin World Perspectives Fund Franklin Investors Securities Trust Mutual Shares Fund Templeton Global Investment Trust Franklin Balanced Fund Franklin Real Estate Securities Trust Templeton Emerging Markets Balanced Fund Franklin Equity Income Fund Franklin Real Estate Securities Fund Templeton Global Balanced Fund Franklin Real Return Fund Franklin Strategic Mortgage Portfolio Franklin Floating Rate Daily Access Fund Franklin Low Duration Total Return Fund Franklin Total Return Fund The prospectus is amended as follows:

I. For Franklin Income Fund, Franklin Global Real Estate Fund, Franklin Templeton Emerging Market Debt Opportunities Fund, Franklin High Income Fund, Franklin Balanced Fund, Franklin Floating Rate Daily Access Fund, Franklin Low Duration Total Return Fund, Franklin Total Return Fund, Franklin Strategic Income Fund, Franklin Templeton Hard Currency Fund, Templeton Emerging Markets Balanced Fund and Templeton Global Balanced Fund, the “Principal Investment Policies and Practices – Commodity Exchange Act Exclusion” section of the Fund Details is replaced with the following: The Fund is not intended as a vehicle for trading in the futures, commodity options or swaps markets. With respect to the Fund, the investment manager has claimed an exclusion from the defi nition of “commodity pool operator” (CPO) under the Commodity Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition, the investment manager is relying upon a related exclusion from the defi nition of “commodity trading advisor” (CTA) under the CEA and the rules of the CFTC. As of January 1, 2013, the terms of the CPO exclusion require the Fund, among other things, to adhere to certain limits on its investments in futures, commodity options, swaps and non-deliverable foreign currency forwards (used for purposes other than bona fi de hedging). Because the investment manager and the Fund intend to comply with the terms of the CPO exclusion, the Fund may need to adjust its investment strategies to limit its investments in these types of instruments. The CFTC has neither reviewed nor approved the investment manager’s reliance on these exclusions, or the Fund, its investment strategies or this prospectus.

II. For Franklin Equity Income Fund, Franklin Real Return Fund, Franklin Real Estate Securities Fund, Franklin Biotechnology Discovery Fund, Franklin Natural Resources Fund, Franklin Strategic Mortgage Portfolio and Franklin World Perspectives Fund, the following is added above the “Principal Investment Policies and Practices – Temporary Investments” section of the Fund Details: Commodity Exchange Act Exclusion The Fund is not intended as a vehicle for trading in the futures, commodity options or swaps markets. With respect to the Fund, the investment manager has claimed an exclusion from the defi nition of “commodity pool operator” (CPO) under the Commodity Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition, the investment manager is relying upon a related exclusion from the defi nition of “commodity trading advisor” (CTA) under the CEA and the rules of the CFTC. As of January 1, 2013, the terms of the CPO exclusion require the Fund, among other things, to adhere to certain limits on its investments in futures, commodity options, swaps and non-deliverable foreign currency forwards (used for purposes other than bona fi de hedging). Because the investment manager and the Fund intend to comply with the terms of the CPO exclusion, the Fund may need to adjust its investment strategies to limit its investments in these types of instruments. The CFTC has neither reviewed nor approved the investment manager’s reliance on these exclusions, or the Fund, its investment strategies or this prospectus.

III. For the Franklin Biotechnology Discovery Fund and Franklin Natural Resources Fund, the last sentence of the second paragraph of the “Principal Risks – Derivative Instruments” section of the Fund Details is deleted. IV. For the Franklin Mutual Recovery Fund, the “Goal and Strategies – Commodity Exchange Act Exclusion” section of the Fund Details is replaced with the following: The Fund is not intended as a vehicle for trading in the futures, commodity options or swaps markets. With respect to the Fund, the investment manager has claimed an exclusion from the defi nition of “commodity pool operator” (CPO) under the Commodity Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition, the investment manager is relying upon a related exclusion from the defi nition of “commodity trading advisor” (CTA) under the CEA and the rules of the CFTC. As of January 1, 2013, the terms of the CPO exclusion require the Fund, among other things, to adhere to certain limits on its investments in futures, commodity options, swaps and non-deliverable foreign currency forwards (used for purposes other than bona fi de hedging). Because the investment manager and the Fund intend to comply with the terms of the CPO exclusion, the Fund may need to adjust its investment strategies to limit its investments in these types of instruments. The CFTC has neither reviewed nor approved the investment manager’s reliance on these exclusions, or the Fund, its investment strategies or this prospectus.

V. For the Franklin Mutual Series Funds, the “More Information on Investment Policies, Practices and Risks – Commodity Exchange Act Exclusion” section of the Fund Details is replaced with the following: The Fund is not intended as a vehicle for trading in the futures, commodity options or swaps markets. With respect to the Fund, the investment manager has claimed an exclusion from the defi nition of “commodity pool operator” (CPO) under the Commodity Exchange Act (CEA) and the rules of the Commodity Futures Trading Commission (CFTC) and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition, the investment manager is relying upon a related exclusion from the defi nition of “commodity trading advisor” (CTA) under the CEA and the rules of the CFTC. As of January 1, 2013, the terms of the CPO exclusion require the Fund, among other things, to adhere to certain limits on its investments in futures, commodity options, swaps and non-deliverable foreign currency forwards (used for purposes other than bona fi de hedging). Because the investment manager and the Fund intend to comply with the terms of the CPO exclusion, the Fund may need to adjust its investment strategies to limit its investments in these types of instruments. The CFTC has neither reviewed nor approved the investment manager’s reliance on these exclusions, or the Fund, its investment strategies or this prospectus.

Please keep this supplement for future reference. 00086677 GOF P-3 06/12 SUPPLEMENT DATED JUNE 6, 2012 TO THE CURRENTLY EFFECTIVE PROSPECTUS OF EACH OF THE LISTED FUNDS

Franklin California Tax-Free Franklin Mutual Recovery Fund Franklin Massachusetts Tax-Free Income Fund Franklin Mutual Series Funds Income Fund Franklin California Tax-Free Trust Mutual Beacon Fund Franklin Michigan Tax-Free Franklin California Insured Tax-Free Mutual European Fund Income Fund Income Fund Mutual Financial Services Fund Franklin Minnesota Tax-Free Franklin California Intermediate-Term Mutual Global Discovery Fund Income Fund Tax-Free Income Fund Mutual International Fund Franklin Missouri Tax-Free Income Fund Franklin California Tax-Exempt Mutual Quest Fund Franklin New Jersey Tax-Free Money Fund Mutual Shares Fund Income Fund Franklin North Carolina Tax-Free Franklin New York Tax-Free Franklin Custodian Funds Income Fund Income Fund Franklin DynaTech Fund Franklin Ohio Tax-Free Income Fund Franklin Income Fund Franklin New York Tax-Free Trust Franklin Oregon Tax-Free Income Fund Franklin U.S. Government Franklin New York Intermediate-Term Franklin Pennsylvania Tax-Free Securities Fund Tax-Free Income Fund Income Fund Franklin Utilities Fund Franklin Real Estate Securities Trust Franklin Virginia Tax-Free Income Fund Franklin Growth Fund Franklin Real Estate Securities Fund Franklin Templeton Fund Franklin Federal Tax-Free Income Fund Franklin Strategic Mortgage Portfolio Allocator Series Franklin Global Trust Franklin Strategic Series Franklin Templeton Conservative Franklin Global Real Estate Fund Franklin Biotechnology Discovery Fund Allocation Fund Franklin International Smaller Cap Franklin Flex Cap Growth Fund Franklin Templeton Corefolio Growth Fund Franklin Focused Core Equity Fund Allocation Fund Franklin International Growth Fund Franklin Growth Opportunities Fund Franklin Templeton Founding Funds Franklin Large Cap Equity Fund Franklin Natural Resources Fund Allocation Fund Franklin Gold and Precious Metals Fund Franklin Small Cap Growth Fund Franklin Templeton Growth Franklin High Income Trust Franklin Small-Mid Cap Growth Fund Allocation Fund Franklin Templeton Moderate Franklin High Income Fund Franklin Strategic Income Fund Allocation Fund Franklin Investors Securities Trust Fr anklin Tax-Exempt Money Fund Franklin Templeton 2015 Retirement Franklin Adjustable U.S. Government Franklin Tax-Free Trust Target Fund Securities Fund Franklin Alabama Tax-Free Income Fund Franklin Templeton 2025 Retirement Franklin Balanced Fund Franklin Arizona Tax-Free Income Fund Target Fund Franklin Convertible Securities Fund Franklin Colorado Tax-Free Income Fund Franklin Templeton 2035 Retirement Franklin Equity Income Fund Franklin Connecticut Tax-Free Target Fund Franklin Floating Rate Income Fund Franklin Templeton 2045 Retirement Daily Access Fund Franklin Double Tax-Free Income Fund Target Fund Franklin Limited Maturity Franklin Federal Intermediate-Term Franklin Templeton Multi-Asset U.S. Government Securities Fund Tax-Free Income Fund Real Return Fund Franklin Low Duration Total Franklin Federal Limited-Term Tax-Free Franklin Templeton Global Trust Return Fund Income Fund Franklin Templeton Hard Currency Fund Franklin Real Return Fund Franklin Florida Tax-Free Income Fund Franklin Total Return Fund Franklin Georgia Tax-Free Income Fund Franklin Templeton International Trust Franklin Managed Trust Franklin High Yield Tax-Free Franklin India Growth Fund Franklin Templeton Global Franklin Rising Dividends Fund Income Fund Allocation Fund Franklin Money Fund Franklin Insured Tax-Free Income Fund Franklin Kentucky Tax-Free Franklin World Perspectives Fund Franklin Municipal Securities Trust Income Fund Templeton Foreign Smaller Franklin California High Yield Franklin Louisiana Tax-Free Companies Fund Municipal Fund Income Fund Franklin Templeton Money Fund Trust Franklin Tennessee Municipal Franklin Maryland Tax-Free Franklin Templeton Money Fund Bond Fund Income Fund

1 Franklin Value Investors Trust Templeton Developing Markets Trust Templeton Frontier Markets Fund Franklin All Cap Value Fund Templeton Funds Templeton Global Balanced Fund Franklin Balance Sheet Templeton Foreign Fund Templeton Global Opportunities Trust Investment Fund Templeton World Fund Templeton Global Smaller Franklin Large Cap Value Fund Templeton Global Investment Trust Companies Fund Franklin MicroCap Value Fund Franklin MidCap Value Fund Templeton Asian Growth Fund Templeton Growth Fund, Inc. Templeton BRIC Fund Franklin Small Cap Value Fund Templeton Income Trust Templeton Emerging Markets Institutional Fiduciary Trust Balanced Fund Templeton Global Bond Fund Money Market Portfolio Templeton Emerging Markets Templeton Global Total Return Fund Templeton China World Fund Small Cap Fund Templeton International Bond Fund

The Prospectus is amended as follows:

I. Effective July 2, 2012, for the Franklin California Tax-Exempt Money Fund, Franklin Money Fund, Franklin Tax-Exempt Money Fund, Franklin Templeton Money Fund and Money Market Portfolio, the references to a 3:00 p.m. Pacific time transaction time are revised to 1:00 p.m. Pacific time in the “Buying Shares” and “Selling Shares” tables of the Fund Details.

II. Effective July 2, 2012, the TDD Hearing Impaired phone number will be discontinued. References to this number in the prospectus will be revised as follows: For hearing impaired assistance, please contact us via a Relay Service.

III. For the Franklin California Tax-Exempt Money Fund, Franklin Money Fund, Franklin Tax-Exempt Money Fund, Franklin Templeton Money Fund and the paragraph beginning “The Fund calculates its NAV per share normally…” in the “Account Policies – Calculating Share Price” section of the Fund Details is revised as follows: The Fund calculates its NAV per share normally as of 1:00 p.m. Pacific time, each day the New York Stock Exchange (NYSE) is open and, alternatively, if the NYSE is closed, or if the NYSE closes early because trading has been halted for the day (other than for a national holiday or weekend), on each day that the U.S. government securities markets are open and the investment manager determines that there is sufficient liquidity in those markets, by dividing its net assets by the number of shares outstanding. The Fund’s assets are generally valued at their amortized cost. National holidays include New Year’s Day, Martin Luther King Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

IV. For all funds except the Franklin California Tax-Exempt Money Fund, Franklin Money Fund, Franklin Tax-Exempt Money Fund, Franklin Templeton Money Fund, the paragraph beginning “The Fund calculates its NAV per share normally…” in the “Account Policies – Calculating Share Price” section of the Fund Details is revised as follows: The Fund calculates the NAV per share each business day at 1 p.m. Pacific time which normally coincides with the close of trading on the New York Stock Exchange (NYSE). The Fund does not calculate the NAV on days the NYSE is closed for trading, which include New Year’s Day, Martin Luther King Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. If the NYSE has a scheduled early close or unscheduled early close, the Fund’s share price would still be determined as of 1 p.m. Pacific/4 p.m. Eastern time.

2 V. Effective on or about September 14, 2012, for the Franklin California Tax-Exempt Money Fund, Franklin Money Fund, Franklin Tax-Exempt Money Fund, Franklin Templeton Money Fund and Money Market Portfolio the paragraph beginning with “Most Franklin Templeton funds impose…” in the “Selling Shares – Contingent Deferred Sales Charge (CDSC)” section of the Fund Details is revised as follows: Most Franklin Templeton funds impose a 1% or 0.75% CDSC on certain investments of Class A shares sold within 18 months of purchase. While the Fund generally does not have a CDSC, it will impose one if you sell shares exchanged into the Fund from another Franklin Templeton fund and those shares would have been assessed a CDSC in the other fund.

VI. Effective May 1, 2012, the following has been added to the “Management” section of the Fund Details for the Franklin International Growth Fund, Franklin Large Cap Equity Fund, Franklin Convertible Securities Fund, Franklin Equity Income Fund, Franklin Low Duration Total Return Fund, Franklin Biotechnology Discovery Fund, Franklin Focused Core Equity Fund, Franklin India Growth Fund, Franklin All Cap Value Fund, Franklin Large Cap Value Fund, Franklin MidCap Value Fund, Templeton World Fund, Templeton BRIC Fund, Templeton Emerging Markets Small Cap Fund, Templeton Frontier Markets Fund, Templeton Growth Fund, Inc., Templeton Global Total Return Fund and Templeton International Bond Fund:

Special Servicing Agreement The Fund is an underlying investment fund of one or more funds of Franklin Templeton Fund Allocator Series Funds (the “Allocator Funds”) and has entered into a Special Servicing Agreement with the Allocator Funds and certain service providers of the Fund and the Allocator Funds, pursuant to which the Fund may pay a portion of the Allocator Funds’ expenses, including transfer agency and shareholder servicing costs, to the extent such payments are less than the amount of the benefits realized or expected to be realized by the Fund from the investment in the Fund by the Allocator Funds.

VII. For Funds that offer Advisor Class or Class Z shares, the first two bullets under in the “Your Account – Qualified Investors – Advisor Class [or Class Z]” section of the Fund Details are replaced with the following: • Advisory Fee Programs. Shares acquired by an investor (in connection with) a comprehensive fee or other advisory fee arrangement between the investor and a registered broker-dealer or investment adviser, trust company or bank (referred to as the “Sponsor”) in which the investor pays that Sponsor a fee for investment advisory services and the Sponsor or a broker-dealer through whom the shares are acquired has an agreement with Distributors authorizing the sale of Fund shares. No minimum initial investment.

VIII. Effective on or about September 14, 2012, for all funds except the Franklin California Tax-Exempt Money Fund, Franklin Money Fund, Franklin Tax-Exempt Money Fund and Franklin Templeton Money Fund, the paragraph beginning with “Any CDSC will continue to be calculated…” in the “Exchanging Shares – Exchange Privilege” section of the Fund Details is revised as follows: Any CDSC will continue to be calculated from the date of your initial investment and will not be charged at the time of the exchange. The purchase price for determining a CDSC on exchanged shares will be the price you paid for the original shares.

IX. The paragraph beginning “In considering an investor’s trading patterns…” in the “Exchanging Shares – Frequent Trading Policy” section of the Fund Details is revised as follows: In considering an investor’s trading patterns, the Fund may consider, among other factors, the investor’s trading history both directly and, if known, through financial intermediaries, in the Fund, in other Franklin Templeton funds, in non-Franklin Templeton mutual funds, or in accounts under common control or

3 ownership (see, for example, “Investment by asset allocators” in the SAI). The transfer agent may also reject any purchase or redemption request, whether or not it represents part of any ongoing trading pattern, if the Fund investment manager or transfer agent reasonably concludes that the amount of the requested transaction may disrupt or otherwise interfere with the efficient management of the Fund’s portfolio. In determining what actions should be taken, the Fund’s transfer agent may consider a variety of factors, including the potential impact of such remedial actions on the Fund and its shareholders. If the Fund is a “fund of funds,” the Fund’s transfer agent may take into account the impact of the trading activity and of any proposed remedial action on both the Fund and the underlying funds in which the Fund invests.

X. The following replaces the second paragraph of the “Selling Shares – Selling Shares in Writing” section of the Fund Details: We also may require a signature guarantee when we receive instructions from an agent, not the registered owners; when you want to send your proceeds to a bank account that was added or changed on your account within the last 15 days and the bank and fund accounts have at least one common owner; or when we believe it would protect the Fund against potential claims based on the instructions received.

XI. The following is added to the “SELLING SHARES” table of the “Selling Shares” section as a third paragraph under “By Electronic Funds Transfer (ACH)” in the “Selling Shares” table of the Fund Details: If the bank and Fund accounts have at least one common owner and the bank account was added or changed within the last 15 days, you may be required to provide written instructions signed by all fund account owners, with a signature guarantee for each fund account owner.

XII. The paragraph beginning “If you believe there are cumulative quantity discount…” in the “Choosing a Share Class – Sales Charge Reductions and Waivers” section of the Fund Details is replaced with the following: If you believe there are cumulative quantity discount eligible shares that can be combined with your current purchase to achieve a sales charge breakpoint (for example, shares held in a different broker- dealer’s brokerage account or with a bank or an investment advisor), it is your responsibility to specifically identify those shares to your financial advisor at the time of your purchase (including at the time of any future purchase). It may be necessary for you to provide your financial advisor with information and records (including account statements) of all relevant accounts invested in the Franklin Templeton Funds. If you have not designated a financial advisor associated with your Franklin Templeton fund shares, it is your responsibility to specifically identify any cumulative quantity discount eligible shares to the Fund’s transfer agent at the time of any purchase.

Please keep this supplement for future reference.

4 Contents

FUND SUMMARY INFORMATION Investment Goal ...... 2 ABOUT THE FUND YOU SHOULD Fees and Expenses of the Fund ...... 2 KNOW BEFORE Portfolio Turnover ...... 4 INVESTING Principal Investment Strategies ...... 4 Principal Risks ...... 5 Performance ...... 7 Investment Manager ...... 8 Portfolio Managers ...... 9 Purchase and Sale of Fund Shares ...... 9 Taxes ...... 9 Payments to Broker-Dealers and Other Financial Intermediaries ...... 9 FUND DETAILS MORE Investment Goal ...... 10 INFORMATION ON INVESTMENT Principal Investment Policies and Practices ...... 10 POLICIES, Principal Risks ...... 14 PRACTICES AND 20 RISKS/FINANCIAL Management ...... HIGHLIGHTS Distributions and Taxes ...... 21 Financial Highlights ...... 24 YOUR ACCOUNT INFORMATION Choosing a Share Class ...... 27 ABOUT SALES CHARGES, Buying Shares ...... 35 QUALIFIED Investor Services ...... 38 INVESTORS, 41 ACCOUNT Selling Shares ...... TRANSACTIONS Exchanging Shares ...... 44 AND SERVICES Account Policies ...... 48 Questions ...... 57 FOR MORE INFORMATION WHERE TO LEARN Back Cover MORE ABOUT THE FUND

1 FUND SUMMARY FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND FUND SUMMARY

FUND SUMMARY ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage of the value of your investment) Advisor Class A Class Investment Goal Management fees 0.65% 0.65% Distribution and service (12b-1) fees 0.30%1 None To protect against depreciation of the U.S. dollar relative to other currencies. Other expenses 0.17% 0.17% Acquired fund fees and expenses 0.17% 0.17% Fees and Expenses of the Fund Total annual Fund operating expenses 1.29% 0.99% Fee waiver and/or expense reimbursement2 -0.07% -0.07% These tables describe the fees and expenses that you may pay if you buy Total annual Fund operating expenses after fee waiver and/or expense and hold shares of the Fund. You may qualify for sales charge discounts reimbursement2, 3 1.22% 0.92% in Class A if you and your family invest, or agree to invest in the future, at least $100,000 in Franklin Templeton funds. More information about these 1. Class A distribution and service (12b-1) fees have been restated to reflect the maximum annual rate approved by the board of trustees for the current fiscal year. Consequently, the total annual Fund operating expenses differ and other discounts is available from your financial professional and under from the ratio of expenses to average net assets shown in the “Financial Highlights” due to the timing of accrual “Your Account” on page 27 in the Fund’s Prospectus and under “Buying adjustments that are made during the Fund’s fiscal year. and Selling Shares” on page 45 of the Fund’s Statement of Additional 2. The investment manager has contractually agreed in advance to reduce its fee as a result of the Fund’s Information. investment in a Franklin Templeton money fund (acquired fund) for at least the next 12-month period. Contractual fee waiver and/or expense reimbursement agreements may not be terminated during the term set forth above. 3. Total annual Fund operating expenses differ from the ratio of expenses to average net assets shown in the SHAREHOLDER FEES (fees paid directly from your investment) Financial Highlights, which reflect the operating expenses of the Fund and do not include acquired fund fees and Advisor expenses. Class A Class Maximum Sales Charge (Load) Imposed on Purchases (as percentage of Example offering price) 2.25% None This Example is intended to help you compare the cost of investing in Maximum Deferred Sales Charge (Load) (as percentage of the lower of original the Fund with the cost of investing in other mutual funds. The Example purchase price or sale proceeds) None None 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 waiver and/or expense reimbursement by the investment manager and/or administrator for the 1 Year numbers only. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years Class A $347 $618 $911 $1,745 Advisor Class $94 $308 $541 $1,210

2 franklintempleton.com franklintempleton.com 3 FUND SUMMARY FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND FUND SUMMARY

Portfolio Turnover The Fund may also invest, from time to time, in currency contracts (including cross-currency forwards) to try to hedge (protect) against The Fund pays transaction costs, such as commissions, when it buys and currency exchange rate fluctuations, or to generate income for the Fund, sells securities (or “turns over” its portfolio). A higher portfolio turnover for example, by cross-hedging. The Fund does not, however, attempt to rate may indicate higher transaction costs and may result in higher taxes actively hedge its portfolio. 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 Principal Risks turnover rate was 0.00% of the average value of its portfolio. You could lose money by investing in the Fund. Mutual fund shares are The portfolio turnover rate shown above does not include purchases and not deposits or obligations of, or guaranteed or endorsed by, any bank, and sales of securities or other instruments whose maturities or expiration dates are not insured by the Federal Deposit Insurance Corporation, the Federal at the time of purchase were one year or less. If these were included, the Reserve Board, or any other agency of the U.S. government. portfolio turnover rate would be higher. Currency In general, the Fund’s investments go up in value when the U.S. dollar is weak (i.e., is losing value relative to other currencies in which Principal Investment Strategies the Fund is invested) or other currencies in which the Fund is invested are strong (i.e., are gaining value relative to the U.S. dollar), and the Fund’s net Under normal market conditions, the Fund invests at least 80% of its net asset value will go down when the U.S. dollar is strong or other currencies assets in investments denominated in “hard currencies.” The Fund normally in which the Fund is invested are weak. Devaluation of a currency by a invests mainly in high-quality, short-term money market instruments and country’s government or banking authority also will have a significant forward currency contracts denominated in foreign hard currencies. impact on the value of any investments denominated in that currency. “Hard currencies” are currencies in which investors have confidence and The Fund may also be positively or negatively affected by governmental are typically currencies of economically and politically stable industrialized strategies intended to make the U.S. dollar, or other currencies in which nations. The Fund tries to expose 100% of its net assets to foreign the Fund invests, stronger or weaker. In addition, currency management currencies, but may do so by investing substantially in a combination of strategies, to the extent that they reduce the Fund’s exposure to currency U.S. dollar-denominated securities and forward currency contracts or risks, may also reduce the Fund’s ability to benefit from favorable changes currency futures contracts (including currency index futures) (collectively, in currency exchange rates. Currency markets generally are not as “currency contracts”). In making investments in foreign hard currencies regulated as securities markets. and in instruments denominated in foreign hard currencies, the Fund Foreign Securities Investing in foreign securities typically involves more focuses on countries and markets that historically have experienced risks than investing in U.S. securities, and includes risks associated with: low inflation rates and, in the investment manager’s opinion, follow political and economic developments - the political, economic and social economic policies favorable to continued low inflation rates and currency structures of some foreign countries may be less stable and more volatile appreciation versus the U.S. dollar over the long term. The Fund may than those in the United States; trading practices - government supervision invest up to 20% of its net assets in instruments denominated in foreign and regulation of foreign securities and currency markets, trading currencies that do not meet all the criteria of hard currencies, including systems and brokers may be less than in the United States; availability of currencies issued by emerging market countries, but that the investment information - foreign issuers may not be subject to the same disclosure, manager believes will appreciate versus the U.S. dollar over the long term. accounting and financial reporting standards and practices as U.S. issuers; Under normal market conditions, the Fund will not expose more than 50% limited markets - the securities of certain foreign issuers may be less liquid of its total assets to any one foreign currency. The Fund is a non-diversified (harder to sell) and more volatile; and currency exchange rate fluctuations fund and therefore may invest a greater portion of its assets in the securities and policies. The risks of foreign investments may be greater in developing of one or more issuers than a diversified fund. or emerging market countries.

4 franklintempleton.com franklintempleton.com 5 FUND SUMMARY FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND FUND SUMMARY

Developing Market Countries The Fund’s investments in developing derivatives, there is the risk that the other party to the transaction will fail market countries are subject to all of the risks of foreign investing generally, to perform. and have additional heightened risks due to a lack of established legal, Non-Diversification Because the Fund is non-diversified, it may be more political, business and social frameworks to support securities markets, sensitive to economic, business, political or other changes affecting similar including: delays in settling portfolio securities transactions; currency and issuers or investments than a diversified fund, which may result in greater capital controls; greater sensitivity to interest rate changes; pervasiveness fluctuation in the value of the Fund’s shares and greater risk of loss. of corruption and crime; currency exchange rate volatility; and inflation, deflation or currency devaluation. Management The Fund is subject to management risk because it is an actively managed investment portfolio. The Fund’s investment manager Focus To the extent that the Fund focuses on particular countries, regions, applies investment techniques and risk analyses in making investment industries, sectors or types of investment from time to time, the Fund may decisions for the Fund, but there can be no guarantee that these decisions be subject to greater risks of adverse developments in such areas of focus will produce the desired results. than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Market The market values of securities owned by the Fund will go up and down, sometimes rapidly or unpredictably. A security’s market value Income Because the Fund can only distribute what it earns, the Fund’s may be reduced by market activity or other results of supply and demand distributions to shareholders may decline when prevailing interest rates fall unrelated to the issuer. This is a basic risk associated with all securities. or when the Fund experiences defaults on debt securities it holds. When there are more sellers than buyers, prices tend to fall. Likewise, when Credit An issuer of debt securities may fail to make interest payments there are more buyers than sellers, prices tend to rise. and repay principal when due, in whole or in part. Changes in an issuer’s financial strength or in a security’s credit rating may affect a Performance security’s value. The following bar chart and table provide some indication of the risks Interest Rate When interest rates rise, debt security prices generally fall. of investing in the Fund. The bar chart shows changes in the Fund’s The opposite is also generally true: debt security prices rise when interest performance from year to year for Class A shares. The table shows how rates fall. In general, securities with longer maturities are more sensitive to the Fund’s average annual returns for 1 year, 5 years, 10 years or since these interest rate changes. inception, as applicable, compared with those of a broad measure of Derivative Instruments The performance of derivative instruments market performance. The Fund’s past performance (before and after taxes) (including currency related derivatives) depends largely on the performance is not necessarily an indication of how the Fund will perform in the future. of an underlying currency, security or index and such instruments often You can obtain updated performance information at franklintempleton. have risks similar to their underlying instrument, in addition to other risks. com or by calling (800) DIAL BEN/342-5236. Derivatives involve costs and can create economic leverage in the Fund’s Sales charges are not reflected in the bar chart, and if those charges were portfolio which may result in significant volatility and cause the Fund to included, returns would be less than those shown. participate in losses (as well as enable gains) in an amount that exceeds the Fund’s initial investment. Other risks include illiquidity, mispricing or improper valuation of the derivative instrument, and imperfect correlation between the value of the derivative and the underlying instrument so that the Fund may not realize the intended benefits. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. With over-the-counter

6 franklintempleton.com franklintempleton.com 7 FUND SUMMARY FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND FUND SUMMARY

CLASS A ANNUAL TOTAL RETURNS Portfolio Managers 30% MICHAEL HASENSTAB, PH.D. Senior Vice President of Advisers and portfolio manager of the Fund since 2001.

19.27% 20% 17.75% SONAL DESAI, PH.D. Portfolio Manager of Advisers and portfolio manager of the Fund since 2011. 11.03% 10% 8.48% 8.45% 8.68%

2.36% Purchase and Sale of Fund Shares -4.24% 1.08% -1.84% 0% You may purchase or redeem shares of the Fund on any business day online through our website at franklintempleton.com, by mail (Franklin -10% Templeton Investor Services, P.O. Box 997151, Sacramento, CA 95899- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 7151), or by telephone at (800) 632-2301. The minimum initial purchase Year for most accounts is $1,000 (or $50 under an automatic investment plan).

Best Quarter: Q3’10 11.81% Worst Quarter: Q3’11 -6.82% Taxes The Fund’s distributions are generally taxable to you as ordinary income, AVERAGE ANNUAL TOTAL RETURNS unless you are investing through a tax-deferred arrangement, such as a (figures reflect sales charges) For the periods ended December 31, 2011 401(k) plan or an individual retirement account. 1 Year 5 Years 10 Years Franklin Templeton Hard Currency Fund - Class A Payments to Broker-Dealers and Return Before Taxes -4.00% 3.67% 6.61% Other Financial Intermediaries Return After Taxes on Distributions -5.44% 2.09% 4.74% If you purchase the Fund through a broker-dealer or other financial Return After Taxes on Distributions and Sale of Fund Shares -2.61% 2.21% 4.60% intermediary (such as a bank), the Fund and its related companies may Franklin Templeton Hard Currency Fund - Advisor Class -1.63% 4.44% 7.19% pay the intermediary for the sale of Fund shares and related services. These J.P. Morgan 3-Month Global Cash Index (index reflects no deduction payments may create a conflict of interest by influencing the broker-dealer for fees, expenses or taxes) -0.17% 3.74% 6.66% or other intermediary and your salesperson to recommend the Fund over another investment. Ask your financial advisor or visit your financial The after-tax returns are calculated using the historical highest individual intermediary’s website for more information. 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. After-tax returns are shown only for Class A and after-tax returns for other classes will vary.

Investment Manager Franklin Advisers, Inc. (Advisers)

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FUND DETAILS average portfolio maturity of 120 days or less and only buys money market instruments: r
with effective maturities of one year or less at the time of purchase, and Investment Goal r
that the investment manager considers comparable in quality to The Fund’s investment goal is to protect against depreciation of the U.S. instruments rated in the top two ratings by U.S. nationally recognized dollar relative to other currencies. rating services or issued by companies with an outstanding unsecured debt issue rated in the top two ratings. Principal Investment Policies and Practices To gain exposure to a foreign currency when the money market for a Under normal market conditions, the Fund invests at least 80% of its particular foreign currency is small or relatively illiquid or when the net assets in investments denominated in “hard currencies.” Shareholders investment manager believes it may be more efficient than a direct will be given at least 60 days’ advance notice of any change to this 80% investment in a foreign currency-denominated instrument, the Fund may investment policy. The Fund normally invests mainly in high-quality, invest in a combination of forward foreign currency exchange contracts short-term money market instruments and forward currency contracts or currency futures contracts (including currency index futures) and denominated in foreign hard currencies. U.S. dollar-denominated money market instruments. A forward foreign currency exchange contract is an agreement to buy or sell a specific amount “Hard currencies” are currencies in which investors have confidence and of currency at a future date and at a price set at the time of the contract. are typically currencies of economically and politically stable industrialized A currency futures contract is similar to a forward foreign currency nations. The Fund tries to expose 100% of its net assets to foreign exchange contract except that the futures contract is in a standardized currencies, but may do so by investing substantially in a combination form that trades on an exchange instead of being privately negotiated with of U.S. dollar-denominated securities and forward currency contracts. a particular counterparty. When combined with an investment in a U.S. In making investments in foreign hard currencies and in instruments dollar-denominated money market instrument, the investment manager denominated in foreign hard currencies, the Fund focuses on countries attempts to obtain an investment result that is substantially the same as a and markets that historically have experienced low inflation rates and, in direct investment in a foreign currency-denominated instrument. the investment manager’s opinion, follow economic policies favorable to continued low inflation rates and currency appreciation versus the U.S. The Fund may also invest, from time to time, in forward foreign currency dollar over the long term. The Fund may invest up to 20% of its net assets exchange contracts (including cross-currency forwards) and currency in instruments denominated in foreign currencies that do not meet all the futures contracts (collectively, “currency contracts”) to try to hedge criteria of hard currencies, including currencies issued by emerging market (protect) against currency exchange rate fluctuations, or to generate income countries, but that the investment manager believes will appreciate versus for the Fund, for example, by cross-hedging. Cross-hedging is the practice the U.S. dollar over the long term. of entering into a forward contract to buy or sell an amount of a foreign currency when the Fund believes that foreign currency may enjoy or suffer Under normal market conditions, the Fund will not expose more than 50% a substantial movement against another currency. The Fund does not, of its total assets to any one foreign currency. however, attempt to actively hedge its portfolio. Money market instruments are issued by foreign and domestic Other derivative investments may also be used to help manage interest governments, financial institutions, corporations and other entities to rate exposure, protect fund assets, implement a cash or tax management borrow money. The issuer pays a fixed, floating or variable rate of interest strategy, enhance Fund returns or to obtain net long or net short exposures and must repay the amount borrowed at maturity. To try to reduce credit to selected interest rates, duration or credit risks. Such derivatives may and interest rate risk to its portfolio, the Fund maintains a weighted include the purchase and sale of financial futures contracts (such as interest rate or bond futures), options on such futures, swap agreements (such as

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interest rate or credit default swaps) and options on swap agreements. of its counterparty to offset losses the Fund could experience if there was With derivatives, the investment manager analyzes whether an underlying such a credit event. Generally, a credit event means bankruptcy, failure investment will increase or decrease in value at some future time. The to timely pay interest or principal, obligation acceleration, or modified investment manager considers various factors, such as availability and cost, restructuring of the reference debt obligation. The contingent payment by in deciding whether to use a particular instrument or strategy. the seller generally is the face amount of the debt obligation in exchange for the physical delivery of the reference debt obligation or a cash payment A futures contract is a standardized binding agreement to buy or sell a equal to the then current market value of that debt obligation. As a seller specified quantity of a currency or other underlying instrument or asset, of a credit default swap, the Fund is able to earn a stream of income at a specified price at a specified later date, that trades on an exchange. while gaining exposure to the underlying reference obligation. The Fund A “sale” of a futures contract means the acquisition of a contractual may be a buyer or seller of credit default swaps. An interest rate swap is obligation to deliver the underlying instrument called for by the contract an agreement between two parties to exchange interest rate obligations, at a specified price on a specified date. A “purchase” of a futures contract generally one based on an interest rate fixed to maturity while the other means the acquisition of a contractual obligation to acquire the underlying is based on an interest rate that changes in accordance with changes in a instrument or interest rate called for by the contract at a specified price on designated benchmark (for example, LIBOR, prime, commercial paper, or a specified date. The purchase or sale of a futures contract will allow the other benchmarks). Fund to increase or decrease its exposure to the underlying instrument. Although most futures contracts by their terms require the actual delivery Commodity Exchange Act Exclusion or acquisition of the underlying instrument, some require cash settlement. The Fund has claimed an exclusion from the definition of “commodity An option on a futures contract is an exchange-traded contract in which pool operator” under the Commodity Exchange Act (CEA), and, therefore, a seller grants to a buyer the right (but not the obligation) to buy or sell a is not currently subject to registration or regulation as a commodity pool futures contract. The buyer pays the seller a premium for the option. The operator under the CEA. However, the Commodity Futures Trading Fund may buy and sell futures contracts and options thereon that trade on Commission (CTFC) has recently adopted amendments to this exclusion. U.S. and foreign exchanges. Such amendments will not become effective until additional proposed rule Swap agreements, such as interest rate swaps and credit default swaps, amendments under the CEA are adopted, the timing of which is not yet are contracts between the Fund and, typically, a brokerage firm, bank, or known. When effective, such amendments may require the Fund to comply other financial institution (the swap counterparty) for periods ranging with regulatory obligations and restrictions under the CEA, which may from a few days to multiple years. In a basic swap transaction, the Fund affect the Fund’s expenses or its use of derivative instruments. agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular “notional amount” of Temporary Investments underlying instruments. The notional amount is the set amount selected When the investment manager believes market or economic conditions by the parties as the basis on which to calculate the obligations that they are unfavorable for investors, the investment manager may invest up to have agreed to exchange. The parties typically do not actually exchange 100% of the Fund’s assets in a temporary defensive manner by holding all the notional amount. Instead, they agree to exchange the returns that or a substantial portion of its assets in cash, cash equivalents or other high would be earned or realized if the notional amount were invested in given quality short-term investments. Temporary defensive investments generally instruments or at given interest rates. For credit default swaps, the “buyer” may include short-term U.S. government securities, high grade commercial of the credit default swap agreement is obligated to pay the “seller” a paper, bank obligations, repurchase agreements, money market fund periodic stream of payments over the term of the agreement in return shares (including shares of an affiliated money market fund) and other for a payment by the “seller” that is contingent upon the occurrence of a money market instruments. The investment manager also may invest in credit event with respect to an underlying reference debt obligation. As a these types of securities or hold cash while looking for suitable investment “buyer” of the credit default swap, the Fund is purchasing the obligation

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opportunities or to maintain liquidity. In these circumstances, the Fund appropriate times. Furthermore, there may not be a perfect correlation may be unable to achieve its investment goal. between the amount of exposure to a particular currency and the amount of securities in the portfolio denominated in that currency. Principal Risks Foreign Money Market Instruments The value of Fund shares will fluctuate. The Fund is not a substitute for a Investing in foreign money market instruments typically involves more money market fund. risks than investing in U.S. money market instruments. These risks can increase the potential for losses in the Fund and affect its share price. Currency Changes in foreign currency exchange rates will affect the value of what General money market movements in any country where the Fund has the Fund owns and the Fund’s share price. Generally, when the U.S. dollar investments are likely to affect the value of the instruments the Fund owns rises in value against a foreign currency, an investment in that country loses that are denominated in that country’s currency. These movements will value because that currency is worth fewer U.S. dollars. Devaluation of a affect the Fund’s share price and Fund performance. currency by a country’s government or banking authority also will have Political and economic developments. The political, economic and social a significant impact on the value of any investments denominated in that structures of some foreign countries may be less stable and more volatile currency. Currency markets generally are not as regulated as securities than those in the United States. Investments in these countries may be markets. subject to greater risks of internal and external conflicts, expropriation, The Fund may be positively or negatively affected by governmental nationalization of assets, foreign exchange controls (such as suspension strategies intended to make the U.S. dollar, or other currencies in which of the ability to transfer currency from a given country), restrictions on the Fund invests, stronger or weaker. In general, the Fund’s net asset value removal of assets, political or social instability, military action or unrest, will go up when the U.S. dollar is weak (i.e., is losing value relative to diplomatic developments, currency devaluations, foreign ownership other currencies in which the Fund is invested) or other currencies in which limitations, and punitive or confiscatory tax increases. It is possible that the Fund is invested are strong (i.e., are gaining value relative to the U.S. a government may take over the assets or operations of a company or dollar), and the Fund’s net asset value will go down when the U.S. dollar is impose restrictions on the exchange or export of currency or other assets. strong or other currencies in which the Fund is invested are weak. Some countries also may have different legal systems that may make it difficult for the Fund to vote proxies, exercise shareholder rights, and The Fund may, from time to time, engage in currency management pursue legal remedies with respect to its foreign investments. Diplomatic strategies to hedge the risk of changes in currency exchange rates or to and political developments, including rapid and adverse political changes, generate Fund income. These currency management strategies may include social instability, regional conflicts, terrorism and war, could affect the cross-hedging where the Fund attempts to hold a net long position of a economies, industries and securities and currency markets, and the value of particular currency versus a second currency (by buying or selling forward the Fund’s investments, in non-U.S. countries. These factors are extremely contracts) even if the Fund does not hold securities denominated in the difficult, if not impossible, to predict and take into account with respect to second currency. Currency management strategies may substantially the Fund’s investments. change the Fund’s exposure to exchange rates and could result in losses to the Fund if currencies do not perform as the investment manager expects. Trading practices. Brokerage commissions, withholding taxes, custodial In addition, currency management strategies, to the extent that they reduce fees, and other fees generally are higher in foreign markets. The policies the Fund’s exposure to currency risks, may also reduce the Fund’s ability and procedures followed by foreign stock exchanges, currency markets, to benefit from favorable changes in currency exchange rates. There is trading systems and brokers may differ from those applicable in the United no assurance that the investment manager’s use of currency management States, with possibly negative consequences to the Fund. The procedures strategies will benefit the Fund or that they will be, or can be, used at and rules governing foreign trading, settlement and custody (holding of the Fund’s assets) also may result in losses or delays in payment, delivery or

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recovery of money or other property. Foreign government supervision and imposed by developing market countries will have an adverse effect on the regulation of foreign securities markets and trading systems may be less value of the securities of companies that trade or operate in such countries. than or different from government supervision in the United States, and Finally, such securities markets are smaller, relatively less liquid and may may increase the Fund’s regulatory and compliance burden and/or decrease not be as efficient or established in terms of settlement, custody and the Fund’s investor rights and protections. securities registration. Availability of information. Foreign issuers may not be subject to the Focus same disclosure, accounting, auditing and financial reporting standards The greater the Fund’s exposure to any single type of investment – and practices as U.S. issuers. Thus, there may be less information publicly including investment in a given industry, sector, region, country, issuer, or available about foreign issuers than about most U.S. issuers. type of security – the greater the losses the Fund may experience upon any Limited markets. Certain foreign money market instruments may be single economic, business, political, regulatory, or other occurrence. As a less liquid (harder to sell) and their prices more volatile than many U.S. result, there may be more fluctuation in the price of the Fund’s shares. money market instruments. Illiquidity tends to be greater, and valuation of the Fund’s foreign securities may be more difficult, due to the infrequent Income trading and/or delayed reporting of quotes and sales. Because the Fund can only distribute what it earns, the Fund’s distributions Regional. Adverse conditions in a certain region can adversely affect to shareholders may decline when prevailing interest rates fall, when securities of issuers in other countries whose economies appear to be dividend income from investments in stocks decline, or when the Fund unrelated. To the extent that the Fund invests a significant portion of its experiences defaults on debt securities it holds. assets in a specific geographic region, the Fund will generally have more exposure to regional economic risks. In the event of economic or political Credit turmoil or a deterioration of diplomatic relations in a region or country The Fund could lose money on a debt security if an issuer or borrower is where a substantial portion of the Fund’s assets are invested, the Fund may unable or fails to meet its obligations, including failing to make interest experience substantial illiquidity. payments and/or to repay principal when due. Changes in an issuer’s financial strength, the market’s perception of the issuer’s financial strength Developing Markets or in a security’s credit rating, which reflects a third party’s assessment of The risks of foreign investments typically are greater in less developed the credit risk presented by a particular issuer, may affect debt securities’ countries, sometimes referred to as developing or emerging markets. For value. The Fund may incur substantial losses on debt securities that are example, the political, social, market regulation and economic structures inaccurately perceived to present a different amount of credit risk by the and institutions in these countries may be less established, including market, the investment manager or the rating agencies than such securities those supporting the regulatory and legal systems and financial markets actually do. may be less established and more vulnerable to corruption and fraud, and may change rapidly. These countries are more likely to experience Interest Rate high levels of inflation, deflation or currency devaluation, which can Interest rate changes can be sudden and unpredictable. Debt securities harm their economies and securities markets and increase volatility. In generally tend to lose market value when interest rates rise and increase fact, short-term volatility in these markets and declines of 50% or more in value when interest rates fall. Securities with longer maturities or lower are not uncommon. Investments in less developed markets generally are coupons or that make little (or no) interest payments before maturity tend subject to higher fees and expenses and exhibit greater price volatility and to be more sensitive to these interest rate changes. The longer the Fund’s valuation challenges. They may be subject to greater risk of expropriation, average weighted portfolio maturity, the greater the impact a change in nationalization, confiscatory or punitive taxation, and foreign investment interest rates will have on its share price. and divestment restrictions. Restrictions on currency trading that may be

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Derivative Instruments basis, it is not obligated to actively engage in these transactions, generally The performance of derivative instruments depends largely on the or in any particular kind of derivative, if the manager elects not to do so performance of an underlying instrument or index and such derivative due to availability, cost or other factors. instruments often have risks similar to their underlying instrument in The use of derivative strategies may also have a tax impact on the Fund. addition to other risks. Derivative instruments involve costs, may be The timing and character of income, gains or losses from these strategies volatile, and may involve a small initial investment relative to the risk could impair the ability of the investment manager to utilize derivatives assumed. Their successful use will usually depend on the investment when it wishes to do so. manager’s ability to accurately forecast movements in the market relating to the underlying instrument. Should a market or markets, or prices of Non-Diversification particular classes of investments move in an unexpected manner, especially The Fund is a “non-diversified” fund. It generally invests a greater portion in unusual or extreme market conditions, the Fund may not achieve the of its assets in the securities of one or more issuers and invests overall anticipated benefits of the transaction, and it may realize losses, which in a smaller number of issuers than a diversified fund. The Fund may be could be significant. If the investment manager is not successful in using more sensitive to a single economic, business, political, regulatory or other such derivative instruments, the Fund’s performance may be worse than if occurrence than a more diversified portfolio might be, which may result in the investment manager did not use such derivative instruments at all. To greater fluctuation in the value of the Fund’s shares and to a greater risk the extent that the Fund uses such instruments for hedging purposes, there of loss. is the risk of imperfect correlation between movements in the value of the derivative instrument and the value of the underlying investment or other Management asset being hedged. There is also the risk, especially under extreme market The Fund is actively managed and could experience losses if the investment conditions, that an instrument, which usually would operate as a hedge, manager’s judgment about markets, interest rates or the attractiveness, provides no hedging benefits at all. relative values, liquidity, or potential appreciation of particular investments Use of these instruments could also result in a loss if the counterparty to the made for the Fund’s portfolio prove to be incorrect. There can be no transaction (with respect to over-the-counter instruments, swap agreements guarantee that these techniques or the investment manager’s investment and forward currency contracts) does not perform as promised, including decisions will produce the desired results. Additionally, legislative, because of such counterparty’s bankruptcy or insolvency. This risk may regulatory, or tax developments may affect the investment techniques be heightened during volatile market conditions. Other risks include available to the investment manager in connection with managing the the inability to close out a position because the trading market becomes Fund and may also adversely affect the ability of the Fund to achieve its illiquid (particularly in the over- the-counter markets) or the availability investment goal. of counterparties becomes limited for a period of time. In addition, the presence of speculators in a particular market could lead to price Market distortions. To the extent that the Fund is unable to close out a position The market values of securities owned by the Fund will go up or down, because of market illiquidity, the Fund may not be able to prevent further sometimes rapidly or unpredictably. Securities may decline in value due losses of value in its derivatives holdings and the Fund’s liquidity may be to factors affecting individual issuers, securities markets generally or impaired to the extent that it has a substantial portion of its otherwise particular industries or sectors within the securities markets. The value liquid assets marked as segregated to cover its obligations under such of a security may go up or down due to general market conditions which derivative instruments. The Fund may also be required to take or make are not specifically related to a particular issuer, such as real or perceived delivery of an underlying instrument that the manager would otherwise adverse economic conditions, changes in the general outlook for revenues have attempted to avoid. Some derivatives can be particularly sensitive to or corporate earnings, changes in interest or currency rates or adverse changes in interest rates or other market prices. Investors should bear in investor sentiment generally. They may also go up or down due to factors mind that, while the Fund intends to use derivative strategies on a regular that affect an individual issuer or a particular industry or sector, such as

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changes in production costs and competitive conditions within an industry. macroeconomic and market developments covering both G10 and global During a general downturn in the securities markets, multiple asset emerging markets. classes may decline in value. When markets perform well, there can be no The Fund’s SAI provides additional information about portfolio manager assurance that the Fund’s securities will participate in or otherwise benefit compensation, other accounts that they manage and their ownership of from the advance. Fund shares. More detailed information about the Fund, its policies and risks can be The Fund pays Advisers a fee for managing the Fund’s assets. found in the Fund’s Statement of Additional Information (SAI). For the fiscal year ended October 31, 2011, Advisers agreed to reduce its A description of the Trust’s policies and procedures regarding the release of fees to reflect reduced services resulting from the Fund’s investment in a portfolio holdings information is also available in the Trust’s SAI. Portfolio Franklin Templeton money fund. The management fees before and after holdings information can be viewed online at franklintempleton.com. such waiver for the fiscal year ended October 31, 2011, are 0.65% and 0.58%, respectively. Management A discussion regarding the basis for the board of trustees approving the Franklin Advisers, Inc. (Advisers), One Franklin Parkway, San Mateo, CA investment management contract of the Fund is available in the Fund’s 94403-1906, is the Fund’s investment manager. Together, Advisers and its semiannual report to shareholders for the six-month period ended April 30. affiliates manage, as of January 31, 2012, over $704 billion in assets, and have been in the investment management business since 1947. Special Servicing Agreement The Fund is managed by a dedicated professional focused on investments The Fund is an underlying investment fund of one or more funds of in high-quality, short-term money market instruments denominated in Franklin Templeton Fund Allocator Series Funds (the “Allocator Funds”) foreign hard currencies. The portfolio manager of the Fund is as follows: and has entered into a Special Servicing Agreement with the Allocator Funds and certain service providers of the Fund and the Allocator Funds, MICHAEL HASENSTAB, PH.D. Senior Vice President of Advisers pursuant to which the Fund may pay a portion of the Allocator Funds’ Dr. Hasenstab has been a portfolio manager of the Fund since 2001. He expenses, including transfer agency and shareholder servicing costs, to the has primary responsibility for the investments of the Fund. He has final extent such payments are less than the amount of the benefits realized or authority over all aspects of the Fund’s investment portfolio, including expected to be realized by the Fund from the investment in the Fund by the but not limited to purchases and sales of individual securities, portfolio Allocator Funds. risk assessment, and the management of daily cash balances in accordance with anticipated management requirements. The degree to which he may perform these functions, and the nature of these functions, may Distributions and Taxes change from time to time. Dr. Hasenstab first joined Franklin Templeton Income and Capital Gain Distributions Investments in 1995, rejoining again in 2001 after a three-year leave to obtain his Ph.D. As a regulated investment company, the Fund generally pays no federal income tax on the income and gains it distributes to you. The Fund intends SONAL DESAI, PH.D. Portfolio Manager of Advisers to pay income dividends at least annually from its net investment income. Dr. Desai has been a portfolio manager of the Fund since 2011, providing Capital gains, if any, may be paid at least annually. The amount of any research and advice on the purchases and sales of individual securities, distribution will vary, and there is no guarantee the Fund will pay either and portfolio risk assessment. She joined Franklin Templeton Investments income dividends or capital gain distributions. Your income dividends and in 2009. Prior to joining Franklin Templeton Investments, she was part capital gain distributions will be automatically reinvested in additional of the Global Credit team at Thames River Capital in London, where shares at net asset value (NAV) unless you elect to receive them in cash. she was responsible for shaping the team’s top-down global view on

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Annual statements. After the close of each calendar year, you will receive how long you have owned your Fund shares. For individuals in the 10% tax information from the Fund with respect to the federal income tax and 15% tax brackets, the long-term capital gains tax rate is 0%. For treatment of the Fund’s distributions and any taxable sales or exchanges individuals in higher tax brackets, the long-term capital gains rate is of covered Fund shares occurring during the prior calendar year. If the 15%. These reduced rates are presently scheduled to sunset on December Fund finds it necessary to reclassify income or adjust the cost basis of any 31, 2012. covered shares sold or exchanged after you receive your tax information, Sales of Fund shares. When you sell your shares in the Fund, or exchange the Fund will send you revised tax information. Distributions declared in them for shares of a different Franklin Templeton fund, you will generally December to shareholders of record in such month and paid in January are realize a taxable capital gain or loss. If you have owned your Fund shares taxable as if they were paid in December. Additional tax information about for more than one year, any net long-term capital gains will qualify for the the Fund’s distributions is available at franklintempleton.com. reduced rates of taxation on long-term capital gains. An exchange of your Avoid “buying a dividend.” At the time you purchase your Fund shares, shares in one class of the Fund for shares of another class of the same Fund the Fund’s net asset value may reflect undistributed income, undistributed is not taxable and no gain or loss will be reported on the transaction. capital gains, or net unrealized appreciation in the value of the portfolio Cost basis reporting. If you acquire shares in the Fund on or after securities held by the Fund. For taxable investors, a subsequent distribution January 1, 2012, generally referred to as “covered shares,” and sell or to you of such amounts, although constituting a return of your investment, exchange them after that date, the Fund is generally required to report cost would be taxable. Buying shares in the Fund just before it declares an basis information to you and the IRS annually. The Fund will compute income dividend or capital gain distribution is sometimes known as the cost basis of your covered shares using the average cost method, the “buying a dividend.” Fund’s “default method,” unless you contact the Fund to select a different method, or choose to specifically identify your shares at the time of each Tax Considerations sale or exchange. If your account is held by your financial advisor or other If you are a taxable investor, Fund distributions are generally taxable broker-dealer, that firm may select a different default method. In these to you as ordinary income. This is the case whether you reinvest your cases, please contact the firm to obtain information with respect to the distributions in additional Fund shares or receive them in cash. available methods and elections for your account. Shareholders should Dividend income. Income dividends are generally subject to tax at carefully review the cost basis information provided by the Fund and ordinary rates. Income dividends reported by the Fund to shareholders make any additional basis, holding period or other adjustments that are as qualified dividend income may be subject to tax by individuals at required when reporting these amounts on their federal and state income reduced long-term capital gains tax rates provided certain holding period tax returns. Additional information about cost basis reporting is available requirements are met. Because the Fund invests primarily in debt securities, at franklintempleton.com/costbasis. it is expected that either none or only a small portion of the Fund’s income Backup withholding. If you do not provide the Fund your taxpayer dividends may be qualified dividends. These reduced rates of taxation are identification number and certain required certifications you may be presently scheduled to sunset and, unless extended, will no longer apply subject to federal backup withholding at 28% on any taxable Fund to qualified dividends paid with respect to taxable years of the Fund distributions and proceeds from the sale of your Fund shares. State backup beginning after December 31, 2012. A return-of-capital distribution is withholding may also apply. generally not taxable but will reduce the cost basis of your shares, and will result in a higher capital gain or a lower capital loss when you later sell State and local taxes. Distributions of ordinary income and capital gains, your shares. and gains from the sale of your Fund shares, are generally subject to state and local taxes. Capital gains. Fund distributions of short-term capital gains are also subject to tax at ordinary rates. Fund distributions of long-term capital Non-U.S. investors. Non-U.S. investors may be subject to U.S. gains are taxable at the reduced long-term capital gains rates no matter withholding tax at 30% or a lower treaty rate on Fund dividends of

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ordinary income. Non-U.S. investors may be subject to U.S. estate tax on CLASS A Year Ended October 31, the value of their shares. They are subject to special U.S. tax certification 2011 2010 2009 2008 2007 requirements to avoid backup withholding, claim any exemptions Per share operating performance from withholding and claim any treaty benefits. Exemptions from U.S. (for a share outstanding throughout the year) withholding tax are provided for capital gain dividends paid by the Fund from long-term capital gains and, with respect to taxable years of the Fund Net asset value, beginning of year $10.21 $9.61 $9.13 $10.16 $9.39 that begin before January 1, 2012 (sunset date), interest-related dividends Income from investment operations:a paid by the Fund from its qualified net interest income from U.S. sources Net investment income (loss)b (—)c 0.01 (0.02) 0.10 0.28 and short-term capital gain dividends. Net realized and unrealized gains (losses) 0.34 0.59 0.74 (0.45) 0.84 Other tax information. This discussion of “Distributions and Taxes” is Total from investment operations 0.34 0.60 0.72 (0.35) 1.12 for general information only and is not tax advice. You should consult your own tax advisor regarding your particular circumstances, and about Less distributions from: any federal, state, local and foreign tax consequences before making an Net investment income and net investment in the Fund. Additional information about the tax consequences realized foreign currency gains (0.57) — (0.22) (0.68) (0.35) of investing in the Fund may be found in the Statement of Additional Tax return of capital — — (0.02) — — Information. Total distributions (0.57) — (0.24) (0.68) (0.35) Redemption feesd ————c —c Financial Highlights Net asset value, end of year $9.98 $10.21 $9.61 $9.13 $10.16 e The Financial Highlights present the Fund’s financial performance for the Total return 3.62% 6.24% 8.09% (3.57)% 12.31% past five years or since its inception. Certain information reflects financial Ratios to average net assets results for a single Fund share. The total returns represent the rate that an Expenses before expense reduction 1.05% 1.07% 0.95% 1.09% 1.09% investor would have earned or lost on an investment in the Fund assuming Expenses net of expense reduction 1.05% 1.07%f 0.94% 1.09%f 1.09%f reinvestment of dividends and capital gains. This information has been Net investment income (loss) (0.03)% 0.07% (0.28)% 1.07% 2.97% audited by PricewaterhouseCoopers LLP, whose report, along with the Supplemental data Fund’s financial statements, are included in the annual report, which is Net assets, end of year (000’s) $463,128 $279,445 $422,665 $479,764 $323,255 available upon request. a. The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations in the annual report for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. b. Based on average daily shares outstanding. c. Amount rounds to less than $0.01 per share. d. Effective September 1, 2008, the redemption fee was eliminated. e. Total return does not reflect sales commissions or contingent deferred sales charges, if applicable. f. Benefit of expense reduction rounds to less than 0.01%.

24 franklintempleton.com franklintempleton.com 25 FUND DETAILS FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

ADVISOR CLASS Year Ended October 31, YOUR ACCOUNT 2011 2010 2009 2008 2007 Per share operating performance (for a share outstanding throughout the year) Choosing a Share Class Net asset value, beginning of year $10.28 $9.65 $9.15 $10.18 $9.41 Each class has its own sales charge and expense structure, allowing a Income from investment operations: you to choose the class that best meets your situation. Your investment Net investment incomeb 0.03 0.04 —c 0.14 0.31 representative can help you decide. Net realized and unrealized gains (losses) 0.35 0.59 0.75 (0.46) 0.84 Total from investment operations 0.38 0.63 0.75 (0.32) 1.15 Class A Advisor Class Less distributions from: Initial sales charge of 2.25% or less See “Qualified Investors - Advisor Class” Net investment income and net Deferred sales charge of 0.75% on purchases realized foreign currency gains (0.65) — (0.23) (0.71) (0.38) of $1 million or more sold within 18 months Tax return of capital — — (0.02) — — Total distributions (0.65) — (0.25) (0.71) (0.38) Sales Charges - Class A Redemption feesd ————c —c the sales charge makes up which equals this % of Net asset value, end of year $10.01 $10.28 $9.65 $9.15 $10.18 when you invest this amount this % of the offering price1 your net investment1 Total return 4.00% 6.52% 8.49% (3.28)% 12.60% Under $100,000 2.25 2.30 Ratios to average net assets $100,000 but under $250,000 1.75 1.78 Expenses before expense reduction 0.75% 0.76% 0.67% 0.78% 0.84% $250,000 but under $500,000 1.25 1.27 e e e Expenses net of expense reduction 0.75% 0.76% 0.66% 0.78% 0.84% $500,000 but under $1million 1.00 1.01 f Net investment income 0.27% 0.38% —% 1.38% 3.22% 1. The dollar amount of the sales charge is the difference between the offering price of the shares purchased Supplemental data (which factors in the applicable sales charge in this table) and the net asset value of those shares. Since the offering price is calculated to two decimal places using standard rounding criteria, the number of shares Net assets, end of year (000’s) $236,712 $70,992 $78,551 $110,247 $89,942 purchased and the dollar amount of the sales charge as a percentage of the offering price and of your net a. The amount shown for a share outstanding throughout the period may not correlate with the Statement of investment may be higher or lower depending on whether there was a downward or upward rounding. Operations in the annual report for the period due to the timing of sales and repurchases of the Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund. Sales Charge Reductions and Waivers b. Based on average daily shares outstanding. c. Amount rounds to less than $0.01 per share. Quantity discounts. We offer two ways for you to combine your current d. Effective September 1, 2008, the redemption fee was eliminated. purchase of Class A Fund shares with other existing Franklin Templeton e. Benefit of expense reduction rounds to less than 0.01%. fund share holdings that might enable you to qualify for a lower sales f. Rounds to less than 0.01%. charge with your current purchase. You can qualify for a lower sales charge when you reach certain “sales charge breakpoints.” This quantity discount information is also available free of charge at franklintempleton.com/retail/ jsp_cm/fund_perf/pub/quantity_discount.jsp. This web page can also be reached at franklintempleton.com by clicking the “Funds” tab and then choosing “Quantity Discounts.”

26 franklintempleton.com franklintempleton.com 27 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

1. Cumulative quantity discount - lets you combine certain existing Franklin Templeton fund assets held in multiple Employer Sponsored holdings of Franklin Templeton fund shares - referred to as “cumulative Retirement Plans may be combined in order to qualify for sales charge quantity discount eligible shares” - with your current purchase of Class A breakpoints at the plan level if the plans are sponsored by the same shares to determine if you qualify for a sales charge breakpoint. employer. Cumulative quantity discount eligible shares are Franklin Templeton fund If you believe there are cumulative quantity discount eligible shares that shares registered to (or held by a financial intermediary for): can be combined with your current purchase to achieve a sales charge breakpoint (for example, shares held in a different broker-dealer’s r
You, individually; brokerage account or with a bank or an investment advisor), it is your r
Your spouse or domestic partner, as recognized by applicable state law, responsibility to specifically identify those shares to your financial and your children under the age of 21 (each a “Family Member”); advisor at the time of your purchase (including at the time of any future purchase). It may be necessary for you to provide your financial advisor r
You jointly with one or more Family Members; with information and records (including account statements) of all relevant r
You jointly with another person(s) who is (are) not Family Members if accounts invested in the Franklin Templeton Funds. If you have not that other person has not included the value of the shares as cumulative designated a financial advisor associated with your Franklin Templeton quantity discount eligible shares for purposes of that person’s separate fund shares, it is your responsibility to specifically identify any cumulative investments in Franklin Templeton fund shares; quantity discount eligible shares to the Fund’s transfer agent at the time of any purchase. r
A Coverdell Education Savings account for which you or a Family Member is the identified responsible person; If there are cumulative quantity discount eligible shares that would qualify for combining with your current purchase and you do not tell your r
A trustee/custodian of an IRA (which includes a Roth IRA and an financial advisor or the Franklin Templeton funds’ transfer agent at the employer sponsored IRA such as a SIMPLE IRA) or your non-ERISA time of any purchase, you may not receive the benefit of a reduced sales covered 403(b), if the shares are registered/recorded under your or a charge that might otherwise be available since your financial advisor and Family Member’s Social Security number; the Fund generally will not have that information. r
A 529 college savings plan over which you or a Family Member has The value of cumulative quantity discount eligible shares equals the cost investment discretion and control; or current value of those shares, whichever is higher. The current value of r
Any entity over which you or a Family Member has (have) individual shares is determined by multiplying the number of shares by their highest or shared authority, as principal, has investment discretion and control current public offering price. It is your responsibility to retain any records (for example, an UGMA/UTMA account for a child on which you or necessary to substantiate historical share costs because neither your current a Family Member is the custodian, a trust on which you or a Family financial advisor nor the Franklin Templeton funds may have or maintain Member is the trustee, a business account [not to include retirement this information. plans] for your solely owned business [or the solely owned business of An “Employer Sponsored Retirement Plan” is a Qualified Retirement a Family Member] on which you or a Family Member is the authorized Plan, ERISA covered 403(b) and certain non-qualified deferred signer); compensation arrangements that operate in a similar manner to a Qualified r
A trust established by you or a Family Member as grantor. Retirement Plan, such as 457 plans and executive deferred compensation Franklin Templeton fund shares held through an administrator or trustee/ arrangements, but not including employer sponsored IRAs. A “Qualified custodian of an Employer Sponsored Retirement Plan such as a 401(k) Retirement Plan” is an employer sponsored pension or profit sharing plan plan (see definition below) do not qualify for a cumulative quantity that qualifies under section 401(a) of the Internal Revenue Code, including discount. 401(k), money purchase pension, profit sharing and defined benefit plans.

28 franklintempleton.com franklintempleton.com 29 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

2. Letter of intent (LOI) - expresses your intent to buy a stated dollar of trustees has set the current amount payable under the Class A plan at amount of “cumulative quantity discount eligible shares” (as defined 0.30% until further notice. in the “Cumulative quantity discount” section above) over a 13-month period and lets you receive the same sales charge as if all shares had been Contingent Deferred Sales Charge (CDSC) purchased at one time. We will reserve 5% of your total intended purchase The CDSC for each class is based on the current value of the shares being in Class A shares registered in your name until you fulfill your LOI to cover sold or their net asset value when purchased, whichever is less. There is no any additional sales charge that may apply if you do not buy the amount CDSC on shares you acquire by reinvesting your dividends or capital gain stated in your LOI. It is your responsibility to tell your financial advisor distributions. when you believe you have fulfilled your LOI with sufficient cumulative To keep your CDSC as low as possible, each time you place a request to sell quantity discount eligible shares. If you have not designated a financial shares we will first sell any shares in your account that are not subject to advisor associated with your Franklin Templeton fund shares, it is your a CDSC. If there are not enough of these to meet your request, we will sell responsibility to tell the Fund’s transfer agent when you believe you have the shares in the order they were purchased. We will use this same method fulfilled your LOI with sufficient cumulative quantity discount eligible if you exchange your shares into another Franklin Templeton fund (please shares. Please refer to the SAI for more LOI details. see “Exchanging Shares”). To sign up for these programs, complete the appropriate section of your account application. The holding period for the CDSC begins on the day you buy your shares. Franklin Templeton funds include all of the U.S. registered mutual funds Your shares will age one month on that same date the next month and each of Franklin Templeton Investments and the Franklin Mutual Recovery following month. For example, if you buy shares on the 18th of the month, Fund. They do not include the funds in the Franklin Templeton Variable they will age one month on the 18th day of the next month and each Insurance Products Trust. following month. Sales charge waivers. Class A shares may be purchased without an initial sales charge or contingent deferred sales charge (CDSC) by certain Reinstatement Privilege investors or for certain payments. If you would like information about If you sell shares of a Franklin Templeton fund that were held indirectly available sales charge waivers, call your investment representative or call for your benefit in an account with your investment representative’s firm or Shareholder Services at (800) 632-2301. A list of available sales charge your bank’s trust department or that were registered to you directly by the waivers also may be found in the SAI. Fund’s transfer agent (or, to an affiliated custodian or trustee of the Fund’s transfer agent), you may reinvest all or a portion of the proceeds from Investments of $1 Million or More that sale within 90 days of the sale without an initial sales charge. This If you invest $1 million or more, either as a lump sum or through our Reinstatement Privilege does not apply to: (i) a purchase of Fund shares cumulative quantity discount or letter of intent programs, you can buy made through a regularly scheduled automatic investment plan such as Class A shares without an initial sales charge. However, there is a 0.75% a purchase by a regularly scheduled payroll deduction or transfer from a CDSC on any shares you sell within 18 months of purchase. bank account, or (ii) a purchase of Fund shares with proceeds from the sale of Franklin Templeton fund shares that were held indirectly through a non- Distribution and Service (12b-1) Fees Franklin Templeton individual or employer sponsored IRA. Class A has a distribution plan, sometimes known as a Rule 12b-1 plan, In order to take advantage of this Reinstatement Privilege, you must inform that allows the Fund to pay distribution fees of up to 0.45% per year to your investment representative or the Fund’s transfer agent of this privilege those who sell and distribute Class A shares and provide other services at the time of your investment. to shareholders. Because these fees are paid out of Class A’s assets on an ongoing basis, over time these fees will increase the cost of your investment The proceeds from the earlier sale must also be invested within the same and may cost you more than paying other types of sales charges. The board share class as that of the sold shares, with the following exceptions:

30 franklintempleton.com franklintempleton.com 31 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

r
Class B shares will be reinvested in Class A shares entered into a comprehensive fee or other advisory fee arrangement with any broker-dealer, trust company, registered investment advisor (RIA), r
Class C shares will be reinvested in Class A shares if at the time of or investment advisor with assets under management in excess of $100 investment you have not appointed an investment representative million that is exempt from federal registration, that is not an affiliate (financial advisor) of record for the Fund account(s) in which the or associated person of the financial intermediary. Minimum initial purchased shares will be held investment: $50,000 for individual or multiple clients. Proceeds from the earlier sale of Class Z shares from another fund may r
Shares acquired by a financial intermediary that the intermediary holds also be invested in Class A shares under this Reinstatement Privilege. on behalf of a beneficial owner who has entered into a comprehensive Generally, if you paid a CDSC when you sold your shares, Franklin fee or other advisory fee arrangement with the financial intermediary Templeton Distributors, Inc. (Distributors) will credit back to you the or an affiliate or associated person of the financial intermediary, CDSC paid on the amount you are reinvesting within 90 days of the sale by provided the financial intermediary has entered into an agreement with adding it to the amount of your reinvestment. The new shares issued with Distributors authorizing the sale of Fund shares. No minimum initial your reinvestment WILL BE subject to any otherwise applicable CDSC. If, investment. however, you (except Employer Sponsored Retirement Plans) paid a CDSC r
Governments, municipalities, and tax-exempt entities that meet when you sold the following shares and you invest the proceeds from that the requirements for qualification under section 501 of the Internal sale in Class A shares within 90 days, you will not receive a credit for the Revenue Code when purchasing direct from the Fund. Minimum CDSC and new Class A shares issued with your reinvestment WILL NOT initial investment: $1 million in Advisor Class or Class Z shares of any BE subject to any otherwise applicable CDSC: Franklin Templeton fund. r
Class B shares r
Current and former officers, trustees, directors, full-time employees r
Class C shares held at the time of sale in a Franklin Templeton fund (and, in each case, their family members) of both Franklin Templeton account without an investment representative (financial advisor) Investments and Franklin Templeton Funds, consistent with our then- appointed by you current policies. Minimum initial investment: $100 ($50 for accounts with an automatic investment plan). Proceeds immediately placed in a Franklin Templeton Bank Certificate of Deposit (CD) also may be reinvested without an initial sales charge if you r
Assets held in accounts managed by a subsidiary of Franklin Resources, reinvest them within 90 days from the date the CD matures, including any Inc.: (1) under an advisory agreement (including sub-advisory rollover. agreements); and/or (2) as trustee of an inter vivos or testamentary trust. This privilege does not apply to shares you buy and sell under our r
Assets held in accounts managed by a state or federally regulated trust exchange program. Shares purchased with the proceeds from a money fund company or bank (Trust Company) either as discretionary trustee of may be subject to a sales charge. an inter vivos or testamentary trust or as investment manager under an advisory agreement (including sub-advisory) or other agreement Qualified Investors - Advisor Class that grants the Trust Company investment discretion over those assets The following investors or investments qualify to buy Advisor Class shares (Trust Company Managed Assets) if (i) the aggregate value of Trust of the Fund: Company Managed Assets invested in Franklin Templeton funds at the time of purchase equals at least $1 million; and (ii) the purchased shares r
Shares acquired by a financial intermediary that has entered into an are registered directly to the Trust Company in its corporate capacity agreement with Distributors authorizing the sale of Fund shares, in (not as trustee of an individual trust) and held solely as Trust Company connection with its mutual fund trading platform, that the intermediary Managed Assets. holds, directly or indirectly, on behalf of a beneficial owner who has

32 franklintempleton.com franklintempleton.com 33 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT r
An Employer Sponsored Retirement Plan (Plan) if the employer sponsors Buying Shares one or more Plans with aggregate Plan assets of $1 million or more. MINIMUM INVESTMENTS - CLASS A An “Employer Sponsored Retirement Plan” includes (a) an employer sponsored pension or profit sharing plan that qualifies (Qualified Plan) Initial under section 401(a) of the Internal Revenue Code, including section Regular accounts $1,000 401(k), money purchase pension, profit sharing and defined benefit Automatic investment plans $50 plans; (b) an ERISA covered 403(b); and (c) certain non-qualified UGMA/UTMA accounts $100 deferred compensation arrangements that operate in a similar manner to Employer Sponsored Retirement Plans, SIMPLE-IRAs, SEP-IRAs, a Qualified Plan, such as 457 plans and executive deferred compensation SARSEPs or 403(b) plan accounts no minimum arrangements, but not including employer sponsored IRAs. IRAs, IRA rollovers, Coverdell Education Savings Plans or Roth IRAs $250 r
Employer Sponsored Retirement Plans that invest indirectly in Fund Broker-dealer sponsored wrap account programs no minimum shares through Fund omnibus accounts registered to a financial Current and former full-time employees, officers, trustees and intermediary. directors of Franklin Templeton entities, and their family members $100 Please note that you may only buy shares of a fund eligible for sale in your state or jurisdiction. r
Any trust or plan established as part of a qualified tuition program under Section 529 of the Internal Revenue Code, provided that Distributors or an affiliate of Distributors has entered into a contract with the state sponsor of the program or one of its service providers to provide certain services relating to the operation of the program or to provide Fund shares for purchase in connection with the program. No initial minimum investment. r
An individual or entity associated with a current customer of Franklin Templeton Institutional, LLC (FTI, LLC) if approved by FTI, LLC in consultation with its customer. r
Unaffiliated U.S. registered mutual funds, including those that operate as “fund of funds.” Minimum initial investment: $1 million in Advisor Class or Class Z shares of any Franklin Templeton fund. r
Assets held in accounts under the recommendation of an investment consultant provided that (1) assets are held with a firm unaffiliated with the investment consultant’s firm; (2) the investment consultant is under a retainer or other similar fee arrangement with its clients; (3) the client is not an individual; and (4) a subsidiary of Franklin Resources, Inc. approves the investment.

34 franklintempleton.com franklintempleton.com 35 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

Account Application BUYING SHARES If you are opening a new account, Opening an account Adding to an account please complete and sign the enclosed Through your investment representative Contact your investment representative Contact your investment representative account application. Make sure you indicate the share class you have By Phone/Online If you have another Franklin Templeton fund Before requesting a telephone or online purchase chosen. If you do not indicate a class, (Up to $100,000 per shareholder per day) account with your bank account information on file, into an existing account, please make sure we have (800) 632-2301 you may open a new identically registered account your bank account information on file. If we do not we will place your purchase in Class franklintempleton.com by phone. At this time, a new account may not be have this information, you will need to send written A shares. To save time, you can sign Note: (1) certain account types are not opened online. instructions with your bank’s name and address and up now for services you may want available for online account access To make a same day investment, your phone order a voided check or savings account deposit slip. If on your account by completing the and (2) the amount may be higher must be received and accepted by us by 1:00 p.m. the bank and Fund accounts do not have at least for members of Franklin Templeton Pacific time or the close of the New York Stock one common owner, your written request must be appropriate sections of the application ® all and VIP Services . Please see “Franklin Exchange, whichever is earlier. signed by fund bank account owners, and (see “Investor Services”). For example, Templeton VIP Services®” under each individual must have his or her signature if you would like to link one of your “Investor Services” for more information guaranteed. bank accounts to your Fund account regarding eligibility. To make a same day investment, your phone or so that you may use electronic funds online order must be received and accepted by us by 1:00 p.m. Pacific time or the close of the New transfer to and from your bank York Stock Exchange, whichever is earlier. account to buy and sell shares, please complete the bank information section By Mail Make your check payable to the Fund. Make your check payable to the Fund. Include your account number on the check. of the application. We will keep your Mail the check and your signed application to bank information on file for future Investor Services. Fill out the deposit slip from your account statement. If you do not have a slip, include a note with your purchases and redemptions. We do not name, the Fund name, and your account number. accept cash, credit card convenience Mail the check and deposit slip or note to Investor checks, non-bank money orders or Services. travelers checks as forms of payment to purchase shares. By Wire Call to receive a wire control number and wire Call to receive a wire control number and wire (800) 632-2301 instructions. instructions. or (650) 312-2000 collect Wire the funds and mail your signed application to To make a same day wire investment, the wired Franklin Templeton Investor Services Investor Services. Please include the wire control funds must be received and accepted by us by 1:00 number or your new account number on the p.m. Pacific time or the close of the New York Stock P.O. Box 997151, Sacramento, CA 95899-7151 application. Exchange, whichever is earlier. Call toll-free: (800) 632-2301 To make a same day investment, your phone order (Monday through Friday must be received and accepted by us by 1:00 p.m. 5:30 a.m. to 5:00 p.m., Pacific time) Pacific time or the close of the New York Stock or visit us online 24 hours a day, 7 days a week, Exchange, whichever is earlier. at franklintempleton.com By Exchange Call Shareholder Services at (800) 632-2301, or (Please see “Exchanging Shares” for more franklintempleton.com send signed written instructions. You also may information on exchanges.) place an online exchange order. The automated Call Shareholder Services at (800) 632-2301, or telephone system cannot be used to open a new send signed written instructions. You also may place account. an online exchange order. (Please see “Exchanging Shares” for more information on exchanges.)

36 franklintempleton.com franklintempleton.com 37 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

Investor Services Retirement Plans Franklin Templeton Investments offers a variety of retirement plans for Automatic Investment Plan individuals and businesses. These plans require separate applications, may This plan offers a convenient way for you to invest in the Fund by require special forms for redemptions, and their policies and procedures automatically transferring money from your checking or savings account may be different than those described in this prospectus. For more each month to buy shares. To sign up, visit us online at franklintempleton. information, including a free retirement plan brochure or application, com or complete the appropriate section of your account application please call Retirement Services at (800) 527-2020. and mail it to Investor Services. If you are opening a new account, please include your minimum initial investment with your application. Telephone/Online Privileges You will automatically receive telephone/online privileges when you open Automated Telephone System your account, allowing you to obtain or view your account information, Our automated system offers around-the-clock access to information about and conduct a number of transactions by phone or online, including: buy, your account or any Franklin Templeton fund. This service is available by sell, or exchange shares of most funds; use electronic funds transfer to dialing any of the following numbers from a touch-tone phone: buy or sell shares of most funds; change your address; and, add or change account services (including distribution options, systematic withdrawal Shareholder Services (800) 632-2301 plans and automatic investment plans). Advisor Services (800) 524-4040 To view your account information or request online transactions, you will Retirement Services (800) 527-2020 first need to register for these services at the shareholder section of our website at franklintempleton.com. You will be asked to accept the terms Distribution Options of an online agreement(s) and establish a password for online services. If You may reinvest distributions you receive from the Fund in an existing you are registered for online services, you may enroll online in Franklin account in the same share class* of the Fund or another Franklin Templeton’s electronic delivery program for your shareholder documents. Templeton fund. Initial sales charges and CDSCs will not apply to This will allow you to receive electronic delivery (through our website) reinvested distributions. You also can have your distributions deposited in of most funds’ prospectuses, annual/semiannual reports to shareholders, a bank account, or mailed by check. Deposits to a bank account may be and proxy statements, as well as your account(s) statements and trade made by electronic funds transfer. confirmations, and discontinue receiving your paper copies through the U.S. mail. Using our shareholder website means you are consenting to *Advisor Class shareholders may reinvest in Advisor Class or Class A shares of another Franklin Templeton fund. sending and receiving personal financial information over the Internet, so To reinvest your distributions in Advisor Class shares of another Franklin Templeton fund, you must be a current shareholder in Advisor Class or otherwise qualify to buy that fund’s Advisor Class shares. you should be sure you are comfortable with the risks. If you received a distribution and chose to return it to purchase additional As long as we follow reasonable security procedures and act on shares in Class A shares of another Franklin Templeton fund, you will not instructions we reasonably believe are genuine, we will not be responsible be charged an initial sales charge if you invest the distribution within 90 for any losses that may occur from unauthorized requests. We will request days of the distribution date. passwords or other information, and also may record calls. To help safeguard your account, keep your password confidential, and verify the Please indicate on your application the distribution option you have accuracy of your confirmation statements immediately after you receive chosen, otherwise we will reinvest your distributions in the same share them. Contact us immediately if you believe someone has obtained class of the Fund. unauthorized access to your account or password. For transactions done over the Internet, we recommend the use of an Internet browser with 128-bit encryption. Certain methods of contacting us (such as by phone

38 franklintempleton.com franklintempleton.com 39 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT or by Internet) may be unavailable or delayed during periods of unusual Selling Shares market activity. Of course, you can decline telephone buy, sell, or exchange You can sell your shares at any time. Please keep in mind that a contingent privileges on your account application, or choose not to register for deferred sales charge (CDSC) may apply. online privileges. If you have telephone/online privileges on your account and want to discontinue them, please contact us for instructions. You Selling Shares in Writing may reinstate these privileges at any time in writing, including online Generally, requests to sell $100,000 or less can be made over the phone, registration with respect to online privileges. online, or with a simple letter. Sometimes, however, to protect you and the Note: We discourage you from including confidential or sensitive Fund we will need written instructions signed by all registered owners, with information in any Internet communication to us. If you do choose to a signature guarantee for each owner, if: send email (encrypted or not) to us over the Internet, you are accepting the r
you are selling more than $100,000 worth of shares associated risks of lack of confidentiality. r
you want your proceeds paid to someone who is not a registered owner Systematic Withdrawal Plan r
you want to send your proceeds somewhere other than the address of This plan allows you to automatically sell your shares and receive regular record, or preauthorized bank or brokerage firm account payments from your account. A CDSC may apply to withdrawals that exceed certain amounts. Certain terms and minimums apply. To sign up, We also may require a signature guarantee when we receive instructions visit us online at franklintempleton.com or complete the appropriate from an agent, not the registered owners; when you want to send your section of your application. proceeds to a bank account that was added or changed on your account within the last 15 days and the bank and fund accounts have at least one Franklin Templeton VIP Services® common owner; or when we believe it would protect the Fund against You may be eligible for Franklin Templeton VIP Services® if you are potential claims based on the instructions received. currently eligible for the $250,000 sales charge breakpoint based solely The amount may be higher for members of Franklin Templeton VIP on shares registered directly with the Franklin Templeton funds’ transfer Services®. Please see “Franklin Templeton VIP Services®” above for more agent and excluding shares held indirectly through brokerage accounts. information regarding eligibility. Franklin Templeton VIP Services® shareholders enjoy enhanced service and transaction capabilities. Please contact Shareholder Services at A signature guarantee helps protect your account against fraud. You can (800) 632-2301 for additional information on this program. obtain a signature guarantee at most banks and securities dealers. A notary public CANNOT provide a signature guarantee.

Selling Recently Purchased Shares If you sell shares recently purchased, we may delay sending you the proceeds until your check, draft or wire/electronic funds transfer has cleared, which may take seven business days.

Redemption Proceeds Your redemption check will be sent within seven days after we receive your request in proper form. We are not able to receive or pay out cash in the form of currency.

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Retirement Plans SELLING SHARES You may need to complete additional forms to sell shares in a Franklin To sell some or all of your shares Templeton Bank & Trust retirement plan. For participants under the age of Through your investment representative See the policies at left for selling shares by mail, 59½, tax penalties may apply. Call Retirement Services at (800) 527-2020 Contact your investment representative phone, or online. for details. Before requesting to have redemption proceeds By Mail sent to a bank account, please make sure we Send written instructions and endorsed share have your bank account information on file. If certificates (if you hold share certificates) to we do not have this information, you will need Investor Services. Corporate, partnership or to send written instructions with your bank’s trust accounts may need to send additional name and a voided check or savings account documents. deposit slip. If the bank and Fund accounts do Specify the Fund, the account number and the not have at least one common owner, you must all dollar value or number of shares you wish to provide written instructions signed by fund and sell. Be sure to include all necessary signatures bank account owners, and each individual and any additional documents, as well as must have his or her signature guaranteed. signature guarantees if required. If the bank and Fund accounts have at least A check will be mailed to the name(s) and one common owner and the bank account address on the account, or otherwise according was added or changed within the last 15 to your written instructions. days, you may be required to provide written instructions signed by all fund account owners, By Phone/Online with a signature guarantee for each fund account owner. (800) 632-2301 franklintempleton.com If we receive your request in proper form by 1:00 p.m. Pacific time, proceeds sent by ACH As long as your transaction is for $100,000 or generally will be available within two to three less, you do not hold share certificates and you business days. have not changed your address by phone or online within the last 15 days, you can sell your By Exchange shares by phone or online. The amount may be higher for members of Franklin Templeton Obtain a current prospectus for the fund you VIP Services®. Please see “Franklin Templeton are considering. Prospectuses are available VIP Services®” above for more information online at franklintempleton.com. regarding eligibility. Call Shareholder Services at the number below A check will be mailed to the name(s) and or send signed written instructions. You also address on the account, or a pre-authorized may place an exchange order online. See the secondary address. Written instructions, with a policies at left for selling shares by mail, phone, signature guarantee, are required to send the or online. check to another address or to make it payable If you hold share certificates, you will need to to another person. return them to the Fund before your exchange can be processed. By Electronic Funds Transfer (ACH) You can call, write, or visit us online to have redemption proceeds sent to a bank account.

Franklin Templeton Investor Services P.O. Box 997151, Sacramento, CA 95899-7151 Call toll-free: (800) 632-2301 (Monday through Friday 5:30 a.m. to 5:00 p.m., Pacific time) or visit us online 24 hours a day, 7 days a week, at franklintempleton.com 42 franklintempleton.com franklintempleton.com 43 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

Exchanging Shares of the request to purchase shares of another fund with the proceeds of the sale. Of course, you may generally redeem shares of the Fund at any time. Exchange Privilege Exchanges through financial intermediaries. If you are investing indirectly Class A in the Fund through a financial intermediary such as a broker-dealer, a You can exchange shares between most Franklin Templeton funds within bank, an insurance company separate account, an investment advisor, the same class,* generally without paying any additional sales charges. If an administrator or trustee of an IRS-recognized tax-deferred savings you exchange shares from a money fund and those shares were not charged plan such as a 401(k) retirement plan and a 529 college savings plan that a sales charge previously, however, a sales charge may apply. maintains a master account (an Omnibus Account) with the Fund for *Class Z shareholders of Franklin Mutual Series Funds may exchange into Class A without any sales charge. trading on behalf of its customers, different exchange and/or transfer limit Advisor Class shareholders of another Franklin Templeton fund also may exchange into Class A without any sales guidelines and restrictions may apply. The financial intermediary through charge. Advisor Class shareholders who exchange their shares for Class A shares and later decide they would like to exchange into another fund that offers Advisor Class may do so. whom you are investing may choose to adopt different trading restrictions designed to discourage short-term or excessive trading. Consult with your Any CDSC will continue to be calculated from the date of your initial financial intermediary (or, in the case of a 401(k) retirement plan, your investment and will not be charged at the time of the exchange. The plan sponsor) to determine what trading restrictions, including exchange/ purchase price for determining a CDSC on exchanged shares will be the transfer limitations, may be applicable to you. price you paid for the original shares. If you exchange shares subject to a CDSC into a Class A money fund, the time your shares are held in the Fund exchange privilege changes/waiver. The Fund may terminate or money fund will not count towards the CDSC holding period. modify (temporarily or permanently) this exchange privilege in the future. You will receive 60 days’ notice of any material changes, unless otherwise Advisor Class provided by law. You can exchange your Advisor Class shares for Advisor Class shares of other Franklin Templeton funds. You also may exchange your Advisor Other funds’ exchange privileges. If there is a conflict between the Class shares for Class A shares of a fund that does not currently offer an exchange privileges of two funds involved in an exchange transaction, the Advisor Class (without any sales charge)* or for Class Z shares of Franklin stricter policy will apply to the transaction. Other Franklin Templeton Mutual Series Funds. funds may have different exchange restrictions. Check each fund’s prospectus for details. *If you exchange into Class A shares and you later decide you would like to exchange into a fund that offers an Advisor Class, you may exchange your Class A shares for Advisor Class shares if you are a current shareholder in Advisor Class or you otherwise qualify to buy the fund’s Advisor Class shares. Frequent Trading Policy The Fund’s board of trustees has adopted the following policies and All Classes procedures with respect to frequent trading in Fund shares (Frequent The remainder of the “Exchanging Shares” section applies to all classes. Trading Policy). Generally exchanges may only be made between identically registered The Fund does not intend to accommodate short-term or frequent accounts, unless you send written instructions with a signature guarantee. purchases and redemptions of Fund shares that may be detrimental to the An exchange is really two transactions: a sale of one fund and the purchase Fund. For example, this type of trading activity could interfere with the of another. In general, the same policies that apply to purchases and sales efficient management of the Fund’s portfolio or materially increase the also apply to exchanges, including minimum investment amounts (except Fund’s transaction costs, administrative costs or taxes. exchanges of an entire account balance). Exchanges also generally have the In addition, since the Fund may invest in foreign securities, it may be same tax consequences as ordinary sales and purchases. vulnerable to a form of short-term trading that is sometimes referred to Rejected exchanges. If the Fund rejects an exchange request involving the as “time-zone arbitrage.” Time-zone arbitrage occurs when an investor sale of Fund shares, the rejected exchange request will also mean rejection seeks to take advantage of delays between changes in the value of a mutual

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fund’s portfolio holdings and the reflection of those changes in the fund’s agent may consider a variety of factors, including the potential impact net asset value per share. These delays are more likely to occur in the case of such remedial actions on the Fund and its shareholders. If the Fund is of foreign investments, due to differences between the times during which a “fund of funds,” the Fund’s transfer agent may take into account the the Fund’s international portfolio securities trade on foreign markets and impact of the trading activity and of any proposed remedial action on both the time as of which the Fund’s NAV is calculated (generally as of the close the Fund and the underlying funds in which the Fund invests. of the NYSE - please see “Calculating Share Price”). Time-zone arbitrage Frequent trading through financial intermediaries. You are an investor traders seek to purchase or redeem shares of a fund based on events subject to this Frequent Trading Policy whether you are a direct occurring after foreign market closing prices are established, but before shareholder of the Fund or you are investing indirectly in the Fund calculation of the fund’s NAV. This can result in the value of the Fund’s through a financial intermediary, such as a broker-dealer, bank, trust shares being diluted. One of the objectives of the Fund’s fair value pricing company, insurance company product such as an annuity contract, procedures is to minimize the possibility of this type of arbitrage (please investment advisor, or an administrator or trustee of an IRS-recognized tax- see “Valuation - Foreign Securities - Potential Impact of Time Zones and deferred savings plan such as a 401(k) retirement plan and a 529 college Market Holidays”); however, there can be no assurance that the Fund’s savings plan. valuation procedures will be successful in eliminating it. Some financial intermediaries maintain master accounts with the Fund on Through its transfer agent, the Fund performs ongoing monitoring of behalf of their customers (“omnibus accounts”). The Fund has entered shareholder trading in shares of the Fund and other Franklin Templeton into “information sharing agreements” with these financial intermediaries, funds in order to try and identify shareholder trading patterns that which permit the Fund to obtain, upon request, information about the suggest an ongoing short-term trading strategy. If shareholder trading trading activity of the intermediary’s customers that invest in the Fund. patterns identified by the transfer agent through monitoring or from other If the Fund’s transfer agent identifies omnibus account level trading information regarding the shareholder’s trading activity in non-Franklin patterns that have the potential to be detrimental to the Fund, the transfer Templeton funds leads the transfer agent to reasonably conclude that agent may, in its sole discretion, request from the financial intermediary such trading may be detrimental to the Fund as described in this Frequent information concerning the trading activity of its customers. Based upon its Trading Policy, the transfer agent, on behalf of the Fund, may temporarily review of the information, if the transfer agent determines that the trading or permanently bar future purchases into the Fund or, alternatively, may activity of any customer may be detrimental to the Fund, it may, in its sole limit the amount, number or frequency of any future purchases and/or discretion, request the financial intermediary to restrict or limit further the method by which you may request future purchases and redemptions trading in the Fund by that customer. There can be no assurance that the (including purchases and/or redemptions by an exchange or transfer transfer agent’s monitoring of omnibus account level trading patterns will between the Fund and any other mutual fund). enable it to identify all short-term trading by a financial intermediary’s In considering an investor’s trading patterns, the Fund may consider, customers. among other factors, the investor’s trading history both directly and, if Revocation of trades. While the Fund reserves the right to reject any known, through financial intermediaries, in the Fund, in other Franklin purchase order for any reason, the Fund may also revoke executed Templeton funds, in non-Franklin Templeton mutual funds, or in accounts purchase orders that the transfer agent reasonably concludes in its sole under common control or ownership (see, for example, “Investment discretion may have been contrary to the objectives of the Fund’s Frequent by asset allocators” in the SAI). The transfer agent may also reject any Trading Policy. purchase or redemption request, whether or not it represents part of any ongoing trading pattern, if the Fund’s investment manager or transfer agent reasonably concludes that the amount of the requested transaction may disrupt or otherwise interfere with the efficient management of the Fund’s portfolio. In determining what actions should be taken, the Fund’s transfer

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Account Policies range of the most recent bid and ask prices. If portfolio securities trade both in the over-the-counter market and on a stock exchange, the Fund Calculating Share Price values them according to the broadest and most representative market. Class A Requests to buy and sell shares are processed at the NAV next calculated When you buy shares, you pay the “offering price” for the shares. The after we or an approved financial intermediary receive your request in “offering price” is determined by dividing the NAV per share by an amount proper form. equal to 1 minus the sales charge applicable to the purchase (expressed in decimals), calculated to two decimal places using standard rounding Generally, trading in corporate bonds, U.S. government securities and criteria. The number of Fund shares you will be issued will equal the money market instruments is substantially completed each day at various amount invested divided by the applicable offering price for those shares, times before the close of the NYSE. The value of these securities used in calculated to three decimal places using standard rounding criteria. For computing the NAV is determined as of such times. Occasionally, events example, if the NAV per share is $10.25 and the applicable sales charge for affecting the values of these securities may occur between the times at the purchase is 5.75%, the offering price would be calculated as follows: which they are determined and the close of the NYSE that will not be 10.25 divided by 1.00 minus 0.0575 [10.25/0.9425] equals 10.87533, reflected in the computation of the NAV. The Fund relies on third-party which, when rounded to two decimal points, equals 10.88. The offering pricing vendors to monitor for events materially affecting the value of these price per share would be $10.88. securities during this period. If an event occurs, the third-party pricing vendors will provide revised values to the Fund. When you sell shares, you receive the NAV minus any applicable CDSC. All Classes Fair Valuation – Individual Securities The value of a mutual fund is determined by deducting the fund’s liabilities The Fund has procedures, approved by the board of trustees, to determine from the total assets of the portfolio. The NAV per share is determined by the fair value of individual securities and other assets for which market dividing the total net asset value of each fund’s share class by the applicable prices are not readily available (such as certain restricted or unlisted number of shares outstanding per share class. securities and private placements) or which may not be reliably priced (such as in the case of trade suspensions or halts, price movement limits set The Fund calculates the NAV per share each business day normally as by certain foreign markets, and thinly traded or illiquid securities). Some of the close of regular trading on the New York Stock Exchange (NYSE) methods for valuing these securities may include: fundamental analysis (normally 1:00 p.m. Pacific time) or earlier when the NYSE closes early (earnings multiple, etc.), matrix pricing, discounts from market prices of because trading has been halted for the day. The Fund does not calculate similar securities, or discounts applied due to the nature and duration the NAV on days the NYSE is closed for trading, which include New Year’s of restrictions on the disposition of the securities. The board of trustees Day, Martin Luther King Jr. Day, President’s Day, Good Friday, Memorial oversees the application of fair value pricing procedures. Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The application of fair value pricing procedures represents a good faith When determining its NAV, the Fund values cash and receivables at their determination based upon specifically applied procedures. There can be no realizable amounts, and records interest as accrued and dividends on the assurance that the Fund could obtain the fair value assigned to a security if ex-dividend date. The Fund generally utilizes two independent pricing it were able to sell the security at approximately the time at which the Fund services to assist in determining a current market value for each security. determines its NAV per share. If market quotations are readily available for portfolio securities listed on a securities exchange, the Fund values those securities at the last quoted Security Valuation – Options sale price or the official closing price of the day, respectively, or, if there is The Fund values portfolio securities underlying actively traded call options no reported sale, within the range of the most recent quoted bid and ask at their market price as determined above. The current market value of prices. The Fund values over-the-counter portfolio securities within the any option the Fund holds is its last sale price on the relevant exchange

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before the Fund values its assets. If there are no sales that day or if the last proxies (such as baskets of American Depositary Receipts, futures contracts sale price is outside the bid and ask prices, the Fund values options within and exchange traded funds). the range of the current closing bid and ask prices if the Fund believes the These price movements are measured against established trigger thresholds valuation fairly reflects the contract’s market value. for each specific market proxy to assist in determining if an event has occurred that might call into question the availability (including the Security Valuation – Foreign Securities – Computation of U.S. reliability) of the values of foreign securities between the times at which Equivalent Value they are determined and the close of the NYSE. If such an event occurs, The Fund generally determines the value of a foreign security as of the close the foreign securities may be valued using fair value procedures established of trading on the foreign stock exchange on which the security is primarily and approved by the board of trustees. In certain circumstances these traded, or as of the close of trading on the NYSE, if earlier. The value is procedures include the use of independent pricing services. The intended then converted into its U.S. dollar equivalent at the foreign exchange rate in effect of applying fair value pricing is to compute an NAV that accurately effect at the close of the NYSE (generally 1:00 p.m. Pacific time) on the day reflects the value of the Fund’s portfolio at the time that the NAV is that the value of the foreign security is determined. If no sale is reported at calculated, to discourage potential arbitrage market timing in Fund that time, the foreign security will be valued within the range of the most shares, to mitigate the dilutive impact of such attempted arbitrage market recent quoted bid and ask prices. Occasionally events (such as repatriation timing and to be fair to purchasing, redeeming and existing shareholders. limits or restrictions) may impact the availability or reliability of foreign However, the application of fair value pricing procedures may, on occasion, exchange rates used to convert the U.S. dollar equivalent value. If such an worsen rather than mitigate the potential dilutive impact of shareholder event occurs, the foreign exchange rate will be valued at fair value using trading. procedures established and approved by the board of trustees. In addition, trading in foreign portfolio securities generally, or in securities Valuation – Foreign Securities – Potential Impact of Time Zones markets in a particular country or countries, may not take place on every and Market Holidays NYSE business day. Furthermore, trading takes place in various foreign Trading in securities on foreign securities stock exchanges and over-the- markets on days that are not business days for the NYSE, and on which counter markets, such as those in Europe and Asia, may be completed the Fund’s NAV is not calculated. Thus, the calculation of the Fund’s NAV well before the close of business on the NYSE on each day that the NYSE does not take place contemporaneously with the determination of the is open. Occasionally, events occur between the time at which trading in prices of many of the foreign portfolio securities used in the calculation. a foreign security is completed and the close of the NYSE that might call If events affecting the last determined values of these foreign securities into question the availability (including the reliability) of the value of a occur (determined through the monitoring process described above), foreign portfolio security held by the Fund. As a result, the Fund may be the securities will be valued at fair value determined in good faith in susceptible to what is referred to as “time-zone arbitrage.” Certain investors accordance with the Fund’s fair value procedures established and approved in the Fund may seek to take advantage of discrepancies in the value of the by the board of trustees. Fund’s portfolio securities as determined by the foreign market at its close and the latest indications of value attributable to the portfolio securities Accounts with Low Balances at the time the Fund’s NAV is computed. Trading by these investors, often If your account has been open for more than one year and its value referred to as “arbitrage market timers,” may dilute the value of the Fund’s falls below $500 ($50 for employee and UGMA/UTMA accounts), we shares, if such discrepancies in security values actually exist. To attempt will mail you a notice asking you to bring the account back up to its to minimize the possibilities for time-zone arbitrage, and in accordance applicable minimum investment amount. If you choose not to do so with procedures established and approved by the Fund’s board of trustees, within 30 days, we will close your account and mail the proceeds to the the investment manager monitors price movements following the close of address of record. You will not be charged a CDSC if your account is trading in foreign stock markets through a series of country specific market closed for this reason. This policy does not apply to: (1) certain broker-

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controlled accounts established through the National Securities Clearing Joint Accounts Corporation’s Networking system; (2) accounts in Class B and Class Unless you specify a different registration, shares issued to two or more A accounts established pursuant to a conversion from Class B; (3) tax- owners are registered as “joint tenants with rights of survivorship” (shown deferred retirement plan accounts; (4) active automatic investment plan as “Jt Ten” on your account statement). To make any ownership changes to accounts; (5) broker-dealer sponsored separately managed accounts (wrap jointly owned shares, or to sever a joint tenancy in jointly owned shares, all accounts); (6) accounts held through a 529 college savings program; and, owners must agree in writing. (7) Coverdell Education Savings Plan accounts. Joint Account Risk with Telephone/Online Privileges Statements, Reports and Prospectuses You will automatically receive telephone/online privileges when you You will receive quarterly account statements that show all your account open your account. If your account has more than one registered owner, transactions during the quarter. You also will receive written notification telephone/online privileges allow the Fund to accept online registration for after each transaction affecting your account (except for distributions and online services (including electronic delivery of shareholder documents) transactions made through automatic investment or withdrawal programs, and transaction instructions online or by telephone from only one which will be reported on your quarterly statement). registered owner. This means that any one registered owner on your account, acting alone and without the consent of any other registered You also will receive the Fund’s financial reports every six months as well owner, may give the Fund instructions by telephone, online or in writing as an annual updated prospectus. To reduce Fund expenses, we try to (subject to any limitations in telephone or online privileges) to: identify related shareholders in a household and send only one copy of the financial reports and prospectus. This process, called “householding,” will r
Exchange shares from a jointly registered Fund account requiring all continue indefinitely unless you instruct us otherwise. If you prefer not to registered owner signatures into an identically registered money fund have these documents householded, please call us at (800) 632-2301. At account that only requires one registered owner’s signature to redeem any time you may view current prospectuses and financial reports on our shares; website. r
Redeem Fund shares and direct the redemption proceeds to a bank If you choose, you may receive your statements, financial reports and account that may or may not be owned by you and, if owned by you prospectuses through electronic delivery (please see “Investor Services - jointly with someone else, only requires one person to withdraw funds Telephone/Online Privileges”). by check or otherwise; r
Add/Change the bank account to which Fund share redemption proceeds Investment Representative Account Access may be sent, which bank account may not be owned by you; If there is a dealer or other investment representative of record on your account, he or she will be able to obtain your account information, r
Purchase Fund shares by debiting a bank account that may be owned by conduct transactions for your account, and also will receive copies of all you; and notifications and statements and other information about your account r
Add/Change the bank account that may be debited for Fund share directly from the Fund. purchases, which new account may be owned by you.

Street or Nominee Accounts If you do NOT want another registered owner on your account to be able You may transfer your shares from the street or nominee name account to issue these kinds of instructions to the Fund without your consent, you of one dealer to another, as long as both dealers have an agreement with must instruct the Fund to deny/terminate online privileges and the ability Distributors. We will process the transfer after we receive authorization in to issue such instructions by telephone so that these types of instructions proper form from your delivering securities dealer. will only be accepted in writing signed by all account owners. This decision will apply to any other fund into which you may exchange your jointly

52 franklintempleton.com franklintempleton.com 53 YOUR ACCOUNT FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON HARD CURRENCY FUND YOUR ACCOUNT

owned Fund shares. Any later decision to permit these types of instructions investors who indirectly hold Franklin Templeton fund shares through by telephone and/or online will need to be given to the Fund in a written dealer-maintained brokerage accounts as more fully described under instruction signed by all registered owners. “Shareholder servicing and transfer agent” of the “Management and Other Services” section in the SAI. These fees are paid by the Fund’s transfer agent Additional Policies from payments it receives under its agreement with the Fund. Please note that the Fund maintains additional policies and reserves certain No dealer commission will be paid on Class A NAV purchases by rights, including: Employer Sponsored Retirement Plans. r
The Fund may restrict, reject or cancel any purchase orders, including an If any dealer commissions are paid in connection with a purchase which exchange request. is subsequently rejected or results in any trading restriction placed on the r
The Fund may modify, suspend, or terminate telephone/online privileges purchaser as a result of a determination by the Fund’s investment manager at any time. or transfer agent that the purchase may be connected with trading activity that may be detrimental to the Fund as described in the Fund’s “Frequent r
The Fund may make material changes to or discontinue the exchange Trading Policy,” the dealer shall, upon demand, refund such commissions privilege on 60 days’ notice or as otherwise provided by law. to Distributors. r
The Fund may stop offering shares completely or may offer shares only Commission (%) — on a limited basis, for a period of time or permanently. Investment under $100,000 2.00 r
Normally, redemptions are processed by the next business day, but may $100,000 but under $250,000 1.50 take up to seven days to be processed if making immediate payment $250,000 but under $500,000 1.00 would adversely affect the Fund. $500,000 but under $1 million 0.85 r
In unusual circumstances, we may temporarily suspend redemptions or $1 million or more up to 0.751 postpone the payment of proceeds, as allowed by federal securities laws. 12b-1 fee to dealer 0.251, 2 r
For redemptions over a certain amount, the Fund may pay redemption 1. For purchases at NAV where Distributors paid a prepaid commission, dealers may start to receive the 12b-1 proceeds in securities or other assets rather than cash if the investment fee in the 13th month after purchase. For purchases at NAV where Distributors did not pay a prepaid commission, manager determines it is in the best interest of the Fund, consistent with dealers may start to receive the 12b-1 fee at the time of purchase. applicable law. 2. Under the Distribution Plan for Class A, the Fund may pay up to 0.45% to Distributors or others, out of which 0.20% generally will be retained by Distributors for its distribution expenses. The board of trustees has currently r
You may only buy shares of a fund (including the purchase side of an determined to set such fees under the Plan at 0.30% (until further notice), thus reducing the amount that will be retained by Distributors. exchange) eligible for sale in your state or jurisdiction. Other dealer and financial intermediary compensation. Distributors may r
To permit investors to obtain the current price, dealers are responsible make payments (a portion of which may be reimbursable under the terms for transmitting all orders to the Fund promptly. of the Fund’s Rule 12b-1 distribution plans) to certain dealers who have sold shares of the Franklin Templeton mutual funds. In the case of any Dealer Compensation one dealer, marketing support payments will not exceed the sum of 0.08% Class A of that dealer’s current year’s total sales of Franklin Templeton mutual Qualifying dealers who sell Fund shares may receive sales commissions funds, and 0.05% (or 0.03%) of the total assets of equity (or fixed income) and other payments. These are paid by Distributors from sales charges funds attributable to that dealer, on an annual basis. Marketing support received from purchasing or redeeming shareholders, from distribution and payments made to organizations located outside the U.S., with respect to service (12b-1) fees from the Fund and from Distributors’ other financial investments in the Fund by non-U.S. persons, may exceed this limitation. resources. Dealers may also receive shareholder servicing fees for servicing

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Distributors makes these payments in connection with the qualifying Questions dealers’ efforts to educate financial advisors about the Franklin Templeton If you have any questions about the Fund or your account, you can write to funds. Any current year sales to, or assets held on behalf of, Employer us at P.O. Box 997151, Sacramento, CA 95899-7151. You also can call us Sponsored Retirement Plans for which payment is made to a financial at one of the following numbers. For your protection and to help ensure we intermediary pursuant to the following paragraph will be excluded from provide you with quality service, all calls may be monitored or recorded. the calculation of marketing support payments pursuant to this paragraph. Hours (Pacific time, Distributors and/or its affiliates may also make payments (a portion of Department Name Telephone Number Monday through Friday) which may be reimbursable under the terms of the Fund’s Rule 12b-1 Shareholder Services (800) 632-2301 5:30 a.m. to 5:00 p.m. distribution plans) to certain financial intermediaries in connection with their activities that are intended to assist in the sale of shares of Fund Information (800) DIAL BEN 5:30 a.m. to 5:00 p.m. the Franklin Templeton mutual funds, directly or indirectly, to certain (800) 342-5236 Employer Sponsored Retirement Plans. In the case of any one financial Retirement Services (800) 527-2020 5:30 a.m. to 5:00 p.m. intermediary, such payments will not exceed 0.10% of the total assets of Franklin Templeton mutual funds held, directly or indirectly, by such Advisor Services (800) 524-4040 5:30 a.m. to 5:00 p.m. Employer Sponsored Retirement Plans, on an annual basis. TDD (hearing impaired) (800) 851-0637 5:30 a.m. to 5:00 p.m.

A number of factors will be considered in determining these payments, Automated Telephone System (800) 632-2301 (around-the-clock access) including the qualifying dealer or financial intermediary’s sales, assets (800) 524-4040 and redemption rates, the nature and quality of any servicing provided (800) 527-2020 by the financial intermediary, and the quality of the dealer or financial intermediary’s relationship with Distributors. Distributors will, on an annual basis, determine the advisability of continuing these payments. These payments may be in addition to any shareholder servicing fees paid by the Fund’s transfer agent from payments it receives under its agreement with the Fund. To the extent permitted by SEC and Financial Industry Regulatory Authority rules and other applicable laws and regulations, Distributors may pay or allow other promotional incentives or payments to dealers. Sale of Fund shares, as well as shares of other funds in Franklin Templeton Investments, is not considered a factor in the selection of broker-dealers to execute the Fund’s portfolio transactions. Accordingly, the allocation of portfolio transactions for execution by broker-dealers that sell Fund shares is not considered marketing support payments to such broker-dealers. You can find further details in the SAI about the payments made by Distributors and the services provided by your financial advisor. Your financial advisor may charge you additional fees or commissions other than those disclosed in this prospectus. You should ask your financial advisor for information about any payments it receives from Distributors and any services it provides, as well as about fees and/or commissions it charges.

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58 franklintempleton.com franklintempleton.com 59 FRANKLIN TEMPLETON HARD CURRENCY FUND FRANKLIN TEMPLETON FUNDS Literature Request. To receive a summary prospectus and/or prospectus, please call us at (800) DIAL BEN/ 342-5236 or visit franklintempleton.com . Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. The prospectus contains this and other information. Please carefully read This page intentionally left blank a prospectus before investing.

VALUE Templeton Asian Growth Fund Franklin Limited Maturity Franklin All Cap Value Fund Templeton BRIC Fund U.S. Government Securities Fund4 Franklin Balance Sheet Investment Fund Templeton China World Fund Franklin Low Duration Total Return Fund Franklin Large Cap Value Fund Templeton Developing Markets Trust Franklin Real Return Fund Franklin MicroCap Value Fund1 Templeton Emerging Markets Franklin Strategic Income Fund Franklin MidCap Value Fund Small Cap Fund Franklin Strategic Mortgage Portfolio Franklin Small Cap Value Fund Templeton Foreign Fund Franklin Templeton Mutual Beacon Fund Templeton Foreign Smaller Hard Currency Fund Mutual Quest Fund Companies Fund Franklin Total Return Fund Mutual Recovery Fund 2 Templeton Frontier Markets Fund Franklin U.S. Government Mutual Shares Fund HYBRID Securities Fund 4 BLEND Franklin Balanced Fund Templeton Global Bond Fund Franklin Focused Core Equity Fund Franklin Convertible Securities Fund Templeton Global Total Return Fund Franklin Large Cap Equity Fund Franklin Equity Income Fund Templeton International Bond Fund Franklin Rising Dividends Fund Franklin Income Fund TAX-FREE INCOME5 GROWTH Templeton Emerging Markets Balanced National Franklin DynaTech Fund Fund Double Tax-Free Income Fund Franklin Flex Cap Growth Fund Templeton Global Balanced Fund3 Federal Tax-Free Income Fund Franklin Growth Fund ASSET ALLOCATION High Yield Tax-Free Income Fund Franklin Growth Opportunities Fund Franklin Templeton Corefolio® Insured Tax-Free Income Fund6 Franklin Small Cap Growth Fund Allocation Fund Limited-/Intermediate-Term Franklin Small-Mid Cap Growth Fund Franklin Templeton Founding Funds California Intermediate-Term SECTOR Allocation Fund Tax-Free Income Fund Franklin Biotechnology Discovery Fund Franklin Templeton Conservative Federal Intermediate-Term Franklin Global Real Estate Fund Allocation Fund Tax-Free Income Fund Franklin Gold & Precious Metals Fund Franklin Templeton Growth Allocation Federal Limited-Term Tax-Free Franklin Natural Resources Fund Fund Income Fund Franklin Real Estate Securities Fund Franklin Templeton Moderate Allocation New York Intermediate-Term Franklin Utilities Fund Fund Tax-Free Income Fund Mutual Financial Services Fund Franklin Templeton 2015 Retirement State-Specifi c GLOBAL Target Fund Alabama Michigan Franklin World Perspectives Fund Franklin Templeton 2025 Retirement Arizona Minnesota Mutual Global Discovery Fund Target Fund California Missouri Templeton Global Opportunities Trust Franklin Templeton 2035 Retirement (4 funds) New Jersey Target Fund Templeton Global Smaller Colorado New York (2 funds) Companies Fund Franklin Templeton 2045 Retirement Connecticut North Carolina Target Fund Templeton Growth Fund Florida Ohio Franklin Templeton Global Allocation Templeton World Fund Georgia Oregon Fund INTERNATIONAL Kentucky Pennsylvania Franklin Templeton Multi-Asset Real Louisiana Tennessee Franklin India Growth Fund Return Fund Franklin International Growth Fund Maryland Virginia FIXED INCOME Franklin International Small Cap Massachusetts Franklin Adjustable U.S. Government INSURANCE FUNDS Growth Fund Securities Fund4 Mutual European Fund Franklin Templeton Variable Franklin Floating Rate Daily Access Fund Insurance Products Trust7 Mutual International Fund Franklin High Income Fund

1. The fund is closed to new investors. Existing shareholders in fi xed income senior securities and at least 25% of its assets and select retirement plans can continue adding to their in equity securities; at least 40% of its assets in non-U.S. accounts. investments; and, in issuers located in at least three different 2. The fund is a continuously offered, closed-end fund. Shares countries (including the U.S.). may be purchased daily; there is no daily redemption. However, 4. An investment in the fund is neither insured nor guaranteed each quarter, pending board approval, the fund will authorize by the U.S. government or by any other entity or institution. the repurchase of 5%-25% of the outstanding number of 5. For investors subject to the alternative minimum tax, a shares. Investors may tender all or a portion of their shares small portion of fund dividends may be taxable. Distributions during the tender period. of capital gains are generally taxable. 3. Effective 7/1/11, Templeton Income Fund changed its 6. The fund invests primarily in insured municipal securities. name to Templeton Global Balanced Fund. Additionally, the 7. The funds of the Franklin Templeton Variable Insurance fund changed its goal and pricing structure. Under normal Products Trust are generally available only through insurance circumstances, the fund will invest: at least 25% of its assets company variable contracts. 60 franklintempleton.com NOT PART OF THE PROSPECTUS 12/11 FOR MORE INFORMATION You can learn more about the Fund in the following documents:

Annual/Semiannual Report to Shareholders Includes a discussion of recent market conditions and Fund strategies that significantly affected Fund performance during its last fiscal year, financial statements, detailed performance information, portfolio holdings and, in the annual report only, the independent registered public accounting firm’s report.

Statement of Additional Information (SAI) Contains more information about the Fund, its investments and policies. It is incorporated by reference (is legally a part of this prospectus). For a free copy of the current annual/semiannual report or the SAI, please contact your investment representative or call us at the number below. You also can view the current annual/semiannual report and the SAI online through franklintempleton.com. You also can obtain information about the Fund by visiting the SEC’s Public Reference Room in Washington, DC (phone (202) 551-8090) or the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You can obtain copies of this information, after paying a duplicating fee, by writing to the SEC’s Public Reference Section, Washington, DC 20549-0102 or by electronic request at the following email address: [email protected].

One Franklin Parkway, San Mateo, CA 94403-1906 (800) DIAL BEN®/342-5236 TDD/Hearing Impaired (800) 851-0637 franklintempleton.com

Investment Company Act file #811-04450 © 2012 Franklin Templeton Investments. All rights reserved.

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