FRANkLiN TEMPLETON INVESTMENT FUNDS - Citibank

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PROSPECTUS OF FRANKLIN TEMPLETON INVESTMENT FUNDS Amendment to Investment Management Fees and Sales Charge Structure—Investment Management Fees The investment management fee in respect of the shares of all classes, except class I shares and class X shares of the Templeton Euro Money Market Fund is reduced from 0.30% to 0.25%. With effect from April 1, 2010, the maintenance charge in respect of the Class A Shares of the Templeton Euro Government Bond Fund is changed from “up to 0.30%” to “up to 0.20%”. Change of Investment Manager for Funds of the Company With effect from May 31, 2010, the management structure of Franklin Mutual Beacon Fund and Franklin Mutual Global Discovery Fund is changed from a co-management structure by Franklin Mutual Advisers, LLC and Franklin Templeton Investment Management Limited to a single management structure by Franklin Mutual Advisers, LLC. Addition of a Risk Consideration The Section “Risk Considerations” is amended to add the Gold and Precious Metals Sector risk, which shall read as follows: Gold and Precious Metals Sector risk Some Funds’ investments may concentrate in gold and other precious metals (particularly platinum and palladium) operations companies. By concentrating in the industries in a single sector, such Funds carry a much greater risk of adverse developments than a fund that invests in companies from a wide variety of industries. Also, there currently are a limited number of platinum and palladium operations companies, which restricts such Funds ability to diversify their investments in those metals. The price of gold and precious metals operations companies is strongly affected by the price of gold and other precious metals such as platinum, palladium and silver. These prices may fluctuate substantially over short periods of time, so the Share price may be more volatile than other types of investments. Inflation-Indexed Securities risk Inflation-indexed securities have a tendency to react to changes in real interest rates. Real interest rates represent nominal (stated) interest rates lowered by the anticipated effect of inflation. In general, the price of an inflation-indexed security can decrease when real interest rates increase, and can increase when real interest rates decrease. Interest payments on inflation-indexed securities will fluctuate as the principal and/or interest is adjusted for inflation and can be unpredictable, therefore, the Fund’s income distributions may fluctuate more than the income distributions of a typical fixed income fund. There can be no assurance that the Consumer Price Index or any other measure used to adjust the principal amounts of the Fund’s debt securities will accurately correspond to the rate of inflation experienced by a particular investor. Any increase in the principal amount of an inflation-protected debt security will be considered taxable ordinary income, even though investors, such as the Fund, do not receive their principal until maturity. 116 Franklin Templeton Investment Funds
PROSPECTUS OF FRANKLIN TEMPLETON INVESTMENT FUNDS Miscellaneous The fourth before last paragraph of Section “Valuation” of Appendix D—Determination of the Net Asset Value of Shares is amended so as to read as follows: The value of securities not quoted or dealt in on a stock exchange or an organised market and of securities which are so quoted or dealt in, but in respect of which no price quotation is available or the price quoted is not representative of the securities’ fair market value shall be determined by or under the direction of the Board of Directors. Short-dated debt transferable securities and money market instruments not traded on a regulated exchange are usually valued on an amortised cost basis. The paragraph on Class Z shares of Sub-section “Share Classes—Sales Charge Structure” of Section “Investment Management Fees and Sales Charge Structure” is amended so as to read as follows: Class Z Shares Class Z Shares may be offered in certain limited circumstances (i) for distribution in certain countries and through certain sub-distributors and/or dealers having separate fee arrangements with their clients, and/or (ii) to professional investors at the discretion of the Principal Distributor and/or the Transfer Agent. In these cases, any local supplement to this Prospectus or marketing material, including that used by the relevant intermediaries, will refer to the possibility and terms to subscribe for Class Z Shares. Class Z Shares will be offered at the applicable net asset value per Share next determined after the purchase order is received. Purchases of Class Z Shares are not subject to an initial sales charge, CDSC nor any maintenance, distribution or servicing charge. Further, the Section “Exchange of Shares” is amended to add that the exchange of Class A Shares into Class Z Shares is only permitted (i) to investors instructing through certain sub-distributors and/or dealers having separate fee arrangements with their clients, and/or (ii) to professional investors at the discretion of the Principal Distributor and/or the Transfer Agent. Benchmark The first paragraph of Section “Benchmark” of the Simplified prospectus is amended so as to read as follows: “The below list of indices and benchmarks is provided to Shareholders for information and indicative purposes only, as all the Company’s Funds are actively managed and tend to deviate from their respective index. This list will be updated from time to time by the Board of Directors without prior notice to the Shareholders, notably in order to provide an index that better reflects the investment objective and policies to the relevant Funds and the composition of their portfolio. Any such change will be mentioned on the internet site: www.franklintempleton.lu”. With effect as from June 30, 2010, the benchmark of the Company’s Fund “Templeton Global Smaller Companies Fund” will be changed from “S&P Global < 2B Index” to “MSCI ACWI Small Cap”. April 2010 www.franklintempleton.lu 117
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FRANkLiN TEMPLETON INVESTMENT FUNDS - Citibank

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