diff --git a/README b/README
index 370f425bd..096cb5ce2 100644
--- a/README
+++ b/README
@@ -395,9 +395,9 @@ General writer options
     of template syntax. If no extension is specified, an extension
     corresponding to the writer will be added, so that `--template=special`
     looks for `special.html` for HTML output.  If the template is not
-    found, pandoc will search for it in the user data directory
-    (see `--data-dir`). If this option is not used, a default
-    template appropriate for the output format will be used (see
+    found, pandoc will search for it in the `templates` subdirectory of
+    the user data directory (see `--data-dir`). If this option is not used,
+    a default template appropriate for the output format will be used (see
     `-D/--print-default-template`).
 
 `-V` *KEY*[`=`*VAL*], `--variable=`*KEY*[`:`*VAL*]