As filed with the Securities and Exchange Commission on December 20, 2001
File Nos. 33-39088
811-6243
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
-------
Post-Effective Amendment No. 43 (X)
----
and/or
|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 1, 2002 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant's Class A, B and C prospectuses and statement of additional information dated September 1, 2001, as filed with the Securities and Exchange Commission under Form Type 485BPOS on August 29, 2001 (File Nos. 33-39088 and 811-6243) for the following funds are hereby incorporated by reference.
o Franklin Aggressive Growth Fund o Franklin California Growth Fund o Franklin Large Cap Growth Fund o Franklin Small-Mid Cap Growth Fund o Franklin Small Cap Growth Fund II o Franklin Technology Fund o Franklin Blue Chip Fund o Franklin Strategic Income Fund o Franklin Biotechnology Discovery Fund o Franklin Global Health Care Fund o Franklin Global Communications Fund o Franklin Natural Resources Fund |
o FSS1 P-3
SUPPLEMENT DATED JANUARY 1, 2002
TO THE PROSPECTUS OF
FRANKLIN STRATEGIC SERIES
(FRANKLIN AGGRESSIVE GROWTH FUND, FRANKLIN CALIFORNIA GROWTH FUND, FRANKLIN
LARGE CAP GROWTH FUND, FRANKLIN SMALL-MID CAP GROWTH FUND AND FRANKLIN SMALL
CAP GROWTH FUND II)
DATED SEPTEMBER 1, 2001
The prospectus is amended as follows:
I. As of January 1, 2002, the Franklin Aggressive Growth Fund, Franklin Large
Cap Growth Fund and Franklin Small Cap Growth Fund II offer five classes of
shares: Class A, Class B, Class C, Class R and Advisor Class. Franklin
California Growth Fund offers four classes of shares: Class A, Class B, Class C
and Class R. Franklin Small-Mid Cap Growth Fund offers four classes of shares:
Class A, Class C, Class R and Advisor Class.
II. The section "Franklin Aggressive Growth Fund - Fees and Expenses" on page 9 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99% 1.00%
Load imposed on purchases 5.75% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 61 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Management fees/5 0.50% 0.50% 0.50% 0.50%
Distribution and service
(12b-1) fees 0.35% 1.00% 0.99% 0.50%
Other expenses 0.53% 0.53% 0.53% 0.53%
----------------------------------------------
Total annual Fund operating
expenses/5 1.38% 2.03% 2.02% 1.53%
----------------------------------------------
Management fee reduction/5 (0.03%) (0.03%) (0.03%) (0.03%)
----------------------------------------------
Net annual Fund operating
expenses/5 1.35% 2.00% 1.99% 1.50%
----------------------------------------------
---------
|
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $705/1 $978 $1,272 $2,105 CLASS B $603 $927 $1,278 $2,160/2 CLASS C $399 $718 $1,162 $2,394 CLASS R $253 $474 $818 $1,791 If you do not sell your shares: CLASS B $203 $627 $1,078 $2,160/2 CLASS C $300 $718 $1,162 $2,394 CLASS R $153 $474 $818 $1,791 --------- |
III. The section "Franklin California Growth Fund - Fees and Expenses" on page 21 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99% 1.00%
Load imposed on purchases 5.75% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 61 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
------------------------------------------------------------------------------
Management fees/5 0.46% 0.46% 0.46% 0.46%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00% 0.50%
Other expenses 0.19% 0.19% 0.19% 0.19%
------------------------------------------------
Total annual Fund operating
expenses/5 0.90% 1.65% 1.65% 1.15%
------------------------------------------------
Management fee reduction/5 (0.02%) (0.02%) (0.02%) (0.02%)
------------------------------------------------
Net annual Fund operating
expenses/5 0.88% 1.63% 1.63% 1.13%
------------------------------------------------
---------
|
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $660/1 $840 $1,035 $1,597 CLASS B $566 $814 $1,087 $1,732/2 CLASS C $363 $609 $978 $2,013 CLASS R $215 $359 $622 $1,375 If you do not sell your shares: CLASS B $166 $514 $887 $1,732/2 CLASS C $264 $609 $978 $2,013 CLASS R $115 $359 $622 $1,375 --------- |
IV. The section "Franklin Large Cap Growth Fund - Fees and Expenses" on page 33 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99% 1.00%
Load imposed on purchases 5.75% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 61 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Management fees/5 0.50% 0.50% 0.50% 0.50%
Distribution and service
(12b-1) fees 0.35% 0.99% 0.99% 0.50%
Other expenses 0.45% 0.45% 0.45% 0.45%
------------------------------------------------
Total annual Fund operating
expenses/5 1.30% 1.94% 1.94% 1.45%
------------------------------------------------
Management fee reduction/5 (0.03%) (0.03%) (0.03%) (0.03%)
------------------------------------------------
Net annual Fund operating
expenses/5 1.27% 1.91% 1.91% 1.42%
------------------------------------------------
---------
|
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $697/1 $955 $1,232 $2,021 CLASS B $594 $900 $1,232 $2,066/2 CLASS C $391 $694 $1,121 $2,310 CLASS R $245 $449 $776 $1,702 If you do not sell your shares: CLASS B $194 $600 $1,032 $2,066/2 CLASS C $292 $694 $1,121 $2,310 CLASS R $145 $449 $776 $1,702 --------- |
V. The callout sentence next to the fifth paragraph under "Franklin Small-Mid Cap Growth Fund - Main Investment Strategies" on page 38 is replaced with the following:
The Fund invests 80% of its net assets in common stocks of mid and small cap companies.
VI. The section "Franklin Small-Mid Cap Growth Fund - Fees and Expenses" on page 45 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 1.99% 1.00%
Load imposed on purchases 5.75% 1.00% None
Maximum deferred sales None/2 0.99%/3 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 61 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS C CLASS R/1
-------------------------------------------------------------------------------
Management fees 0.45% 0.45% 0.45%
Distribution and service
(12b-1) fees 0.25% 1.00% 0.50%
Other expenses 0.16% 0.16% 0.16%
------------------------------------------------
Total annual Fund operating
expenses 0.86% 1.61% 1.11%
------------------------------------------------
---------
|
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $658/1 $834 $1,024 $1,575 CLASS C $361 $603 $967 $1,992 CLASS R $213 $353 $612 $1,352 If you do not sell your shares: CLASS C $262 $603 $967 $1,992 CLASS R $113 $353 $612 $1,352 --------- |
VII. The following paragraph is added to the "Franklin Small Cap Growth Fund II - Goal and Strategies" section on page 49:
The Fund is closed to new investors, except for broker-dealer sponsored wrap account programs and retirement plan accounts. The Fund reserves the right to modify this policy at any time. If you were a shareholder of record as of the close of market on October 4, 2001, you may continue to add to your account subject to the applicable minimum investment amount, or buy additional shares through reinvestment of dividends or capital gains distributions.
VIII. The first sentence under "Franklin Small Cap Growth Fund II - Main Investment Strategies" on page 49 is replaced with the following:
Under normal market conditions the Fund invests at least 80% of its net assets in the equity securities of small capitalization (small cap companies).
IX. The section "Franklin Small Cap Growth Fund II - Fees and Expenses" on page 54 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99% 1.00%
Load imposed on purchases 5.75% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 61 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
------------------------------------------------------------------------------
Management fees/5 0.54% 0.54% 0.54% 0.54%
Distribution and service
(12b-1) fees 0.35% 1.00% 1.00% 0.50%
Other expenses 0.48% 0.48% 0.48% 0.48%
-----------------------------------------------
Total annual Fund operating
expenses/5 1.37% 2.02% 2.02% 1.52%
-----------------------------------------------
Management fee reduction/5 (0.05%) (0.05%) (0.05%) (0.05%)
-----------------------------------------------
Net annual Fund operating
expenses/5 1.32% 1.97% 1.97% 1.47%
-----------------------------------------------
|
1. The Fund began offering Class R shares on January 1, 2002. Annual Fund
operating expenses are based on the expenses for Class A, B and C for the fiscal
year ended April 30, 2001. The distribution and service (12b-1) fees are based
on the maximum fees allowed under Class R's Rule 12b-1 plan.
2. There is a 1% contingent deferred sales charge that applies to investments
of $1 million or more (see page 61) and purchases by certain retirement plans
without an initial sales charge.
3. Declines to zero after six years.
4. This is equivalent to a charge of 1% based on net asset value.
5. For the fiscal year ended April 30, 2001, the manager had agreed in advance
to reduce its fee to reflect reduced services resulting from the Fund's
investment in a Franklin Templeton money fund. This reduction is required by
the Fund's Board of Trustees and an exemptive order by the Securities and
Exchange Commission.
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $702/1 $969 $1,257 $2,074 CLASS B $600 $918 $1,262 $2,128/2 CLASS C $397 $712 $1,152 $2,373 CLASS R $250 $465 $803 $1,757 If you do not sell your shares: CLASS B $200 $618 $1,062 $2,128/2 CLASS C $298 $712 $1,152 $2,373 CLASS R $150 $465 $803 $1,757 --------- |
X. The first paragraph under the section "Choosing a Share Class" on page 61 is replaced with the following:
Each class has its own sales charge and expense structure, allowing you to choose the class that best meets your situation. Your investment representative can help you decide.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
o Initial o No o Initial o No initial
sales charge initial sales sales charge
of 5.75% or sales charge of
less charge 1%
o Deferred o Deferred o Deferred o Except for
sales charge sales sales ValuSelect
of 1% on charge of charge of plans and
purchases of 4% on 1% on plans for
$1 million or shares you shares you which Franklin
more sold sell sell Templeton
within 12 within the within 18 Investments
months. first year, months provides
Effective for declining recordkeeping,
purchases on to 1% deferred sales
or after within six charge of 1%
February 1, years and on shares you
2002, the eliminated sell within 18
holding period after that months
is extended to (charged at
18 months. plan level
based on
initial
investment for
Qualified
plans).
o Lower o Higher o Higher o Higher
annual annual annual annual
expenses than expenses expenses expenses than
Class B, C or than Class than Class Class A due to
R due to lower A (same as A (same as higher
distribution Class C) Class B) distribution
fees due to due to fees (lower
higher higher than Class B
distribution distribution and Class C).
fees. fees. No No conversion
Automatic conversion to Class A
conversion to Class A shares, so
to Class A shares, so annual
shares annual expenses do
after expenses not decrease.
eight do not
years, decrease.
reducing
future
annual
expenses.
|
XI. Under the section "Investments of $1 Million or More" on page 61, effective for purchases on or after February 1, 2002, the holding period for the deferred sales charge of 1% on new Class A purchases of $1 million or more will be extended to 18 months.
XII. The section "Retirement Plans" on page 62 is replaced with the following:
RETIREMENT PLANS Class B shares are available to certain retirement plans, including IRAs (of any type), Franklin Templeton Bank & Trust 403(b) plans, and Franklin Templeton Bank & Trust qualified plans with participant or earmarked accounts, when such retirement plans are ineligible to purchase Class R shares.
XIII. The following is added under the section "Choosing a Share Class" on page 61:
SALES CHARGES - CLASS R
With Class R shares, there is no initial sales charge.
RETIREMENT PLANS Class R shares are available to the following investors:
o Qualified Retirement Plans, including 401(k), profit sharing, money purchase pension and defined benefit plans; ERISA covered 403(b)s, and; certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million,
o ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and
o Investors who open a Franklin Templeton IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO, or a rollover of assets from a same employer sponsored Franklin Templeton money purchase plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
MAXIMUM PURCHASE AMOUNT The maximum lump sum amount you may invest in Class R share IRA Rollovers is $999,999. We place any investment of $1 million or more in Class A shares since Class A's annual expenses are lower. There is no maximum purchase amount for Qualified plans.
CDSC Except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, there is a 1% contingent deferred sales charge (CDSC) on any Class R shares you sell within 18 months of purchase. The CDSC is applied at the plan level based on initial investment for Qualified plans. The way we calculate the CDSC is the same for each class (please see CDSC section on page 63 of the Prospectus).
DISTRIBUTION AND SERVICE (12B-1) FEES Class R has a distribution plan, sometimes known as a Rule 12b-1 plan, that allows each Fund to pay distribution and other fees of up to 0.50% per year for the sale of Class R shares and for services provided to shareholders. Because these fees are paid out of Class R's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
XIV. The paragraph heading on page 63 "Contingent Deferred Sales Charge (CDSC) - Class A, B & C" is replaced with the following:
CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B, C & R
XV. The second paragraph under "Reinstatement Privilege" on page 64 is replaced with the following:
If you paid a CDSC when you sold your Class A, C or R shares, we will credit your account with the amount of the CDSC paid but a new CDSC will apply. For Class B shares reinvested in Class A, a new CDSC will not apply, although your account will not be credited with the amount of any CDSC paid when you sold your Class B shares.
XVI. The table under "Buying Shares - Minimum investments" on page 66 is replaced with the following:
MINIMUM INVESTMENTS
-------------------------------------------------------------------------------
INITIAL ADDITIONAL
-------------------------------------------------------------------------------
Regular accounts $1,000 $50
-------------------------------------------------------------------------------
Automatic investment plans $50 ($25 $50 ($25
for an for an
Education Education
IRA) IRA)
-------------------------------------------------------------------------------
UGMA/UTMA accounts $100 $50
-------------------------------------------------------------------------------
Retirement accounts including no minimum no minimum
Qualified plans (other than IRAs, IRA
rollovers, Education IRAs or Roth IRAs)
-------------------------------------------------------------------------------
IRAs, IRA rollovers, Education IRAs or
Roth IRAs $250 $50
-------------------------------------------------------------------------------
Broker-dealer sponsored wrap account
programs $250 $50
-------------------------------------------------------------------------------
Full-time employees, officers, $100 $50
trustees and directors of Franklin
Templeton entities, and their
immediate family members
-------------------------------------------------------------------------------
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XVII. The footnote under the section "Distribution Options" on page 69 is replaced with the following:
*Class B and C shareholders may reinvest their distributions in Class A shares of any Franklin Templeton money fund. ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping may direct distributions to Class A shares if Class R shares are not offered by that fund.
XVIII. The following paragraph is added under the section "Exchange Privilege" beginning on page 71:
For ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping, you may exchange your Class R shares for Class A shares of another Franklin Templeton fund if that fund does not offer Class R shares.
XIX. The section "Dealer Compensation" on page 78 is replaced with the following:
DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
COMMISSION (%) --- 4.00 2.00/4 1.00/6
Investment under $50,000 5.00 --- --- ---
$50,000 but under $100,000 3.75 --- --- ---
$100,000 but under $250,000 2.80 --- --- ---
$250,000 but under $500,000 2.00 --- --- ---
$500,000 but under $1 million 1.60 --- --- ---
$1 million or more up to 1.00/1 --- --- ---
12B-1 FEE TO DEALER 0.25/1/,2 0.25/3 1.00/5 0.35/6
|
A dealer commission of up to 1% may be paid on Class A NAV purchases by certain retirement plans1 and on Class C NAV purchases. A dealer commission of up to 0.25% may be paid on Class A NAV purchases by certain trust companies and bank trust departments, eligible governmental authorities, and broker-dealers or others on behalf of clients participating in comprehensive fee programs.
MARKET TIMERS. Please note that for Class A NAV purchases by Market Timers, including purchases of $1 million or more, dealers are not eligible to receive the dealer commission. Dealers, however, may be eligible to receive the 12b-1 fee from the date of purchase.
Please keep this supplement for future reference.
o FSS2 P-1
SUPPLEMENT DATED JANUARY 1, 2002
TO THE PROSPECTUS OF
FRANKLIN STRATEGIC SERIES
(FRANKLIN BIOTECHNOLOGY DISCOVERY FUND, FRANKLIN TECHNOLOGY FUND, FRANKLIN
GLOBAL HEALTH CARE FUND, FRANKLIN GLOBAL COMMUNICATIONS FUND AND FRANKLIN
NATURAL RESOURCES FUND)
DATED SEPTEMBER 1, 2001
The prospectus is amended as follows:
I. As of January 1, 2002, the Franklin Technology Fund offers five classes of shares: Class A, Class B, Class C, Class R and Advisor Class.
II. The first sentence under "Franklin Biotechnology Discovery Fund - Main Investment Strategies" on page 2 is replaced with the following:
Under normal market conditions, the Fund invests at least 80% of its net assets in securities of biotechnology companies and discovery research firms.
III. The section "Franklin Technology Fund - Fees and Expenses" on page 20 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99% 1.00%
Load imposed on purchases 5.75% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 63 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Management fees/5 0.55% 0.55% 0.55% 0.55%
Distribution and service
(12b-1) fees 0.35% 0.98% 0.99% 0.50%
Other expenses 0.81% 0.81% 0.81% 0.81%
------------------------------------------------
Total annual Fund operating
expenses/5 1.71% 2.34% 2.35% 1.86%
------------------------------------------------
Management fee reduction/5 -0.03% -0.03% -0.03% -0.03%
------------------------------------------------
Net annual Fund operating
expenses/5 1.68% 2.31% 2.32% 1.83%
------------------------------------------------
|
1. The Fund began offering Class R shares on January 1, 2002. Annual Fund
operating expenses are based on the expenses for Class A, B and C for the fiscal
year ended April 30, 2001. The distribution and service (12b-1) fees are based
on the maximum fees allowed under Class R's Rule 12b-1 plan.
2. There is a 1% contingent deferred sales charge that applies to investments
of $1 million or more (see page 63) and purchases by certain retirement plans
without an initial sales charge.
3. Declines to zero after six years.
4. This is equivalent to a charge of 1% based on net asset value.
5. For the fiscal year ended April 30, 2001, the manager and administrator had
agreed in advance to limit their respective fees. The manager also had agreed
in advance to reduce its fee to reflect reduced services resulting from the
Fund's investment in a Franklin Templeton money fund. With these reductions,
management fees were 0.44% and net annual Fund operating expenses were 1.40%
for Class A, 2.03% for Class B, 2.04% for Class C and 1.55% for Class R.
The manager and administrator may end this arrangement at any time upon notice
to the Fund's Board of Trustees. The manager, however, is required by the
Fund's Board of Trustees and an exemptive order by the Securities and Exchange
Commission to reduce its fee if the Fund invests in a Franklin Templeton
money fund.
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $736/1 $1,074 $1,435 $2,448 CLASS B $634 $1,021 $1,435 $2,488/2 CLASS C $432 $817 $1,328 $2,729 CLASS R $286 $576 $990 $2,148 If you do not sell your shares: CLASS B $234 $721 $1,235 $2,488/2 CLASS C $333 $817 $1,328 $2,729 CLASS R $186 $576 $990 $2,148 |
1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.
IV. The callout sentence next to the fourth paragraph under "Franklin Natural Resources Fund - Main Investment Strategies" on page 50 is replaced with the following:
The Fund normally invests at least 80% of its net assets in the equity and debt securities of U.S. and foreign companies in the natural resources sector.
V. The section "Franklin Natural Resources Fund - Management" on page 59 is replaced with the following:
Franklin Advisers, Inc. (Advisers), One Franklin Parkway, San Mateo, CA 94403-1906, is the Fund's investment manager. Together, Advisers and its affiliates manage over $251 billion in assets.
The team responsible for the Fund's management is:
STEVE LAND, PORTFOLIO MANAGER OF ADVISERS
Mr. Land has been a manager of the Fund since 1999. He joined Franklin Templeton Investments in 1997.
STEVE KORNFELD CFA, PORTFOLIO MANAGER of ADVISERS
Mr. Kornfeld has been a manager of the Fund since October 2001. He joined
Franklin Templeton Investments in January 2001. Prior to joining Franklin
Templeton investments he worked in private equity and as a sell-side research
analyst where he specialized in covering small and micro-cap securities.
CARLEE PRICE CFA, PORTFOLIO MANAGER of ADVISERS
Ms. Price has been a manager of the Fund since October 2001. She joined Franklin
Templeton Investments in 2000. Prior to joining Franklin Templeton Investments
she worked as an analyst for a large institutional fund manager in Toronto,
Canada, and has spent time in a similar role in Frankfurt, Germany.
The Fund pays Advisers a fee for managing the Fund's assets. For the fiscal year ended April 30, 2001, management fees, before any advance waiver, were 0.63% of the Fund's average daily net assets. Under an agreement by the manager to limit its fees and to reduce its fees to reflect reduced services resulting from the Fund's investment in a Franklin Templeton money fund, the Fund paid 0.34% of its average daily net assets to the manager for its services. The manager may end this arrangement at any time upon notice to the Fund's Board of Trustees. The manager, however, is required by the Fund's Board of Trustees and an exemptive order by the Securities and Exchange Commission to reduce its fee if the Fund invests in a Franklin Templeton money fund.
VI. The first paragraph under the section "Choosing a Share Class" on page 63 is replaced with the following:
Each class has its own sales charge and expense structure, allowing you to choose the class that best meets your situation. Your investment representative can help you decide.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
o Initial o No o Initial o No initial
sales charge initial sales sales charge
of 5.75% or sales charge of
less charge 1%
o Deferred o Deferred o Deferred o Except for
sales charge sales sales ValuSelect
of 1% on charge of charge of plans and
purchases of 4% on 1% on plans for
$1 million or shares you shares you which Franklin
more sold sell sell within Templeton
within 12 within the 18 months Investments
months. first year, provides
Effective for declining recordkeeping,
purchases on to 1% deferred sales
or after within six charge of 1%
February 1, years and on shares you
2002, the eliminated sell within 18
holding period after that months
is extended to (charged at
18 months. plan level
based on
initial
investment for
Qualified
plans).
o Lower o Higher o Higher o Higher
annual annual annual annual
expenses than expenses expenses expenses than
Class B, C or than Class than Class Class A due to
R due to lower A (same as A (same as higher
distribution Class C) Class B) distribution
fees due to due to fees (lower
higher higher than Class B
distribution distribution and Class C).
fees. fees. No No conversion
Automatic conversion to Class A
conversion to Class A shares, so
to Class A shares, so annual
shares annual expenses do
after expenses not decrease.
eight do not
years, decrease.
reducing
future
annual
expenses.
|
VII. Under the section "Investments of $1 Million or More" on page 63, effective for purchases on or after February 1, 2002, the holding period for the deferred sales charge of 1% on new Class A purchases of $1 million or more will be extended to 18 months.
VIII. The section "Retirement Plans" on page 64 is replaced with the following:
RETIREMENT PLANS Class B shares are available to certain retirement plans, including IRAs (of any type), Franklin Templeton Bank & Trust 403(b) plans, and Franklin Templeton Bank & Trust qualified plans with participant or earmarked accounts, when such retirement plans are ineligible to purchase Class R shares.
IX. The following is added under the section "Choosing a Share Class" on page 63:
SALES CHARGES - CLASS R - TECHNOLOGY FUND
With Class R shares, there is no initial sales charge.
RETIREMENT PLANS Class R shares are available to the following investors:
o Qualified Retirement Plans, including 401(k), profit sharing, money purchase pension and defined benefit plans; ERISA covered 403(b)s, and; certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million,
o ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and
o Investors who open a Franklin Templeton IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO, or a rollover of assets from a same employer sponsored Franklin Templeton money purchase plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
MAXIMUM PURCHASE AMOUNT The maximum lump sum amount you may invest in Class R share IRA Rollovers is $999,999. We place any investment of $1 million or more in Class A shares since Class A's annual expenses are lower. There is no maximum purchase amount for Qualified plans.
CDSC Except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, there is a 1% contingent deferred sales charge (CDSC) on any Class R shares you sell within 18 months of purchase. The CDSC is applied at the plan level based on initial investment for Qualified plans. The way we calculate the CDSC is the same for each class (please see CDSC section on page 65 of the Prospectus).
DISTRIBUTION AND SERVICE (12B-1) FEES Class R has a distribution plan, sometimes known as a Rule 12b-1 plan, that allows the Fund to pay distribution and other fees of up to 0.50% per year for the sale of Class R shares and for services provided to shareholders. Because these fees are paid out of Class R's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
X. The paragraph heading on page 65 "Contingent Deferred Sales Charge (CDSC) - Class A, B & C" is replaced with the following:
CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B, C & R
XI. The second paragraph under "Reinstatement Privilege" on page 66 is replaced with the following:
If you paid a CDSC when you sold your Class A, C or R shares, we will credit your account with the amount of the CDSC paid but a new CDSC will apply. For Class B shares reinvested in Class A, a new CDSC will not apply, although your account will not be credited with the amount of any CDSC paid when you sold your Class B shares.
XII. The table under "Buying Shares - Minimum investments" on page 67 is replaced with the following:
MINIMUM INVESTMENTS
-------------------------------------------------------------------------------
INITIAL ADDITIONAL
-------------------------------------------------------------------------------
Regular accounts $1,000 $50
-------------------------------------------------------------------------------
Automatic investment plans $50 ($25 $50 ($25
for an for an
Education Education
IRA) IRA)
-------------------------------------------------------------------------------
UGMA/UTMA accounts $100 $50
-------------------------------------------------------------------------------
Retirement accounts including no minimum no minimum
Qualified plans (other than IRAs, IRA
rollovers, Education IRAs or Roth IRAs)
-------------------------------------------------------------------------------
IRAs, IRA rollovers, Education IRAs or
Roth IRAs $250 $50
-------------------------------------------------------------------------------
Broker-dealer sponsored wrap account
programs $250 $50
-------------------------------------------------------------------------------
Full-time employees, officers, $100 $50
trustees and directors of Franklin
Templeton entities, and their
immediate family members
-------------------------------------------------------------------------------
|
XIII. The footnote under the section "Distribution Options" on page 70 is replaced with the following:
*Class B and C shareholders may reinvest their distributions in Class A shares of any Franklin Templeton money fund. ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping may direct distributions to Class A shares if Class R shares are not offered by that fund.
XIV. The following paragraph is added under the section "Exchange Privilege" beginning on page 72:
For ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping, you may exchange your Class R shares for Class A shares of another Franklin Templeton fund if that fund does not offer Class R shares.
XV. The section "Dealer Compensation" on page 80 is replaced with the following:
DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
BIOTECHNOLOGY DISCOVERY FUND AND NATURAL RESOURCES FUND
CLASS A
------------------------------------------------------------
COMMISSION (%) ---
Investment under $50,000 5.00
$50,000 but under $100,000 3.75
$100,000 but under $250,000 2.80
$250,000 but under $500,000 2.00
$500,000 but under $1 million 1.60
$1 million or more up to 1.00/1
12B-1 FEE TO DEALER
TECHNOLOGY FUND
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
COMMISSION (%) --- 4.00 2.00/4 1.00/6
Investment under $50,000 5.00 --- --- ---
$50,000 but under $100,000 3.75 --- --- ---
$100,000 but under $250,000 2.80 --- --- ---
$250,000 but under 4500,000 2.00 --- --- ---
$500,000 but under 1 million 1.60 --- --- ---
$1 million or more up to 1.00/1 --- --- ---
12B-1 FEE TO DEALER 0.25/1/,2 0.25/3 1.00/5 0.35/6
|
HEALTH CARE FUND AND COMMUNICATIONS FUND
CLASS A CLASS B CLASS C
-------------------------------------------------------------------------------
COMMISSION (%) --- 4.00 2.00/4
Investment under $50,000 5.00 --- ---
$50,000 but under $100,000 3.75 --- ---
$100,000 but under $250,000 2.80 --- ---
$250,000 but under $500,000 2.00 --- ---
$500,000 but under $1 million 1.60 --- ---
$1 million or more up to 1.00/1 --- ---
12B-1 FEE TO DEALER 0.25/1 0.25/3 1.00/5
|
A dealer commission of up to 1% may be paid on Class A NAV purchases by certain retirement plans1 and on Class C NAV purchases. A dealer commission of up to 0.25% may be paid on Class A NAV purchases by certain trust companies and bank trust departments, eligible governmental authorities, and broker-dealers or others on behalf of clients participating in comprehensive fee programs.
MARKET TIMERS. Please note that for Class A NAV purchases by Market Timers, including purchases of $1 million or more, dealers are not eligible to receive the dealer commission. Dealers, however, may be eligible to receive the 12b-1 fee from the date of purchase.
Please keep this supplement for future reference.
o 483 P-1
SUPPLEMENT DATED JANUARY 1, 2002
TO THE PROSPECTUS OF
FRANKLIN BLUE CHIP FUND
DATED SEPTEMBER 1, 2001
The prospectus is amended as follows:
I. As of January 1, 2002, the Fund offers four classes of shares: Class A, Class B, Class C and Class R.
II. The section "Fees and Expenses" on page 7 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99% 1.00%
Load imposed on purchases 5.75% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 14 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Management fees/5 0.75% 0.75% 0.75% 0.75%
Distribution and service
(12b-1) fees 0.34% 1.00% 1.00% 0.50%
Other expenses 0.29% 0.29% 0.29% 0.29%
------------------------------------------------
Total annual Fund operating
expenses/5 1.38% 2.04% 2.04% 1.54%
------------------------------------------------
Management fee reduction/5 (0.02%) (0.02%) (0.02%) (0.02%)
------------------------------------------------
Net annual Fund operating
expenses/5 1.36% 2.02% 2.02% 1.52%
------------------------------------------------
---------
|
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $706/1 $981 $1,277 $2,116 CLASS B $605 $934 $1,288 $2,178/2 CLASS C $402 $727 $1,177 $2,425 CLASS R $255 $480 $829 $1,813 If you do not sell your shares: CLASS B $205 $634 $1,088 $2,178/2 CLASS C $303 $727 $1,177 $2,425 CLASS R $155 $480 $829 $1,813 --------- |
III. The first paragraph under the section "Choosing a Share Class" on page 14 is replaced with the following:
Each class has its own sales charge and expense structure, allowing you to choose the class that best meets your situation. Your investment representative can help you decide.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
o Initial o No o Initial o No initial
sales charge initial sales sales charge
of 5.75% or sales charge of
less charge 1%
o Deferred o Deferred o Deferred o Except for
sales charge sales sales ValuSelect
of 1% on charge of charge of plans and
purchases of 4% on 1% on plans for
$1 million or shares you shares you which Franklin
more sold sell sell Templeton
within 12 within the within Investments
months. first year, 18 months provides
Effective for declining recordkeeping,
purchases on to 1% deferred sales
or after within six charge of 1%
February 1, years and on shares you
2002, the eliminated sell within 18
holding period after that months
is extended to (charged at
18 months. plan level
based on
initial
investment for
Qualified
plans).
o Lower o Higher o Higher o Higher
annual annual annual annual
expenses than expenses expenses expenses than
Class B, C or than Class than Class Class A due to
R due to lower A (same as A (same as higher
distribution Class C) Class B) distribution
fees due to due to fees (lower
higher higher than Class B
distribution distribution and Class C).
fees. fees. No No conversion
Automatic conversion to Class A
conversion to Class A shares, so
to Class A shares, so annual
shares annual expenses do
after expenses not decrease.
eight do not
years, decrease.
reducing
future
annual
expenses.
|
IV. Under the section "Investments of $1 Million or More" on page 14, effective for purchases on or after February 1, 2002, the holding period for the deferred sales charge of 1% on new Class A purchases of $1 million or more will be extended to 18 months.
V. The section "Retirement Plans" on page 15 is replaced with the following:
RETIREMENT PLANS Class B shares are available to certain retirement plans, including IRAs (of any type), Franklin Templeton Bank & Trust 403(b) plans, and Franklin Templeton Bank & Trust qualified plans with participant or earmarked accounts, when such retirement plans are ineligible to purchase Class R shares.
VI. The following is added under the section "Choosing a Share Class" on page 14:
SALES CHARGES - CLASS R
With Class R shares, there is no initial sales charge.
RETIREMENT PLANS Class R shares are available to the following investors:
o Qualified Retirement Plans, including 401(k), profit sharing, money purchase pension and defined benefit plans; ERISA covered 403(b)s, and; certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million,
o ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and
o Investors who open a Franklin Templeton IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO, or a rollover of assets from a same employer sponsored Franklin Templeton money purchase plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
MAXIMUM PURCHASE AMOUNT The maximum lump sum amount you may invest in Class R share IRA Rollovers is $999,999. We place any investment of $1 million or more in Class A shares since Class A's annual expenses are lower. There is no maximum purchase amount for Qualified plans.
CDSC Except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, there is a 1% contingent deferred sales charge (CDSC) on any Class R shares you sell within 18 months of purchase. The CDSC is applied at the plan level based on initial investment for Qualified plans. The way we calculate the CDSC is the same for each class (please see CDSC section on page 16 of the Prospectus).
DISTRIBUTION AND SERVICE (12B-1) FEES Class R has a distribution plan, sometimes known as a Rule 12b-1 plan, that allows the Fund to pay distribution and other fees of up to 0.50% per year for the sale of Class R shares and for services provided to shareholders. Because these fees are paid out of Class R's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
VII. The paragraph heading on page 16 "Contingent Deferred Sales Charge (CDSC) - Class A, B & C" is replaced with the following:
CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B, C & R
VIII. The second paragraph under "Reinstatement Privilege" on page 17 is replaced with the following:
If you paid a CDSC when you sold your Class A, C or R shares, we will credit your account with the amount of the CDSC paid but a new CDSC will apply. For Class B shares reinvested in Class A, a new CDSC will not apply, although your account will not be credited with the amount of any CDSC paid when you sold your Class B shares.
IX. The table under "Buying Shares - Minimum investments" on page 18 is replaced with the following:
MINIMUM INVESTMENTS
-------------------------------------------------------------------------------
INITIAL ADDITIONAL
-------------------------------------------------------------------------------
Regular accounts $1,000 $50
-------------------------------------------------------------------------------
Automatic investment plans $50 ($25 $50 ($25
for an for an
Education Education
IRA) IRA)
-------------------------------------------------------------------------------
UGMA/UTMA accounts $100 $50
-------------------------------------------------------------------------------
Retirement accounts including no minimum no minimum
Qualified plans (other than IRAs, IRA
rollovers, Education IRAs or Roth IRAs)
-------------------------------------------------------------------------------
IRAs, IRA rollovers, Education IRAs or
Roth IRAs $250 $50
-------------------------------------------------------------------------------
Broker-dealer sponsored wrap account
programs $250 $50
-------------------------------------------------------------------------------
Full-time employees, officers, $100 $50
trustees and directors of Franklin
Templeton entities, and their
immediate family members
-------------------------------------------------------------------------------
|
X. The footnote under the section "Distribution Options" on page 21 is replaced with the following:
*Class B and C shareholders may reinvest their distributions in Class A shares of any Franklin Templeton money fund. ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping may direct distributions to Class A shares if Class R shares are not offered by that fund.
XI. The following paragraph is added under the section "Exchange Privilege" beginning on page 23:
For ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping, you may exchange your Class R shares for Class A shares of another Franklin Templeton fund if that fund does not offer Class R shares.
XII. The section "Dealer Compensation" on page 30 is replaced with the following:
DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
COMMISSION (%) --- 4.00 2.00/4 1.00/6
Investment under $50,000 5.00 --- --- ---
$50,000 but under $100,000 3.75 --- --- ---
$100,000 but under $250,000 2.80 --- --- ---
$250,000 but under $500,000 2.00 --- --- ---
$500,000 but under 1 million 1.60 --- --- ---
$1 million or more up to 1.00/1 --- --- ---
12B-1 FEE TO DEALER 0.25/1/,2 0.25/3 1.00/5 0.35/6
|
A dealer commission of up to 1% may be paid on Class A NAV purchases by certain retirement plans1 and on Class C NAV purchases. A dealer commission of up to 0.25% may be paid on Class A NAV purchases by certain trust companies and bank trust departments, eligible governmental authorities, and broker-dealers or others on behalf of clients participating in comprehensive fee programs.
MARKET TIMERS. Please note that for Class A NAV purchases by Market Timers, including purchases of $1 million or more, dealers are not eligible to receive the dealer commission. Dealers, however, may be eligible to receive the 12b-1 fee from the date of purchase.
Please keep this supplement for future reference.
o 194 P-1
SUPPLEMENT DATED JANUARY 1, 2002
TO THE PROSPECTUS OF
FRANKLIN STRATEGIC INCOME FUND
DATED SEPTEMBER 1, 2001
The prospectus is amended as follows:
I. As of January 1, 2002, the Fund offers five classes of shares: Class A, Class B, Class C, Class R and Advisor Class.
II. The section "Fees and Expenses" on page 10 is replaced with the following:
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 4.25% 4.00% 1.99% 1.00%
Load imposed on purchases 4.25% None 1.00% None
Maximum deferred sales None/2 4.00%/3 0.99%/4 1.00%
charge (load)
|
Please see "Choosing a Share Class" on page 17 for an explanation of how and when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
CLASS A CLASS B CLASS C CLASS R/1
-------------------------------------------------------------------------------
Management fees/5 0.53% 0.53% 0.53% 0.53%
Distribution and service
(12b-1) fees 0.25% 0.65% 0.65% 0.50%
Other expenses 0.22% 0.22% 0.22% 0.22%
------------------------------------------------
Total annual Fund operating
expenses/5 1.00% 1.40% 1.40% 1.25%
------------------------------------------------
Management fee reduction/5 (0.01%) (0.01%) (0.01%) (0.01%)
------------------------------------------------
Net annual Fund operating
expenses/5 0.99% 1.39% 1.39% 1.24%
------------------------------------------------
---------
|
EXAMPLE
This example can help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
CLASS A $522/1 $727 $949 $1,586 CLASS B $542 $740 $961 $1,560/2 CLASS C $339 $536 $853 $1,752 CLASS R $226 $393 $681 $1,500 If you do not sell your shares: CLASS B $142 $440 $761 $1,560/2 CLASS C $240 $536 $853 $1,752 CLASS R $126 $393 $681 $1,500 |
1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.
III. The first paragraph under the section "Choosing a Share Class" on page 17 is replaced with the following:
Each class has its own sales charge and expense structure, allowing you to choose the class that best meets your situation. Your investment representative can help you decide.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
o Initial o No o Initial o No initial
sales charge initial sales sales charge
of 4.25% or sales charge of
less charge 1%
o Deferred o Deferred o Deferred o Except for
sales charge sales sales ValuSelect
of 1% on charge of charge of plans and
purchases of 4% on 1% on plans for
$1 million or shares you shares you which Franklin
more sold sell sell within Templeton
within 12 within the 18 months Investments
months. first year, provides
Effective for declining recordkeeping,
purchases on to 1% deferred sales
or after within six charge of 1%
February 1, years and on shares you
2002, the eliminated sell within 18
holding period after that months
is extended to (charged at
18 months. plan level
based on
initial
investment for
Qualified
plans).
o Lower o Higher o Higher o Higher
annual annual annual annual
expenses than expenses expenses expenses than
Class B, C or than Class than Class Class A due to
R due to lower A (same as A (same as higher
distribution Class C) Class B) distribution
fees due to due to fees (lower
higher higher than Class B
distribution distribution and Class C).
fees. fees. No No conversion
Automatic conversion to Class A
conversion to Class A shares, so
to Class A shares, so annual
shares annual expenses do
after expenses not decrease.
eight do not
years, decrease.
reducing
future
annual
expenses.
|
IV. Under the section "Investments of $1 Million or More" on page 17, effective for purchases on or after February 1, 2002, the holding period for the deferred sales charge of 1% on new Class A purchases of $1 million or more will be extended to 18 months.
V. The section "Retirement Plans" on page 18 is replaced with the following:
RETIREMENT PLANS Class B shares are available to certain retirement plans, including IRAs (of any type), Franklin Templeton Bank & Trust 403(b) plans, and Franklin Templeton Bank & Trust qualified plans with participant or earmarked accounts, when such retirement plans are ineligible to purchase Class R shares.
VI. The following is added under the section "Choosing a Share Class" on page 17:
SALES CHARGES - CLASS R
With Class R shares, there is no initial sales charge.
RETIREMENT PLANS Class R shares are available to the following investors:
o Qualified Retirement Plans, including 401(k), profit sharing, money purchase pension and defined benefit plans; ERISA covered 403(b)s, and; certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million,
o ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and
o Investors who open a Franklin Templeton IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO, or a rollover of assets from a same employer sponsored Franklin Templeton money purchase plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
MAXIMUM PURCHASE AMOUNT The maximum lump sum amount you may invest in Class R share IRA Rollovers is $999,999. We place any investment of $1 million or more in Class A shares since Class A's annual expenses are lower. There is no maximum purchase amount for Qualified plans.
CDSC Except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, there is a 1% contingent deferred sales charge (CDSC) on any Class R shares you sell within 18 months of purchase. The CDSC is applied at the plan level based on initial investment for Qualified plans. The way we calculate the CDSC is the same for each class (please see CDSC section on page 19 of the Prospectus).
DISTRIBUTION AND SERVICE (12B-1) FEES Class R has a distribution plan, sometimes known as a Rule 12b-1 plan, that allows the Fund to pay distribution and other fees of up to 0.50% per year for the sale of Class R shares and for services provided to shareholders. Because these fees are paid out of Class R's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
VII. The paragraph heading on page 19 "Contingent Deferred Sales Charge (CDSC) - Class A, B & C" is replaced with the following:
CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B, C & R
VIII. The second paragraph under "Reinstatement Privilege" on page 20 is replaced with the following:
If you paid a CDSC when you sold your Class A, C or R shares, we will credit your account with the amount of the CDSC paid but a new CDSC will apply. For Class B shares reinvested in Class A, a new CDSC will not apply, although your account will not be credited with the amount of any CDSC paid when you sold your Class B shares.
IX. The table under "Buying Shares - Minimum investments" on page 21 is replaced with the following:
MINIMUM INVESTMENTS
-------------------------------------------------------------------------------
INITIAL ADDITIONAL
-------------------------------------------------------------------------------
Regular accounts $1,000 $50
-------------------------------------------------------------------------------
Automatic investment plans $50 ($25 $50 ($25
for an for an
Education Education
IRA) IRA)
-------------------------------------------------------------------------------
UGMA/UTMA accounts $100 $50
-------------------------------------------------------------------------------
Retirement accounts including no minimum no minimum
Qualified plans (other than IRAs, IRA
rollovers, Education IRAs or Roth IRAs)
-------------------------------------------------------------------------------
IRAs, IRA rollovers, Education IRAs or
Roth IRAs $250 $50
-------------------------------------------------------------------------------
Broker-dealer sponsored wrap account
programs $250 $50
-------------------------------------------------------------------------------
Full-time employees, officers, $100 $50
trustees and directors of Franklin
Templeton entities, and their
immediate family members
-------------------------------------------------------------------------------
|
X. The footnote under the section "Distribution Options" on page 24 is replaced with the following:
*Class B and C shareholders may reinvest their distributions in Class A shares of any Franklin Templeton money fund. ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping may direct distributions to Class A shares if Class R shares are not offered by that fund.
XI. The following paragraph is added under the section "Exchange Privilege" beginning on page 26:
For ValuSelect plans and other retirement plans where Franklin Templeton Investments has contracted with the plan sponsor to provide participant level recordkeeping, you may exchange your Class R shares for Class A shares of another Franklin Templeton fund if that fund does not offer Class R shares.
XII. The section "Dealer Compensation" on page 33 is replaced with the following:
DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
CLASS A CLASS B CLASS C CLASS R
-------------------------------------------------------------------------------
COMMISSION (%) --- 3.00 2.00/3 1.00/5
Investment under $100,000 4.00 --- --- ---
$100,000 but under $250,000 3.25 --- --- ---
$250,000 but under $500,000 2.25 --- --- ---
$500,000 but under 1 million 1.85 --- --- ---
$1 million or more up to 0.75/1 --- --- ---
12B-1 FEE TO DEALER 0.251 0.15/2 0.65/4 0.35/5
|
A dealer commission of up to 1% may be paid on Class A NAV purchases by certain retirement plans1 and on Class C NAV purchases. A dealer commission of up to 0.25% may be paid on Class A NAV purchases by certain trust companies and bank trust departments, eligible governmental authorities, and broker-dealers or others on behalf of clients participating in comprehensive fee programs.
MARKET TIMERS. Please note that for Class A NAV purchases by Market Timers, including purchases of $1 million or more, dealers are not eligible to receive the dealer commission. Dealers, however, may be eligible to receive the 12b-1 fee from the date of purchase.
Please keep this supplement for future reference.
o FSS1 SA-1 SUPPLEMENT DATED JANUARY 1, 2002 TO THE STATEMENT OF ADDITIONAL INFORMATION OF FRANKLIN STRATEGIC SERIES (FRANKLIN AGGRESSIVE GROWTH FUND, FRANKLIN CALIFORNIA GROWTH FUND, FRANKLIN LARGE CAP GROWTH FUND, FRANKLIN SMALL-MID CAP GROWTH FUND AND FRANKLIN SMALL CAP GROWTH FUND II) DATED SEPTEMBER 1, 2001
The Statement of Additional Information is amended as follows:
I. As of January 1, 2002, the Franklin Aggressive Growth Fund, Franklin Large
Cap Growth Fund and Franklin Small Cap Growth Fund II offer five classes of
shares: Class A, Class B, Class C, Class R and Advisor Class. Franklin
California Growth Fund offers four classes of shares: Class A, Class B, Class C
and Class R. Franklin Small-Mid Cap Growth Fund offers four classes of shares:
Class A, Class C, Class R and Advisor Class.
II. The second, third, fourth and fifth paragraphs under the section "Organization, Voting Rights and Principal Holders" starting on page 26 are replaced with the following:
The Aggressive Growth Fund, Large Cap Fund and Small Cap Fund II currently offer five classes of shares, Class A, Class B, Class C, Class R and Advisor Class. Each Fund may offer additional classes of shares in the future. The full title of each class is:
o Franklin Aggressive Growth Fund - Class A
o Franklin Aggressive Growth Fund - Class B
o Franklin Aggressive Growth Fund - Class C
o Franklin Aggressive Growth Fund - Class R
o Franklin Aggressive Growth Fund - Advisor Class
o Franklin Large Cap Growth Fund - Class A
o Franklin Large Cap Growth Fund - Class B
o Franklin Large Cap Growth Fund - Class C
o Franklin Large Cap Growth Fund - Class R
o Franklin Large Cap Growth Fund - Advisor Class
o Franklin Small Cap Growth Fund II - Class A
o Franklin Small Cap Growth Fund II - Class B
o Franklin Small Cap Growth Fund II - Class C
o Franklin Small Cap Growth Fund II - Class R
o Franklin Small Cap Growth Fund II - Advisor Class
The California Fund currently offers four classes of shares, Class A, Class B, Class C and Class R. The Fund may offer additional classes of shares in the future. The full title of each class is:
o Franklin California Growth Fund - Class A o Franklin California Growth Fund - Class B o Franklin California Growth Fund - Class C o Franklin California Growth Fund - Class R |
Before September 1, 2001, the Small-Mid Cap Fund was named the Small Cap Growth Fund I. On that date, the Fund's investment objective and various investment policies were changed. Consistent with these changes, the Fund's name was changed to the Franklin Small-Mid Cap Growth Fund.
The Small-Mid Cap Fund currently offers four classes of shares, Class A, Class C, Class R and Advisor Class. The Fund may offer additional classes of shares in the future. The full title of each class is:
o Franklin Small-Mid Cap Growth Fund - Class A
o Franklin Small-Mid Cap Growth Fund - Class C
o Franklin Small-Mid Cap Growth Fund - Class R
o Franklin Small-Mid Cap Growth Fund - Advisor Class
III. The following is added to the section "Organization, Voting Rights and Principal Holders" on page 25:
As of December 3, 2001, the principal shareholders of the Funds, beneficial or of record, were:
Name and Address Share Class Percentage (%) ------------------------------------------------------------------------------ AGGRESSIVE GROWTH FUND FTB&T/1 TTEE For Defined Advisor 56.50 Benefit Services Franklin Templeton 401K P.O. Box 2438 Rancho Cordova, CA 95741-2138 LARGE CAP FUND F T Fund Allocator Advisor 10.37 Conservative Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 25.12 Moderate Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 34.36 Growth Target Fund One Franklin Parkway San Mateo, CA 94403-1906 FTB&T/1 TTEE For Defined Advisor 19.64 Benefit Services Franklin Templeton 401K P.O. Box 2438 Rancho Cordova, CA 95741-2138 SMALL-MID CAP FUND Fidelity Investments A 10.07 Institutional Op. Co. As Agent for All-Phase Electric Supply Company 100 Magellan Way KWIC Covington, KY 41015-1927 First Union National Bank Advisor 5.05 Trustee FBO Willis Corroon Corporation 1525 West WT Harris Blvd. NC-1151 Charlotte, NC 28288-0001 Sheldon & Co. Advisor 5.16 C/o National City Bank Attn. Trust Mutual Funds P.O. Box 94984 Cleveland, OH 44101-4984 Prudential Securities Inc. Advisor 6.39 FBO Prudential Retirement Services Octanner Company P.O. Box 5310 Scranton, PA 18505-5310 SMALL CAP FUND II The Northern Trust Co. Trustee A 15.18 FBO Goodyear Tire & Rubber Co. P.O. Box 92956 Chicago, IL 60675-2958 F T Fund Allocator Advisor 10.93 Moderate Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 13.58 Growth Target Fund One Franklin Parkway San Mateo, CA 94403-1906 Northwest Savings Bank Advisor 5.46 Attn. Trust Dept. Liberty St. Second Avenue Warren, PA 16565 Key Trust Company NA-Prism Advisor 8.83 Applied Industrial Technologies Retirement Savings Plan 4900 Tiedeman Rd. Brooklyn, OH 44144-2330 --------- |
Note: Charles B. Johnson and Rupert H. Johnson, Jr., who are officers and/or trustees of the Fund, serve on the administrative committee of the Franklin Templeton Profit Sharing 401(k) Plan, which owns shares of the Funds. In that capacity, they participate in the voting of such shares. Charles B. Johnson and Rupert H. Johnson, Jr. disclaims beneficial ownership of any share of the Funds owned by the Franklin Templeton Profit Sharing 401(k) Plan.
As of December 3, 2001, the officers and board members, as a group, owned of record and beneficially 2.87% of Aggressive Growth Fund - Advisor Class and less than 1% of the outstanding shares of the other Funds and classes. The board members may own shares in other funds in Franklin Templeton Investments.
IV. The first paragraph under the section "Buying and Selling Shares - Initial sales charges" on page 27 is replaced with the following:
The maximum initial sales charge is 5.75% for Class A and 1% for Class C. There is no initial sales charge for Class B and Class R.
V. The first and second paragraphs under "Buying and Selling Shares - Retirement plans" on page 30 are replaced with the following:
RETIREMENT PLANS. Effective January 1, 2002, (i) individual retirement accounts with investments of $1 million or more, (ii) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets of $20 million or more, (iii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of $10 million or more and (iv) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of less than $10 million if Class R shares are not offered on a particular fund are eligible to buy Class A shares without an initial sales charge.
Retirement plans with assets invested in one or more Franklin Templeton funds on December 31, 2001, or in contract on December 31, 2001, to add one or more Franklin Templeton funds to the plan's investment options, and sponsored by an employer (i) with at least 100 employees, or (ii) with retirement plan assets of $1 million or more, or (iii) that agreed to invest at least $500,000 in Franklin Templeton funds over a 13 month period may continue to buy Class A shares without an initial sales charge.
The following investors are eligible to buy Class R shares: (i) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million, (ii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and (iii) investors who open an IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO or a rollover of assets from a same employer sponsored Franklin Templeton money purchase pension plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing
plan that qualifies under section 401(a) of the Internal Revenue Code, including
401(k), money purchase pension, profit sharing and defined benefit plans.
Retirement plans that are not Qualified Retirement Plans, SIMPLEs (savings incentive match plans for employees) or SEPs (employer sponsored simplified employee pension plans established under section 408(k) of the Internal Revenue Code) must meet the group purchase requirements described above to be able to buy Class A shares without an initial sales charge. We may enter into a special arrangement with a securities dealer, based on criteria established by the Fund, to add together certain small Qualified Retirement Plan accounts for the purpose of meeting these requirements.
VI. The second paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 30 is replaced with the following:
Distributors may pay the following commissions, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares of $1 million or more: 1.00% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million.
VII. The third paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 30 is deleted.
VIII. The fourth paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 30 is replaced with the following:
Distributors or one of its affiliates may pay up to 1% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares by certain retirement plans without an initial sales charge. These payments may be made in the form of contingent advance payments, which may be recovered from the securities dealer or set off against other payments due to the dealer if shares are sold within 12 months of the calendar month of purchase. Other conditions may apply. All terms and conditions may be imposed by an agreement between Distributors, or one of its affiliates, and the securities dealer.
IX. The first paragraph under the section "Buying and Selling Shares - Contingent deferred sales charge (CDSC)" on page 31 is replaced with the following:
If you invest $1 million or more in Class A shares, either as a lump sum or through our cumulative quantity discount or letter of intent programs, a CDSC may apply on any shares you sell within 18 months of purchase effective February 1, 2002. For purchases made prior to February 1, 2002, a CDSC of 1% may apply to shares redeemed within 12 months of purchase. For Class C and Class R shares, a CDSC may apply if you sell your shares within 18 months of purchase. For Class R shares, except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, the CDSC is applied at the plan level based on initial investment for qualified plans. The CDSC is 1% of the value of the shares sold or the net asset value at the time of purchase, whichever is less.
X. The following is added under the section "Buying and Selling Shares - CDSC waivers" on page 31:
o Redemptions of Class R shares by investors if the securities dealer of record waived its commission in connection with the purchase.
XI. The following is added under the section "Buying and Selling Shares," beginning on page 27:
CONVERSION OF CLASS R SHARES TO CLASS A SHARES Effective October 1, 2002, when ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping reach $10 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor. For all other Qualified Retirement Plans, when plan assets reach $20 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor.
XII. The first two paragraphs under "The Underwriter - Distribution and service
(12b-1) fees - The Class B and C plans" on page 35 are replaced with the
following:
THE CLASS B, C AND R PLANS. For Class B and C shares, a Fund pays Distributors up to 1% per year of the class's average daily net assets, out of which 0.25% may be paid for services to the shareholders (service fees). For Class R shares, the Fund pays Distributors up to 0.50% per year of the class's average daily net assets. The Class B, C and R plans also may be used to pay Distributors for advancing commissions to securities dealers with respect to the initial sale of Class B, C and R shares. Class B plan fees payable to Distributors are used by Distributors to pay third party financing entities that have provided financing to Distributors in connection with advancing commissions to securities dealers. Resources owns a minority interest in one of the third party financing entities.
The Class B, C and R plans are compensation plans. They allow the Fund to pay a fee to Distributors that may be more than the eligible expenses Distributors has incurred at the time of the payment. Distributors must, however, demonstrate to the board that it has spent or has near-term plans to spend the amount received on eligible expenses. The Fund will not pay more than the maximum amount allowed under the plans.
XIII. The subheading "The Class A, B and C plans" under "The Underwriter - Distribution and service (12b-1) fees" on page 35 is replaced with "The Class A, B, C and R plans."
XIV. The first paragraph under "Performance" on page 36 is replaced with the following:
Performance quotations are subject to SEC rules. These rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by the Funds be accompanied by certain standardized performance information computed as required by the SEC. Average annual total return quotations used by the Funds are based on the standardized methods of computing performance mandated by the SEC. Unless otherwise noted, performance figures reflect Rule 12b-1 fees from the date of the plan's implementation. An explanation of these and other methods used by the Funds to compute or express performance follows. Regardless of the method used, past performance does not guarantee future results, and is an indication of the return to shareholders only for the limited historical period used.
Effective January 1, 2002, the Funds began offering Class R shares, which do not have initial sales charges. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to January 1, 2002, a restated figure is used based on the Fund's Class A performance, excluding the effect of Class A's maximum initial sales charge, reflecting the Rule 12b-1 rate differential between Class A and R; and (b) for periods after January 1, 2002, Class R standardized performance quotations are calculated as described below.
Please keep this supplement for future reference.
o FSS2 SA-1 SUPPLEMENT DATED JANUARY 1, 2002 TO THE STATEMENT OF ADDITIONAL INFORMATION OF FRANKLIN STRATEGIC SERIES (FRANKLIN BIOTECHNOLOGY DISCOVERY FUND, FRANKLIN TECHNOLOGY FUND, FRANKLIN GLOBAL HEALTH CARE FUND, FRANKLIN GLOBAL COMMUNICATIONS FUND AND FRANKLIN NATURAL RESOURCES FUND) DATED SEPTEMBER 1, 2001
The Statement of Additional Information is amended as follows:
I. As of January 1, 2002, the Franklin Technology Fund offers five classes of shares: Class A, Class B, Class C, Class R and Advisor Class.
II. The second paragraph under the section "Organization, Voting Rights and Principal Holders" on page 33 is replaced with the following:
Biotechnology Discovery Fund currently offers one class of shares, Class A. Technology Fund currently offers five classes of shares, Class A, Class B, Class C, Class R and Advisor Class. Health Care Fund and Communications Fund currently offer three classes of shares, Class A, Class B and Class C and Natural Resources Fund offers two classes of shares, Class A and Advisor Class. The Funds may offer additional classes of shares in the future. The full title of each class is:
o Franklin Biotechnology Discovery Fund - Class A
o Franklin Technology Fund - Class A
o Franklin Technology Fund - Class B
o Franklin Technology Fund - Class C
o Franklin Technology Fund - Class R
o Franklin Technology Fund - Advisor Class
o Franklin Global Communications Fund - Class A
o Franklin Global Communications Fund - Class B
o Franklin Global Communications Fund - Class C
o Franklin Global Health Care Fund - Class A
o Franklin Global Health Care Fund - Class B
o Franklin Global Health Care Fund - Class C
o Franklin Natural Resources Fund - Class A
o Franklin Natural Resources Fund - Advisor Class
III. The following is added to the section "Organization, Voting Rights and Principal Holders" on page 33:
As of December 3, 2001, the principal shareholders of the Funds, beneficial or of record, were:
Name and Address Share Class Percentage (%) ------------------------------------------------------------------------------- TECHNOLOGY FUND F T Fund Allocator Advisor 8.58 Conservative Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 30.57 Moderate Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 37.41 Growth Target Fund One Franklin Parkway San Mateo, CA 94403-1906 NATURAL RESOURCES FUND F T Fund Allocator Advisor 12.12 Conservative Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 34.95 Moderate Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 48.88 Growth Target Fund One Franklin Parkway San Mateo, CA 94403-1906 |
As of December 3, 2001, the officers and board members, as a group, owned of record and beneficially less than 1% of the outstanding shares of each Fund and class. The board members may own shares in other funds in Franklin Templeton Investments.
IV. The first paragraph under the section "Buying and Selling Shares - Initial sales charges" on page 34 is replaced with the following:
The maximum initial sales charge is 5.75% for Class A and 1% for Class C. There is no initial sales charge for Class B and Class R.
V. The first and second paragraphs under "Buying and Selling Shares - Retirement plans" on page 37 are replaced with the following:
RETIREMENT PLANS. Effective January 1, 2002, (i) individual retirement accounts with investments of $1 million or more, (ii) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets of $20 million or more, (iii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of $10 million or more and (iv) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of less than $10 million if Class R shares are not offered on a particular fund are eligible to buy Class A shares without an initial sales charge.
Retirement plans with assets invested in one or more Franklin Templeton funds on December 31, 2001, or in contract on December 31, 2001, to add one or more Franklin Templeton funds to the plan's investment options, and sponsored by an employer (i) with at least 100 employees, or (ii) with retirement plan assets of $1 million or more, or (iii) that agreed to invest at least $500,000 in Franklin Templeton funds over a 13 month period may continue to buy Class A shares without an initial sales charge.
The following investors are eligible to buy Class R shares: (i) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million, (ii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and (iii) investors who open an IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO or a rollover of assets from a same employer sponsored Franklin Templeton money purchase pension plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing
plan that qualifies under section 401(a) of the Internal Revenue Code, including
401(k), money purchase pension, profit sharing and defined benefit plans.
Retirement plans that are not Qualified Retirement Plans, SIMPLEs (savings incentive match plans for employees) or SEPs (employer sponsored simplified employee pension plans established under section 408(k) of the Internal Revenue Code) must meet the group purchase requirements described above to be able to buy Class A shares without an initial sales charge. We may enter into a special arrangement with a securities dealer, based on criteria established by the Fund, to add together certain small Qualified Retirement Plan accounts for the purpose of meeting these requirements.
VI. The second paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 37 is replaced with the following:
Distributors may pay the following commissions, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares of $1 million or more: 1.00% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million.
VII. The third paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 37 is deleted.
VIII. The fourth paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 37 is replaced with the following:
Distributors or one of its affiliates may pay up to 1% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares by certain retirement plans without an initial sales charge. These payments may be made in the form of contingent advance payments, which may be recovered from the securities dealer or set off against other payments due to the dealer if shares are sold within 12 months of the calendar month of purchase. Other conditions may apply. All terms and conditions may be imposed by an agreement between Distributors, or one of its affiliates, and the securities dealer.
IX. The first paragraph under the section "Buying and Selling Shares - Contingent deferred sales charge (CDSC)" on page 38 is replaced with the following:
If you invest $1 million or more in Class A shares, either as a lump sum or through our cumulative quantity discount or letter of intent programs, a CDSC may apply on any shares you sell within 18 months of purchase effective February 1, 2002. For purchases made prior to February 1, 2002, a CDSC of 1% may apply to shares redeemed within 12 months of purchase. For Class C and Class R shares, a CDSC may apply if you sell your shares within 18 months of purchase. For Class R shares, except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, the CDSC is applied at the plan level based on initial investment for qualified plans. The CDSC is 1% of the value of the shares sold or the net asset value at the time of purchase, whichever is less.
X. The following is added under the section "Buying and Selling Shares - CDSC waivers" on page 38:
o Redemptions of Class R shares by investors if the securities dealer of record waived its commission in connection with the purchase.
XI. The following is added under the section "Buying and Selling Shares," beginning on page 34:
CONVERSION OF CLASS R SHARES TO CLASS A SHARES Effective October 1, 2002, when ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping reach $10 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor. For all other Qualified Retirement Plans, when plan assets reach $20 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor.
XII. The first two paragraphs under "The Underwriter - Distribution and service
(12b-1) fees - The Class B and C plans" on page 42 are replaced with the
following:
THE CLASS B, C AND R PLANS. For Class B and C shares, the Technology Fund, Global Health Care Fund and Global Communications Fund pay Distributors up to 1% per year of the class's average daily net assets, out of which 0.25% may be paid for services to the shareholders (service fees). For Class R shares, the Technology Fund pays Distributors up to 0.50% per year of the class's average daily net assets. The Class B, C and R plans also may be used to pay Distributors for advancing commissions to securities dealers with respect to the initial sale of Class B, C and R shares. Class B plan fees payable to Distributors are used by Distributors to pay third party financing entities that have provided financing to Distributors in connection with advancing commissions to securities dealers. Resources owns a minority interest in one of the third party financing entities.
The Class B, C and R plans are compensation plans. They allow the Fund to pay a fee to Distributors that may be more than the eligible expenses Distributors has incurred at the time of the payment. Distributors must, however, demonstrate to the board that it has spent or has near-term plans to spend the amount received on eligible expenses. The Fund will not pay more than the maximum amount allowed under the plans.
XIII. The subheading "The Class A, B and C plans" under "The Underwriter - Distribution and service (12b-1) fees" on page 43 is replaced with "The Class A, B, C and R plans."
XIV. The first paragraph under "Performance" on page 43 is replaced with the following:
Performance quotations are subject to SEC rules. These rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by the Funds be accompanied by certain standardized performance information computed as required by the SEC. Average annual total return quotations used by the Funds are based on the standardized methods of computing performance mandated by the SEC. Unless otherwise noted, performance figures reflect Rule 12b-1 fees from the date of the plan's implementation. An explanation of these and other methods used by the Funds to compute or express performance follows. Regardless of the method used, past performance does not guarantee future results, and is an indication of the return to shareholders only for the limited historical period used.
Effective January 1, 2002, the Technology Fund began offering Class R shares, which do not have initial sales charges. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to January 1, 2002, a restated figure is used based on the Fund's Class A performance, excluding the effect of Class A's maximum initial sales charge, reflecting the Rule 12b-1 rate differential between Class A and R; and (b) for periods after January 1, 2002, Class R standardized performance quotations are calculated as described below.
Please keep this supplement for future reference.
o 483 SA-1
SUPPLEMENT DATED JANUARY 1, 2002
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN BLUE CHIP FUND
DATED SEPTEMBER 1, 2001
The Statement of Additional Information is amended as follows:
I. As of January 1, 2002, the Fund offers four classes of shares: Class A, Class B, Class C and Class R.
II. The second paragraph under the section "Organization, Voting Rights and Principal Holders" on page 19 is replaced with the following:
The Fund currently offers four classes of shares, Class A, Class B, Class C and Class R. The Fund may offer additional classes of shares in the future. The full title of each class is:
o Franklin Blue Chip Fund - Class A
o Franklin Blue Chip Fund - Class B
o Franklin Blue Chip Fund - Class C
o Franklin Blue Chip Fund - Class R
III. The following is added to the section "Organization, Voting Rights and Principal Holders" on page 19:
As of December 3, 2001, the officers and board members, as a group, owned of record and beneficially less than 1% of the outstanding shares of each class. The board members may own shares in other funds in Franklin Templeton Investments.
IV. The first paragraph under the section "Buying and Selling Shares - Initial sales charges" on page 19 is replaced with the following:
The maximum initial sales charge is 5.75% for Class A and 1% for Class C. There is no initial sales charge for Class B and Class R.
V. The first and second paragraphs under "Buying and Selling Shares - Retirement plans" on page 22 are replaced with the following:
RETIREMENT PLANS. Effective January 1, 2002, (i) individual retirement accounts with investments of $1 million or more, (ii) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets of $20 million or more, (iii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of $10 million or more and (iv) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of less than $10 million if Class R shares are not offered on a particular fund are eligible to buy Class A shares without an initial sales charge.
Retirement plans with assets invested in one or more Franklin Templeton funds on December 31, 2001, or in contract on December 31, 2001, to add one or more Franklin Templeton funds to the plan's investment options, and sponsored by an employer (i) with at least 100 employees, or (ii) with retirement plan assets of $1 million or more, or (iii) that agreed to invest at least $500,000 in Franklin Templeton funds over a 13 month period may continue to buy Class A shares without an initial sales charge.
The following investors are eligible to buy Class R shares: (i) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million, (ii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and (iii) investors who open an IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO or a rollover of assets from a same employer sponsored Franklin Templeton money purchase pension plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing
plan that qualifies under section 401(a) of the Internal Revenue Code, including
401(k), money purchase pension, profit sharing and defined benefit plans.
Retirement plans that are not Qualified Retirement Plans, SIMPLEs (savings incentive match plans for employees) or SEPs (employer sponsored simplified employee pension plans established under section 408(k) of the Internal Revenue Code) must meet the group purchase requirements described above to be able to buy Class A shares without an initial sales charge. We may enter into a special arrangement with a securities dealer, based on criteria established by the Fund, to add together certain small Qualified Retirement Plan accounts for the purpose of meeting these requirements.
VI. The second paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 22 is replaced with the following:
Distributors may pay the following commissions, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares of $1 million or more: 1.00% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million.
VII. The third paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 22 is deleted.
VIII. The fourth paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 22 is replaced with the following:
Distributors or one of its affiliates may pay up to 1% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares by certain retirement plans without an initial sales charge. These payments may be made in the form of contingent advance payments, which may be recovered from the securities dealer or set off against other payments due to the dealer if shares are sold within 12 months of the calendar month of purchase. Other conditions may apply. All terms and conditions may be imposed by an agreement between Distributors, or one of its affiliates, and the securities dealer.
IX. The first paragraph under the section "Buying and Selling Shares - Contingent deferred sales charge (CDSC)" on page 23 is replaced with the following:
If you invest $1 million or more in Class A shares, either as a lump sum or through our cumulative quantity discount or letter of intent programs, a CDSC may apply on any shares you sell within 18 months of purchase effective February 1, 2002. For purchases made prior to February 1, 2002, a CDSC of 1% may apply to shares redeemed within 12 months of purchase. For Class C and Class R shares, a CDSC may apply if you sell your shares within 18 months of purchase. For Class R shares, except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, the CDSC is applied at the plan level based on initial investment for qualified plans. The CDSC is 1% of the value of the shares sold or the net asset value at the time of purchase, whichever is less.
X. The following is added under the section "Buying and Selling Shares - CDSC waivers" on page 23:
o Redemptions of Class R shares by investors if the securities dealer of record waived its commission in connection with the purchase.
XI. The following is added under the section "Buying and Selling Shares," beginning on page 19:
CONVERSION OF CLASS R SHARES TO CLASS A SHARES Effective October 1, 2002, when ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping reach $10 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor. For all other Qualified Retirement Plans, when plan assets reach $20 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor.
XII. The first two paragraphs under "The Underwriter - Distribution and service
(12b-1) fees - The Class B and C plans" on page 27 are replaced with the
following:
THE CLASS B, C AND R PLANS. For Class B and C shares, the Fund pays Distributors up to 1% per year of the class's average daily net assets, out of which 0.25% may be paid for services to the shareholders (service fees). For Class R shares, the Fund pays Distributors up to 0.50% per year of the class's average daily net assets. The Class B, C and R plans also may be used to pay Distributors for advancing commissions to securities dealers with respect to the initial sale of Class B, C and R shares. Class B plan fees payable to Distributors are used by Distributors to pay third party financing entities that have provided financing to Distributors in connection with advancing commissions to securities dealers. Resources owns a minority interest in one of the third party financing entities.
The Class B, C and R plans are compensation plans. They allow the Fund to pay a fee to Distributors that may be more than the eligible expenses Distributors has incurred at the time of the payment. Distributors must, however, demonstrate to the board that it has spent or has near-term plans to spend the amount received on eligible expenses. The Fund will not pay more than the maximum amount allowed under the plans.
XIII. The subheading "The Class A, B and C plans" under "The Underwriter - Distribution and service (12b-1) fees" on page 27 is replaced with "The Class A, B, C and R plans."
XIV. The first paragraph under "Performance" on page 27 is replaced with the following:
Performance quotations are subject to SEC rules. These rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by the Fund be accompanied by certain standardized performance information computed as required by the SEC. Average annual total return quotations used by the Fund are based on the standardized methods of computing performance mandated by the SEC. Unless otherwise noted, performance figures reflect Rule 12b-1 fees from the date of the plan's implementation. An explanation of these and other methods used by the Fund to compute or express performance follows. Regardless of the method used, past performance does not guarantee future results, and is an indication of the return to shareholders only for the limited historical period used.
Effective January 1, 2002, the Fund began offering Class R shares, which do not have initial sales charges. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to January 1, 2002, a restated figure is used based on the Fund's Class A performance, excluding the effect of Class A's maximum initial sales charge, reflecting the Rule 12b-1 rate differential between Class A and R; and (b) for periods after January 1, 2002, Class R standardized performance quotations are calculated as described below.
Please keep this supplement for future reference.
o 194 SA-1
SUPPLEMENT DATED JANUARY 1, 2002
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN STRATEGIC INCOME FUND
DATED SEPTEMBER 1, 2001
The Statement of Additional Information is amended as follows:
I. As of January 1, 2002, the Fund offers five classes of shares: Class A, Class B, Class C, Class R and Advisor Class.
II. The second paragraph under the section "Organization, Voting Rights and Principal Holders" on page 25 is replaced with the following:
The Fund currently offers five classes of shares, Class A, Class B, Class C, Class R and Advisor Class. The Fund may offer additional classes of shares in the future. The full title of each class is:
o Franklin Strategic Income Fund - Class A
o Franklin Strategic Income Fund - Class B
o Franklin Strategic Income Fund - Class C
o Franklin Strategic Income Fund - Class R
o Franklin Strategic Income Fund - Advisor Class
III. The following is added to the section "Organization, Voting Rights and Principal Holders" on page 25:
As of December 3, 2001, the principal shareholders of the Fund, beneficial or of record, were:
Name and Address Share Class Percentage (%) ------------------------------------------------------------------------------- Charles Schwab & Co. Inc. A 6.47 FBO SPS Advantage 101 Montgomery Street San Francisco, CA 94104-4122 F T Fund Allocator Advisor 24.23 Conservative Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 48.88 Moderate Target Fund One Franklin Parkway San Mateo, CA 94403-1906 F T Fund Allocator Advisor 19.55 Growth Target Fund One Franklin Parkway San Mateo, CA 94403-1906 FTB&T Trust Services FBO Advisor 5.20 Thomas W. Cotter One Franklin Parkway San Mateo, CA 94403-1906 |
As of December 3, 2001, the officers and board members, as a group, owned of record and beneficially less than 1% of the outstanding shares of each class. The board members may own shares in other funds in Franklin Templeton Investments.
IV. The first paragraph under the section "Buying and Selling Shares - Initial sales charges" on page 26 is replaced with the following:
The maximum initial sales charge is 4.25% for Class A and 1% for Class C. There is no initial sales charge for Class B and Class R.
V. The first and second paragraphs under "Buying and Selling Shares - Retirement plans" on page 29 are replaced with the following:
RETIREMENT PLANS. Effective January 1, 2002, (i) individual retirement accounts with investments of $1 million or more, (ii) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets of $20 million or more, (iii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of $10 million or more and (iv) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets of less than $10 million if Class R shares are not offered on a particular fund are eligible to buy Class A shares without an initial sales charge.
Retirement plans with assets invested in one or more Franklin Templeton funds on December 31, 2001, or in contract on December 31, 2001, to add one or more Franklin Templeton funds to the plan's investment options, and sponsored by an employer (i) with at least 100 employees, or (ii) with retirement plan assets of $1 million or more, or (iii) that agreed to invest at least $500,000 in Franklin Templeton funds over a 13 month period may continue to buy Class A shares without an initial sales charge.
The following investors are eligible to buy Class R shares: (i) Qualified Retirement Plans, ERISA covered 403(b)'s and certain non-qualified deferred compensation arrangements that operate in a similar manner to Qualified Retirement Plans, such as 457 plans and executive deferred compensation arrangements, with assets less than $20 million, (ii) ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping with assets less than $10 million, and (iii) investors who open an IRA Rollover with less than $1 million from a retirement plan that offered Franklin Templeton funds other than a current or former Franklin Templeton employee or as the result of a spousal rollover, a QDRO or a rollover of assets from a same employer sponsored Franklin Templeton money purchase pension plan in existence prior to January 1, 2002, to a new or existing Franklin Templeton profit sharing plan.
A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing
plan that qualifies under section 401(a) of the Internal Revenue Code, including
401(k), money purchase pension, profit sharing and defined benefit plans.
Retirement plans that are not Qualified Retirement Plans, SIMPLEs (savings incentive match plans for employees) or SEPs (employer sponsored simplified employee pension plans established under section 408(k) of the Internal Revenue Code) must meet the group purchase requirements described above to be able to buy Class A shares without an initial sales charge. We may enter into a special arrangement with a securities dealer, based on criteria established by the Fund, to add together certain small Qualified Retirement Plan accounts for the purpose of meeting these requirements.
VI. The second paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 29 is replaced with the following:
Distributors may pay the following commissions, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares of $1 million or more: 0.75% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million.
VII. The third paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 29 is deleted.
VIII. The fourth paragraph under the section "Buying and Selling Shares - Dealer compensation" on page 29 is replaced with the following:
Distributors or one of its affiliates may pay up to 1% on sales of $1 million to $4 million, plus 0.50% on sales over $4 million to $50 million, plus 0.25% on sales over $50 million, out of its own resources, to securities dealers who initiate and are responsible for purchases of Class A shares by certain retirement plans without an initial sales charge. These payments may be made in the form of contingent advance payments, which may be recovered from the securities dealer or set off against other payments due to the dealer if shares are sold within 12 months of the calendar month of purchase. Other conditions may apply. All terms and conditions may be imposed by an agreement between Distributors, or one of its affiliates, and the securities dealer.
IX. The first paragraph under the section "Buying and Selling Shares - Contingent deferred sales charge (CDSC)" on page 30 is replaced with the following:
If you invest $1 million or more in Class A shares, either as a lump sum or through our cumulative quantity discount or letter of intent programs, a CDSC may apply on any shares you sell within 18 months of purchase effective February 1, 2002. For purchases made prior to February 1, 2002, a CDSC of 1% may apply to shares redeemed within 12 months of purchase. For Class C and Class R shares, a CDSC may apply if you sell your shares within 18 months of purchase. For Class R shares, except for ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping, the CDSC is applied at the plan level based on initial investment for qualified plans. The CDSC is 1% of the value of the shares sold or the net asset value at the time of purchase, whichever is less.
X. The following is added under the section "Buying and Selling Shares - CDSC waivers" on page 30:
o Redemptions of Class R shares by investors if the securities dealer of record waived its commission in connection with the purchase.
XI. The following is added under the section "Buying and Selling Shares," beginning on page 26:
CONVERSION OF CLASS R SHARES TO CLASS A SHARES Effective October 1, 2002, when ValuSelect plans and other retirement plans where Franklin Templeton Investments contracts with the plan sponsor to provide participant level recordkeeping reach $10 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor. For all other Qualified Retirement Plans, when plan assets reach $20 million, assets may be transferred from Class R shares into Class A shares at NAV if Franklin Templeton Investments is notified by the plan sponsor.
XII. The first two paragraphs under "The Underwriter - Distribution and service
(12b-1) fees - The Class B and C plans" on page 34 are replaced with the
following:
THE CLASS B, C AND R PLANS. For Class B and C shares, the Fund pays Distributors up to 0.65% per year of the class's average daily net assets, out of which 0.15% may be paid for services to the shareholders (service fees). For Class R shares, the Fund pays Distributors up to 0.50% per year of the class's average daily net assets. The Class B, C and R plans also may be used to pay Distributors for advancing commissions to securities dealers with respect to the initial sale of Class B, C and R shares. Class B plan fees payable to Distributors are used by Distributors to pay third party financing entities that have provided financing to Distributors in connection with advancing commissions to securities dealers. Resources owns a minority interest in one of the third party financing entities.
The Class B, C and R plans are compensation plans. They allow the Fund to pay a fee to Distributors that may be more than the eligible expenses Distributors has incurred at the time of the payment. Distributors must, however, demonstrate to the board that it has spent or has near-term plans to spend the amount received on eligible expenses. The Fund will not pay more than the maximum amount allowed under the plans.
XIII. The subheading "The Class A, B and C plans" under "The Underwriter - Distribution and service (12b-1) fees" on page 34 is replaced with "The Class A, B, C and R plans."
XIV. The first paragraph under "Performance" on page 34 is replaced with the following:
Performance quotations are subject to SEC rules. These rules require the use of standardized performance quotations or, alternatively, that every non-standardized performance quotation furnished by the Fund be accompanied by certain standardized performance information computed as required by the SEC. Average annual total return and current yield quotations used by the Fund are based on the standardized methods of computing performance mandated by the SEC. Unless otherwise noted, performance figures reflect Rule 12b-1 fees from the date of the plan's implementation. An explanation of these and other methods used by the Fund to compute or express performance follows. Regardless of the method used, past performance does not guarantee future results, and is an indication of the return to shareholders only for the limited historical period used.
Effective January 1, 2002, the Fund began offering Class R shares, which do not have initial sales charges. Performance quotations for this class reflect the following methods of calculation: (a) For periods prior to January 1, 2002, a restated figure is used based on the Fund's Class A performance, excluding the effect of Class A's maximum initial sales charge, reflecting the Rule 12b-1 rate differential between Class A and R; and (b) for periods after January 1, 2002, Class R standardized performance quotations are calculated as described below.
Please keep this supplement for future reference.
FRANKLIN STRATEGIC SERIES
FILE NOS. 33-39088 &
811-6243
FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS. The following exhibits are incorporated by reference to
the previously filed document indicated below, except as noted:
(a) Agreement and Declaration of Trust
(i) Agreement and Declaration of Trust of Franklin California 250 Growth Index Fund dated January 22, 1991 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(ii) Certificate of Amendment of Agreement and Declaration of Trust of Franklin Strategic Series dated April 18, 1995 Filing: Post-Effective Amendment No. 21 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 7, 1996
(iii) Certificate of Amendment of Agreement and Declaration of Trust of Franklin Strategic Series dated July 19, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(iv) Certificate of Trust dated January 22, 1991 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(v) Certificate of Amendment to the Certificate of Trust dated November 19, 1991 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(vi) Certificate of Amendment to the Certificate of Trust of Franklin Strategic Series dated May 14, 1992 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(b) By-Laws
(i) Amended and Restated By-Laws as of April 25, 1991 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(ii) Amendment to By-Laws dated October 27, 1994 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(c) Instruments Defining Rights of Security Holders
Not Applicable
(d) Investment Advisory Contracts
(i) Management Agreement between the Registrant, on behalf of Franklin Global Health Care Fund, Franklin Small Cap Growth Fund, Franklin Global Utilities Fund, and Franklin Natural Resources Fund, and Franklin Advisers, Inc., dated February 24, 1992 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(ii) Management Agreement between the Registrant, on behalf of Franklin Strategic Income Fund, and Franklin Advisers, Inc., dated May 24, 1994 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(iii) Subadvisory Agreement between Franklin Advisers, Inc., on behalf of the Franklin Strategic Income Fund, and Templeton Investment Counsel, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(iv) Amended and Restated Management Agreement between the Registrant, on behalf of Franklin California Growth Fund, and Franklin Advisers, Inc., dated July 12, 1993 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(v) Management Agreement between the Registrant, on behalf of Franklin Blue Chip Fund, and Franklin Advisers, Inc., dated February 13, 1996 Filing: Post-Effective Amendment No. 18 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 14, 1996
(vi) Amendment dated August 1, 1995 to the Management Agreement between the Registrant, on behalf of Franklin California Growth Fund, and Franklin Advisers, Inc., dated July 12, 1993 Filing: Post-Effective Amendment No. 21 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 7, 1996
(vii) Amendment dated August 1, 1995 to the Management Agreement between the Registrant, on behalf of Franklin Global Health Care Fund, Franklin Small Cap Growth Fund, Franklin Global Utilities Fund, and Franklin Natural Resources Fund, and Franklin Advisers, Inc., dated February 24, 1992 Filing: Post-Effective Amendment No. 21 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 7, 1996
(viii) Amendment dated August 1, 1995 to the Management Agreement between the Registrant, on behalf of Franklin Strategic Income Fund, and Franklin Advisers, Inc., dated May 24, 1994 Filing: Post-Effective Amendment No. 21 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 7, 1996
(ix) Management Agreement between the Registrant, on behalf of Franklin Biotechnology Discovery Fund, and Franklin Advisers, Inc., dated July 15, 1997 Filing: Post-Effective Amendment No. 25 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 22, 1997
(x) Investment Advisory Agreement between the Registrant, on behalf of Franklin U.S. Long-Short Fund, and Franklin Advisers, Inc. dated February 18, 1999 Filing: Post-Effective Amendment No. 31 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 11, 1999
(xi) Investment Advisory Agreement between the Registrant, on behalf of Franklin Large Cap Growth Fund, and Franklin Advisers, Inc. dated May 18, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(xii) Investment Advisory Agreement between the Registrant, on behalf of Franklin Aggressive Growth Fund, and Franklin Advisers, Inc. dated May 18, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(xiii) Investment Advisory Agreement between the Registrant, on behalf of Franklin Technology Fund, and Franklin Advisers, Inc., dated May 1, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(xiv) Investment Advisory Agreement between the Registrant, on behalf of Franklin Small Cap Growth Fund II, and Franklin Advisers, Inc. dated May 1, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(e) Underwriting Contracts
(i) Forms of Dealer Agreements between Franklin/Templeton Distributors, Inc. and Securities Dealers dated March 1, 1998 Filing: Post-Effective Amendment No. 30 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: December 23, 1998
(ii) Amended and Restated Distribution Agreement between the Registrant and Franklin/Templeton Distributors, Inc. dated October 31, 2000 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(f) Bonus or Profit Sharing Contracts
Not Applicable
(g) Custodian Agreements
(i) Master Custody Agreement between the Registrant and Bank of New York dated February 16, 1996 Filing: Post-Effective Amendment No. 19 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 14, 1996
(ii) Amendment dated May 7, 1997 to Master Custody Agreement between Registrant and Bank of New York dated February 16, 1996 Filing: Post-Effective Amendment No. 27 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 13, 1998
(iii) Amendment dated February 27, 1998 to Master Custody Agreement between Registrant and Bank of New York dated February 16, 1996 Filing: Post-Effective Amendment No. 30 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: December 23, 1998
(iv) Amendment dated March 28, 2001 to Exhibit A of the Master Custody Agreement between Registrant and the Bank of New York dated February 16, 1996 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(v) Amendment dated May 16, 2001, to Master Custody Agreement between Registrant and Bank of New York dated February 16, 1996
(vi) Amended and Restated Foreign Custody Manager Agreement between the Registrant and Bank of New York made as of May 16, 2001
(vii) Terminal Link Agreement between the Registrant and Bank of New York dated February 16, 1996 Filing: Post-Effective Amendment No. 19 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 14, 1996
(h) Other Material Contracts
(i) Subcontract for Fund Administrative Services dated January 1, 2001 between Franklin Advisers, Inc. and Franklin Templeton Services, LLC Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(ii) Fund Administration Agreement between the Registrant, on behalf of Franklin Biotechnology Discovery Fund, and Franklin Templeton Services, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(iii) Fund Administration Agreement between the Registrant, on behalf of Franklin U.S. Long-Short Fund, and Franklin Templeton Services, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(iv) Fund Administration Agreement between the Registrant, on behalf of Franklin Large Cap Growth Fund, and Franklin Templeton Services, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(v) Fund Administration Agreement between the Registrant, on behalf of Franklin Aggressive Growth Fund, and Franklin Templeton Services, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(vi) Fund Administration Agreement between the Registrant, on behalf of Franklin Technology Fund, and Franklin Templeton Services, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(vii)Fund Administration Agreement between the Registrant, on behalf of Franklin Small Cap Growth Fund II, and Franklin Templeton Services, LLC, dated January 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(i) Legal Opinion
(i) Opinion and consent of counsel dated March 8, 1999 Filing: Post-Effective Amendment No. 31 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 11, 1999
(j) Other Opinions
(i) Consent of Independent Auditors
(k) Omitted Financial Statements
Not Applicable
(l) Initial Capital Agreements
(i) Letter of Understanding for Franklin California Growth Fund dated August 20, 1991 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(ii) Letter of Understanding for Franklin Global Utilities Fund - Class II dated April 12, 1995 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(iii) Letter of Understanding for Franklin Natural Resources Fund dated June 5, 1995 Filing: Post-Effective Amendment No. 17 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: December 5, 1995
(iv) Letter of Understanding for Franklin California Growth Fund-Class II dated August 30, 1996 Filing: Post-Effective Amendment No. 27 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 13, 1998
(v) Letter of Understanding for Franklin Global Health Care Fund dated August 30, 1996 Filing: Post-Effective Amendment No. 27 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 13, 1998
(vi) Letter of Understanding for Franklin Blue Chip Fund dated May 24, 1996 Filing: Post-Effective Amendment No. 27 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 13, 1998
(vii) Letter of Understanding for Franklin Biotechnology Discovery Fund dated September 5, 1997 Filing: Post-Effective Amendment No. 27 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 13, 1998
(viii)Letter of Understanding for Franklin U.S. Long-Short Fund dated March 11, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(ix) Letter of Understanding for Franklin Large Cap Growth Fund dated June 4, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(x) Letter of Understanding for Franklin Aggressive Growth Fund dated June 22, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(xi) Letter of Understanding for Franklin Small Cap Growth Fund II dated April 28, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(xii) Letter of Understanding for Franklin Technology Fund dated April 28, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(m) Rule 12b-1 Plan
(i) Class A Amended and Restated Distribution Plan between the Registrant, on behalf of Franklin California Growth Fund, Franklin Small Cap Growth Fund, Franklin Global Health Care Fund and Franklin Global Utilities Fund, and Franklin/Templeton Distributors, Inc., dated July 1, 1993 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(ii) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of the Franklin Strategic Income Fund, and Franklin/Templeton Distributors, Inc., dated May 24, 1994 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(iii) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of the Franklin Natural Resources Fund, and Franklin/Templeton Distributors, Inc., dated June 1, 1995 Filing: Post-Effective Amendment No. 14 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 2, 1995
(iv) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of the Franklin Blue Chip Fund, and Franklin/Templeton Distributors, Inc., dated May 28, 1996 Filing: Post-Effective Amendment No. 21 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 7, 1996
(v) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Biotechnology Discovery Fund and Franklin/Templeton Distributors, Inc., dated September 15, 1997 Filing: Post-Effective Amendment No. 27 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 13, 1998
(vi) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin U.S. Long-Short Fund, and Franklin Templeton Distributors, Inc. dated April 15, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(vii) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Large Cap Growth Fund and Franklin Templeton Distributors, Inc. dated May 18, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(viii) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Aggressive Growth Fund and Franklin Templeton Distributors, Inc. dated May 18, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(ix) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Small Cap Growth Fund II and Franklin/Templeton Distributors, Inc., dated May 1, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(x) Class A Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Technology Fund and Franklin/Templeton Distributors, Inc., dated May 1, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(xi) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin California Growth Fund and Franklin/Templeton Distributors, Inc. dated October 16, 1998 Filing: Post-Effective Amendment No. 33 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 24, 1999
(xii) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Global Health Care Fund and Franklin/Templeton Distributors, Inc. dated October 16, 1998 Filing: Post-Effective Amendment No. 33 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 24, 1999
(xiii)Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Global Utilities Fund and Franklin/Templeton Distributors, Inc. dated October 16, 1998 Filing: Post-Effective Amendment No. 33 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 24, 1999
(xiv) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Strategic Income Fund and Franklin/Templeton Distributors, Inc. dated October 16, 1998 Filing: Post-Effective Amendment No. 33 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 24, 1999
(xv) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Large Cap Growth Fund and Franklin/Templeton Distributors, Inc. dated May 18, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(xvi) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Aggressive Growth Fund and Franklin/Templeton Distributors, Inc. dated May 18, 1999 Filing: Post-Effective Amendment No. 37 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 25, 1999
(xvii) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Blue Chip Fund and Franklin/Templeton Distributors, Inc., dated September 14, 1999 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(xviii) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Small Cap Growth Fund II and Franklin/Templeton Distributors, Inc., dated May 1, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(xix) Class B Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Technology Fund and Franklin/Templeton Distributors, Inc., dated May 1, 2000 Filing: Post-Effective Amendment No. 40 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: June 30, 2000
(xx) Class C Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Strategic Income Fund and Franklin/Templeton Distributors, Inc., dated October 31, 2000 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(xxi) Class C Distribution Plan between the Registrant, on behalf of Franklin Aggressive Growth Fund, Franklin Blue Chip Fund, Franklin California Growth Fund, Franklin Global Communications Fund, Franklin Global Health Care Fund, Franklin Large Cap Growth Fund, Franklin Small Cap Growth Fund I, Franklin Small Cap Growth Fund II and Franklin Technology Fund and Franklin/Templeton Distributors, Inc., dated October 31, 2000 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
(xxii)Class R Distribution Plan pursuant to Rule 12b-1 between the Registrant, on behalf of Franklin Aggressive Growth Fund, Franklin California Growth Fund, Franklin Blue Chip Fund, Franklin Large Cap Growth Fund, Franklin Small Cap Growth Fund II, Franklin Small-Mid Cap Growth Fund, Franklin Strategic Income Fund, and Franklin Technology Fund and Franklin/Templeton Distributors, Inc. dated January 1, 2002
(n) Rule 18f-3 Plan
(i) Multiple Class Plan for Franklin Global Utilities Fund dated April 16, 1998 Filing: Post-Effective Amendment No. 33 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 24, 1999
(ii) Multiple Class Plan for Franklin Global Health Care Fund dated April 16, 1998 Filing: Post-Effective Amendment No. 33 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: March 24, 1999
(iii) Multiple Class Plan for Franklin Natural Resources Fund dated June 18, 1996 Filing: Post-Effective Amendment No. 24 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: December 11, 1996
(iv) Multiple Class Plan for Franklin Strategic Income Fund dated October 9, 2001
(v) Multiple Class Plan for Franklin Aggressive Growth Fund dated October 9, 2001
(vi) Multiple Class Plan for Franklin Blue Chip Fund dated October 9, 2001
(vii) Multiple Class Plan for Franklin California Growth Fund dated October 9, 2001
(viii)Multiple Class Plan for Franklin Large Cap Growth Fund dated October 9, 2001
(ix) Multiple Class Plan for Franklin Small Cap Growth Fund II dated October 9, 2001
(x) Multiple Class Plan for Franklin Technology Fund dated October 9, 2001
(xi) Multiple Class Plan for Franklin Small-Mid Cap Growth Fund dated October 9, 2001
(p) Power of Attorney
(i) Power of Attorney for Franklin Strategic Series dated January 20, 2000 Filing: Post-Effective Amendment No. 38 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: January 28, 2000
(q) Code of Ethics
(i) Code of Ethics dated June 1, 2001 Filing: Post-Effective Amendment No. 42 to Registration Statement on Form N-1A File No. 33-39088 Filing Date: August 29, 2001
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None
ITEM 25. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a Court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
a) Franklin Adviser, Inc. (Advisers)
The officers and directors of Advisers also serve as officers and/or directors for (1) Advisers' corporate parent, Franklin Resources, Inc., and/or (2) other investment companies in Franklin Templeton Investments. For additional information please see Part B and Schedules A and D of Form ADV of Advisers (SEC File 801-26292) incorporated herein by reference, which sets forth the officers and directors of Advisers and information as to any business, profession, vocation or employment of a substantial nature engaged in by those officers and directors during the past two years.
b) Templeton Investment Counsel, LLC (TICL)
Templeton Investment Counsel, LLC, an indirect, wholly owned subsidiary of Franklin Resources, Inc., serves as Franklin Strategic Income Fund's Sub-adviser, furnishing to Advisers in that capacity portfolio management services and investment research. For additional information please see Part B and Schedules A and D of Form ADV of TICL (SEC File 801-15125), incorporated herein by reference, which sets forth the officers and directors of TICL and information as to any business, profession, vocation or employment of a substantial nature engaged in by those officers and directors during the past two years.
ITEM 27 PRINCIPAL UNDERWRITERS
a) Franklin/Templeton Distributors, Inc., (Distributors) also acts as principal underwriter of shares of:
Franklin California Tax-Free Income Fund, Inc.
Franklin California Tax-Free Trust
Franklin Custodian Funds, Inc.
Franklin Federal Money Fund
Franklin Federal Tax-Free Income Fund
Franklin Floating Rate Master Trust
Franklin Floating Rate Trust
Franklin Global Trust
Franklin Gold and Precious Metals Fund
Franklin Growth and Income Fund
Franklin High Income Trust
Franklin Investors Securities Trust
Franklin Managed Trust
Franklin Money Fund
Franklin Mutual Series Fund Inc.
Franklin Municipal Securities Trust
Franklin New York Tax-Free Income Fund
Franklin New York Tax-Free Trust
Franklin Real Estate Securities Trust
Franklin Strategic Mortgage Portfolio
Franklin Tax-Exempt Money Fund
Franklin Tax-Free Trust
Franklin Templeton Fund Allocator Series
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Templeton Money Fund Trust
Franklin Templeton Variable Insurance Products Trust
Franklin Value Investors Trust
Institutional Fiduciary Trust
Templeton Capital Accumulator Fund, Inc.
Templeton Developing Markets Trust
Templeton Funds, Inc.
Templeton Global Investment Trust
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund, Inc.
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
b) The information required by this Item 27 with respect to each director and officer of Distributors is incorporated by reference to Part B of this N-1A and Schedule A of Form BD filed by Distributors with the Securities and Exchange Commission pursuant to the Securities Act of 1934 (SEC File No. 8-5889).
c) Not Applicable. Registrant's principal underwriter is an affiliated person of an affiliated person of the Registrant.
ITEM 28 LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 are kept by the Registrant or its shareholder services agent, Franklin Templeton Investor Services LLC both of whose address is One Franklin Parkway, San Mateo, CA 94403-1906.
ITEM 29 MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 30 UNDERTAKINGS
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of San Mateo and the State of California, on the 14th day of December, 2001.
FRANKLIN STRATEGIC SERIES
(Registrant)
*By: /s/ David P. Goss
------------------
David P. Goss
Vice President
|
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
RUPERT H. JOHNSON, JR.* Principal Executive Officer
-----------------------
Rupert H. Johnson, Jr. and Trustee
Dated: December 17, 2001
MARTIN L. FLANAGAN* Principal Financial Officer
-------------------
Martin L. Flanagan Dated: December 17, 2001
KIMBERLEY H. MONASTERIO* Principal Accounting Officer
------------------------
Kimberley H. Monasterio Dated: December 17, 2001
FRANK H. ABBOTT, III* Trustee
---------------------
Frank H. Abbott, III Dated: December 17, 2001
HARRIS J. ASHTON* Trustee
-----------------
Harris J. Ashton Dated: December 17, 2001
HARMON E. BURNS* Trustee
----------------
Harmon E. Burns Dated: December 17, 2001
S. JOSEPH FORTUNATO* Trustee
--------------------
S. Joseph Fortunato Dated: December 17, 2001
EDITH E. HOLIDAY* Trustee
-----------------
Edith E. Holiday Dated: December 17, 2001
CHARLES B. JOHNSON* Trustee
-------------------
Charles B. Johnson Dated: December 17, 2001
FRANK W.T. LAHAYE* Trustee
------------------
Frank W.T. LaHaye Dated: December 17, 2001
GORDON S. MACKLIN* Trustee
------------------
Gordon S. Macklin Dated: December 17, 2001
By: /s/ David P. Goss
-------------------
David P. Goss
Attorney-in-Fact
(Pursuant to Power of Attorney previously filed)
FRANKLIN STRATEGIC SERIES
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.(a)(i) Agreement and Declaration of *
Trust dated January 22, 1991
EX-99.(a)(ii) Certificate of Amendment of *
Agreement and Declaration of
Trust of Franklin Strategic
Series dated April 18, 1995
EX-99.(a)(iii) Certificate of Amendment of *
Agreement and Declaration of
Trust dated July 19, 2001
EX-99.(a)(iv) Certificate of Trust dated *
January 22, 1991
EX-99.(a)(v) Certificate of Amendment to the *
Certificate of Trust dated
November 19, 1991
EX-99.(a)(vi) Certificate of Amendment to the *
Certificate of Trust of Franklin
Strategic Series dated May 14,
1992
EX-99.(b)(i) Amended and Restated By-Laws as *
of April 25, 1991
EX-99.(b)(ii) Amendment to By-Laws dated *
October 27, 1994
EX-99.(d)(i) Management Agreement between the *
Registrant, on behalf of Franklin
Global Health Care Fund, Franklin
Small Cap Growth Fund, Franklin
Global Utilities Fund, and
Franklin Natural Resources Fund,
and Franklin Advisers, Inc.,
dated February 24, 1992
EX-99.(d)(ii) Management Agreement between the *
Registrant, on behalf of Franklin
Strategic Income Fund, and
Franklin Advisers, Inc., dated
May 24, 1994
EX-99.(d)(iii) Subadvisory Agreement between *
Franklin Advisers, Inc., on
behalf of Franklin Strategic
Income Fund, and Templeton
Investment Counsel, LLC, dated
January 1, 2001
EX-99.(d)(iv) Amended and Restated Management *
Agreement between the Registrant,
on behalf of Franklin California
Growth Fund, and Franklin
Advisers, Inc., dated July 12,
1993
EX-99.(d)(v) Management Agreement between the *
Registrant, on behalf of Franklin
Blue Chip Fund, and Franklin
Advisers, Inc., dated February
13, 1996
EX-99.(d)(vi) Amendment dated August 1, 1995 to *
the Management Agreement between
the Registrant, on behalf of
Franklin California Growth Fund,
and Franklin Advisers, Inc.,
dated July 12, 1993
EX-99.(d)(vii) Amendment dated August 1, 1995 to *
the Management Agreement between
the Registrant, on behalf of
Franklin Global Health Care Fund,
and Franklin Small Cap Growth
Fund, Franklin Global Utilities
Fund, and Franklin Natural
Resources Fund, and Franklin
Advisers, Inc., dated February
24, 1992
EX-99.(d)(viii) Amendment dated August 1, 1995 to *
the Management Agreement between
the Registrant on behalf of
Franklin Strategic Income Fund,
and Franklin Advisers, Inc.,
dated May 24, 1994
EX-99.(d)(ix) Management Agreement between the *
Registrant, on behalf of Franklin
Biotechnology Discovery Fund, and
Franklin Advisers, Inc., dated
July 15, 1997
EX-99.(d)(x) Investment Advisory Agreement *
between the Registrant, on behalf
of Franklin U.S. Long-Short Fund,
and Franklin Advisers, Inc. dated
February 18, 1999
EX-99.(d)(xi) Investment Advisory Agreement *
between the Registrant, on
behalf of Franklin Large Cap
Growth Fund, and Franklin
Advisers, Inc. dated May 18, 1999
EX-99.(d)(xii) Investment Advisory Agreement *
between the Registrant, on behalf
of Franklin Aggressive Growth
Fund, and Franklin Advisers, Inc.
dated May 18, 1999
EX-99.(d) (xiii) Investment Advisory Agreement *
between the Registrant, on behalf
of Franklin Technology Fund, and
Franklin Advisers, Inc., dated
May 1, 2000
EX-99.(d) (xiv) Investment Advisory Agreement *
between the Registrant, on behalf
of Franklin Small Cap Growth Fund II,
and Franklin Advisers, Inc.,
dated May 1, 2000
EX-99.(e)(i) Forms of Dealer Agreements *
between Franklin/Templeton
Distributors, Inc., and
Securities Dealers dated March 1,
1998
EX-99.(e)(ii) Amended and Restated Distribution *
Agreement between the Registrant
on behalf of Franklin Strategic
Series, and Franklin/Templeton
Distributors, Inc., dated October
31, 2000
EX-99.(g)(i) Master Custody Agreement between *
the Registrant and Bank of New
York dated February 16, 1996
EX-99.(g)(ii) Amendment dated May 7, 1997 to *
Master Custody Agreement between
Registrant and Bank of New York
dated February 16, 1996
EX-99.(g)(iii) Amendment dated February 27, 1998 *
to Master Custody Agreement
between Registrant and Bank of
New York dated February 16, 1996
EX-99.(g)(iv) Amendment dated March 28, 2001, *
to Exhibit A of the Master
Custody Agreement between
Registrant and the Bank of New
York dated February 16, 1996
EX-99.(g)(v) Amendment dated May 16, 2001, to Attached
Master Custody Agreement between
Registrant and Bank of New York
dated February 16, 1996
EX-99.(g)(vi) Amended and Restated Foreign Attached
Custody Agreement between the
Registrant and Bank of New York
made as of May 16, 2001
EX-99.(g)(vii) Terminal Link Agreement between *
the Registrant and Bank of New
York dated February 16, 1996
EX-99.(h)(i) Subcontract for Fund *
Administrative Services dated
January 1, 2001 between Franklin
Advisers, Inc. and Franklin
Templeton Services, LLC
EX-99.(h)(ii) Fund Administration Agreement *
between the Registrant, on behalf
of Franklin Biotechnology
Discovery Fund, and Franklin
Templeton Services, LLC, dated
January 1, 2001
EX-99.(h)(iii) Fund Administration Agreement *
between the Registrant, on behalf
of Franklin U.S. Long-Short Fund,
and Franklin Templeton Services,
LLC, dated January 1, 2001
EX-99.(h)(iv) Fund Administration Agreement *
between the Registrant, on behalf
of Franklin Large Cap Growth
Fund, and Franklin Templeton
Services, LLC, dated January 1,
2001
EX-99.(h)(v) Fund Administration Agreement *
between the Registrant, on behalf
of Franklin Aggressive Growth
Fund, and Franklin Templeton
Services, LLC, dated January 1,
2001
EX-99.(h)(vi) Fund Administration Agreement *
between the Registrant, on behalf
of Franklin Technology Fund, and
Franklin Templeton Services, LLC,
dated January 1, 2001
EX-99.(h)(vii) Fund Administration Agreement *
between the Registrant, on behalf
of Franklin Small Cap Growth Fund
II, and Franklin Templeton
Services, LLC, dated January 1,
2001
EX-99.(i)(i) Opinion and consent of counsel *
dated March 8, 1999
EX-99.(j)(i) Consent of Independent Auditors Attached
EX-99.(l)(i) Letter of Understanding for *
Franklin California Growth Fund
dated August 20, 1991
EX-99.(l)(ii) Letter of Understanding for *
Franklin Global Utilities Fund -
Class II dated April 12, 1995
EX-99.(l)(iii) Letter of Understanding for *
Franklin Natural Resources Fund
dated June 5, 1995
EX-99.(l)(iv) Letter of Understanding for *
Franklin California Growth Fund -
Class II dated August 30, 1996
EX-99.(l)(v) Letter of Understanding for *
Franklin Global Health Care Fund
dated August 30, 1996
EX-99.(l)(vi) Letter of Understanding for *
Franklin Blue Chip Fund dated May
24, 1996
EX-99.(l)(vii) Letter of Understanding for *
Franklin Biotechnology Discovery
Fund dated September 5, 1997
EX-99.(l)(viii) Letter of Understanding for *
Franklin U.S. Long-Short Fund
dated March 11, 1999
EX-99.(l)(ix) Letter of Understanding for *
Franklin Large Cap Growth Fund
dated June 4, 1999
EX-99.(l)(x) Letter of Understanding for *
Franklin Aggressive Growth Fund
dated June 22, 1999
EX-99.(l)(xi) Letter of Understanding for *
Franklin Small Cap Growth Fund II
dated April 28, 2000
EX-99.(l)(xii) Letter of Understanding for *
Franklin Technology Fund dated
April 28, 2000
EX-99.(m)(i) Class A Amended and Restated *
Distribution Plan between the
Registrant, on behalf of Franklin
California Growth Fund, Franklin
Small Cap Growth Fund, Franklin
Global Health Care Fund and
Franklin Global Utilities Fund,
and Franklin/Templeton
Distributors, Inc., dated July 1,
1993
EX-99.(m)(ii) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Strategic Income Fund,
and Franklin/Templeton
Distributors, Inc., dated May 24,
1994
EX-99.(m)(iii) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Natural Resources Fund,
and Franklin/Templeton
Distributors, Inc., dated June 1,
1995
EX-99.(m)(iv) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Blue Chip Fund, and
Franklin/Templeton Distributors,
Inc., dated May 28, 1996
EX-99.(m)(v) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Biotechnology Discovery
Fund, and Franklin/Templeton
Distributors, Inc., dated
September 15, 1997
EX-99.(m)(vi) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin U.S. Long-Short Fund,
and Franklin/Templeton
Distributors, Inc., dated April
15, 1999
EX-99.(m)(vii) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Large Cap Growth Fund,
and Franklin/Templeton
Distributors, Inc., dated May 18,
1999
EX-99.(m)(viii) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Aggressive Growth Fund,
and Franklin/Templeton
Distributors, Inc., dated May 18,
1999
EX-99.(m)(ix) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Small Cap Growth Fund
II, and Franklin/Templeton
Distributors, Inc., dated May 1,
2000
EX-99.(m)(x) Class A Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of the
Franklin Technology Fund, and
Franklin/Templeton Distributors,
Inc., dated May 1, 2000
EX-99.(m)(xi) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin California Growth Fund
and Franklin/Templeton
Distributors, Inc., dated October
16, 1998
EX-99.(m)(xii) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Global Health Care Fund
and Franklin/Templeton
Distributors, Inc., dated October
16, 1998
EX-99.(m)(xiii) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Global Utilities Fund
and Franklin/Templeton
Distributors, Inc., dated October
16, 1998
EX-99.(m)(xiv) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Strategic Income Fund
and Franklin/Templeton
Distributors, Inc., dated October
16, 1998
EX-99.(m)(xv) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Large Cap Growth Fund
and Franklin/Templeton
Distributors, Inc., dated May 18,
1999
EX-99.(m)(xvi) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Aggressive Growth Fund
and Franklin/Templeton
Distributors, Inc., dated May 18,
1999
EX-99.(m)(xvii) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Blue Chip Fund and
Franklin/Templeton Distributors,
Inc., dated September 14, 1999
EX-99.(m)(xviii) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Small Cap Growth Fund II
and Franklin/Templeton
Distributors, Inc., dated May 1,
2000
EX-99.(m)(xix) Class B Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Technology Fund and
Franklin/Templeton Distributors,
Inc., dated May 1, 2000
EX-99.(m)(xx) Class C Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Strategic Income Fund
and Franklin/Templeton
Distributors, Inc., dated October
31, 2000
EX-99.(m)(xxi) Class C Distribution Plan *
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Aggressive Growth Fund,
Franklin Blue Chip Fund, Franklin
Global Communications Fund,
Franklin Global Health Care Fund,
Franklin Large Cap Growth Fund,
Franklin Small Cap Growth Fund I,
Franklin Small Cap Growth Fund II
and Franklin Technology Fund and
Franklin/Templeton Distributors,
Inc., dated October 31, 2000
EX-99.(m)(xxii) Class R Distribution Plan Attached
pursuant to Rule 12b-1 between
the Registrant, on behalf of
Franklin Aggressive Growth Fund,
Franklin California Growth Fund,
Franklin Blue Chip Fund, Franklin
Large Cap Growth Fund, Franklin
Small Cap Growth Fund II,
Franklin Small-Mid Cap Growth
Fund, Franklin Strategic Income
Fund, and Franklin Technology
Fund and Franklin/Templeton
Distributors, Inc.
EX-99.(n)(i) Multiple Class Plan for Franklin *
Global Utilities Fund dated April
16, 1998
EX-99.(n)(ii) Multiple Class Plan for Franklin *
Global Health Care Fund dated
April 16, 1998
EX-99.(n)(iii) Multiple Class Plan for Franklin *
Natural Resources Fund dated June
18, 1996
EX-99.(n)(iv) Multiple Class Plan for Franklin Attached
Strategic Income Fund dated
October 9, 2001
EX-99.(n)(v) Multiple Class Plan for Franklin Attached
Aggressive Growth Fund dated
October 9, 2001
EX-99.(n)(vi) Multiple Class Plan for Franklin Attached
Blue Chip Fund dated October 9,
2001
EX-99.(n)(vii) Multiple Class Plan for Franklin Attached
California Growth Fund dated
October 9, 2001
Ex-99.(n)(viii) Multiple Class Plan for Franklin Attached
Large Cap Growth Fund dated
October 9, 2001
EX-99.(n)(ix) Multiple Class Plan for Franklin Attached
Small Cap Growth Fund II dated
October 9, 2001
EX-99.(n)(x) Multiple Class Plan for Franklin Attached
Technology Fund dated October 9,
2001
EX-99.(n)(xi) Multiple Class Plan for Franklin Attached
Small-Mid Cap Growth Fund dated
October 9, 2001
EX-99.(p)(i) Power of Attorney for Franklin *
Strategic Series dated January
20, 2000
EX-99.(q)(i) Code of Ethics *
|
* Incorporated by reference
AMENDMENT
Amendment made as of May 16, 2001 to that certain Master Custody Agreement dated as of February 16, 1996, as thereafter amended, between each of the investment companies listed on Schedule 1 hereto (each, a "Fund") and The Bank of New York ("Custodian") (such Master Custody Agreement hereinafter referred to as the "Custody Agreement").
W I T N E S S E T H :
WHEREAS, Rule 17f-7 under the Investment Company Act of 1940, as amended (the "Rule"), was adopted on June 12, 2000 by the Securities and Exchange Commission;
WHEREAS, the Fund and Custodian desire to amend the Custody Agreement to conform with the Rule;
NOW, THEREFORE, the Fund and Custodian hereby agree as follows:
A. The following new Article is hereby added to the Custody Agreement:
FOREIGN DEPOSITORIES
1. As used in this Article, the term "Foreign Depository" shall mean (a) Euroclear, (b) Clearstream Banking, societe anonyme, (c) each Eligible Securities Depository as defined in Rule 17f-7 under the Investment Company Act of 1940, as amended (the "Rule"), identified by Custodian to the Fund or its investment adviser(s) ("Adviser") from time to time, and (d) the respective successors and nominees of the foregoing.
2. Notwithstanding any other provision in this Agreement, the Fund hereby represents and warrants, which representations and warranties shall be continuing and shall be deemed to be reaffirmed upon any delivery of a Certificate or any giving of Oral Instructions, Instructions, or Written Instructions, as the case may be, that the Fund or its Adviser has determined that the custody arrangements of each Foreign Depository provide reasonable safeguards against the custody risks associated with maintaining assets with such Foreign Depository within the meaning of the Rule.
3. With respect to each Foreign Depository, Custodian shall exercise reasonable care, prudence, and diligence such as a person having responsibility for the safekeeping of the Fund's Foreign Assets (as defined in the Rule) would exercise: (i) to provide the Fund or Adviser with an analysis of the custody risks associated with maintaining assets with the Foreign Depository, and (ii) to monitor such custody risks on a continuing basis and promptly notify the Fund or Adviser of any material change in such risks. The Fund acknowledges and agrees that such analysis and monitoring shall be made on the basis of, and limited by, information gathered from Subcustodians or through publicly available information otherwise obtained by Custodian, and shall not include any evaluation of Country Risks. As used herein the term "Country Risks" shall mean with respect to any Foreign Depository: (a) the financial infrastructure of the country in which it is organized, (b) such country's prevailing settlement practices, (c) nationalization, expropriation or other governmental actions, (d) such country's regulation of the banking or securities industry, (e) currency controls, restrictions, devaluations or fluctuations, and (f) market conditions which affect the orderly execution of securities transactions or affect the value of securities.
B. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts, shall, together, constitute only one amendment.
IN WITNESS WHEREOF, the Fund and Custodian have caused this Amendment to be executed by their respective officers, thereunto duly authorized, as of the day and year first above written.
EACH INVESTMENT COMPANY LISTED ON SCHEDULE 1
HERETO
By: /s/ MURRAY L. SIMPSON
----------------------
Title: Vice President
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Tax Identification No:
THE BANK OF NEW YORK
By: /s/ IRA R. ROSNER
------------------
Title: Ira R. Rosner
Vice President
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AMENDMENT TO MASTER CUSTODY AGREEMENT
SCHEDULE 1
The following is a list of the Investment Companies and their respective Series
for which the Custodian shall serve under the Foreign Custody Manager Agreement
dated as of May 16, 2001.
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INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Custodian Funds, Inc. Maryland Corporation DynaTech Series
Growth Series
Income Series
Utilities Series
Franklin Floating Rate Master Trust Delaware Business Trust Franklin Floating Rate Master Series Trust
Franklin Gold and Precious Metals Fund Delaware Business Trust
Franklin Growth and Income Fund Delaware Business Trust
Franklin High Income Trust Delaware Business Trust AGE High Income Fund
Franklin Investors Securities Trust Massachusetts Business Trust Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Global Government Income Fund
Franklin Total Return Fund
Franklin Managed Trust Delaware Business Trust Franklin Rising Dividends Fund
Franklin Mutual Series Fund Inc. Maryland Corporation Mutual Beacon Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Franklin Real Estate Securities Trust Delaware Business Trust Franklin Real Estate Securities Fund
Franklin Strategic Mortgage Portfolio Delaware Business Trust
Franklin Strategic Series Delaware Business Trust Franklin Aggressive Growth Fund
Franklin Biotechnology Discovery Fund
Franklin Blue Chip Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Large Cap Growth Fund
Franklin Natural Resources Fund
Franklin Small Cap Growth Fund I
Franklin Small Cap Growth Fund II
Franklin Strategic Income Fund
Franklin Technology Fund
Franklin U.S. Long-Short Fund
Franklin Templeton Fund Allocator Series Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton International Trust Templeton Pacific Growth Fund
Franklin Templeton Variable Insurance Massachusetts Business Fund Franklin Aggressive Growth Securities Fund
Products Trust Franklin Global Communications Securities Fund
Franklin Global Health Care Securities Fund
Franklin Growth and Income Securities Fund
Franklin High Income Fund
Franklin Income Securities Fund
Franklin Large Cap Growth Securities Fund
Franklin Money Market Fund
Franklin Natural Resources Securities Fund
Franklin Real Estate Fund
Franklin Rising Dividends Securities Fund
Franklin Small Cap Fund
Franklin Strategic Income Securities Fund
Franklin S&P 500 Index Fund
Franklin Technology Securities Fund
Franklin U.S. Government Fund
Franklin Value Securities Fund
Franklin Zero Coupon Fund - 2005
Franklin Zero Coupon Fund - 2010
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Franklin Value Investors Trust Massachusetts Business Trust Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund
Franklin Value Fund
CLOSED END FUNDS:
Franklin Floating Rate Trust Delaware Business Trust
Franklin Multi-Income Trust Massachusetts Business Trust
Franklin Universal Trust Massachusetts Business Trust
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Revised 5/1/01
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AMENDED AND RESTATED FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of May 16, 2001 between Each Investment Company Listed on Schedule 1 attached hereto (each a "Fund") and The Bank of New York ("BNY").
W I T N E S S E T H:
WHEREAS, each Fund appointed BNY as a Foreign Custody Manager on the terms and conditions contained in a certain Foreign Custody Agreement made as of July 30, 1998 or May 7, 1998, and effective as of February 27, 1998 (the "Prior Agreement");
WHEREAS, each Fund and BNY desire to amend and restate the Prior Agreement;
WHEREAS, BNY desires to continue to serve as a Foreign Custody Manager and perform the duties set forth herein on the terms and conditions contained herein;
NOW THEREFORE, in consideration of the mutual promises hereinafter contained in this Agreement, each Fund and BNY hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:
1. "BOARD" shall mean the board of directors or board of trustees, as the case may be, of the Fund.
2. "ELIGIBLE FOREIGN CUSTODIAN" shall have the meaning provided in the Rule.
3. "MONITORING SYSTEM" shall mean a system established by BNY to fulfill the Responsibilities (as herein defined) specified in clauses (d) and (e) of Section 1 of Article III of this Agreement.
4. "RESPONSIBILITIES" shall mean the responsibilities delegated to BNY under the Rule (as herein defined) as a Foreign Custody Manager with respect to each Specified Country (as herein defined) and each Eligible Foreign Custodian selected by BNY, as such responsibilities are more fully described in Article III of this Agreement.
5. "RULE" shall mean Rule 17f-5 under the Investment Company Act of 1940, as amended on June 12, 2000.
6. "SPECIFIED COUNTRY" shall mean each country listed on Schedule 2 attached hereto and each country, other than the United States, constituting the primary market for a security with respect to which the Fund has given settlement instructions to BNY as custodian (the "Custodian") under its Custody Agreement with the Fund.
ARTICLE II.
BNY AS A FOREIGN CUSTODY MANAGER
1. Each Fund on behalf of its Board hereby delegates to BNY with respect to each Specified Country the Responsibilities.
2. BNY accepts the Board's delegation of Responsibilities with respect to each Specified Country and agrees in performing the Responsibilities as a Foreign Custody Manager to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of the Fund's Foreign Assets (as defined in the Rule) would exercise.
3. BNY shall provide to the Board at such times as the Board deems reasonable and appropriate based on the circumstances of the Fund's foreign custody arrangements written reports notifying the Board of the placement of assets of the Fund with a particular Eligible Foreign Custodian within a Specified Country and of any material change in the arrangements (including the contract governing such arrangements) with respect to Foreign Assets (as defined in the Rule) of the Fund with any such Eligible Foreign Custodian.
ARTICLE III.
RESPONSIBILITIES
1. Subject to the provisions of this Agreement, BNY shall with respect to each Specified Country select an Eligible Foreign Custodian. In connection therewith, BNY shall: (a) determine that assets of the Fund held by such Eligible Foreign Custodian will be subject to reasonable care, based on the standards applicable to custodians in the relevant market in which such Eligible Foreign Custodian operates, after considering all factors relevant to the safekeeping of such assets, including, without limitation, those contained in paragraph (c)(1) of the Rule; (b) determine that the Fund's foreign custody arrangements with each Eligible Foreign Custodian are governed by a written contract with the Custodian which will provide reasonable care for the Fund's assets based on the standards specified in paragraph (c)(1) of the Rule; (c) determine that each contract with an Eligible Foreign Custodian shall include the provisions specified in paragraph (c)(2)(i)(A) through (F) of the Rule or, alternatively, in lieu of any or all of such (c)(2)(i)(A) through (F) provisions, such other provisions as BNY determines will provide, in their entirety, the same or a greater level of care and protection for the assets of the Fund as such specified provisions; (d) monitor pursuant to the Monitoring System the appropriateness of maintaining the assets of the Fund with a particular Eligible Foreign Custodian pursuant to paragraph (c)(1) of the Rule and the performance of the
contract governing such arrangement; and (e) advise the Fund whenever BNY determines under the Monitoring System that an arrangement (including, any material change in the contract governing such arrangement) described in preceding clause (d) no longer meets the requirements of the Rule.
2. For purposes of clause (d) of preceding Section 1 of this Article, BNY's determination of appropriateness shall not include, nor be deemed to include, any evaluation of Country Risks associated with investment in a particular country. For purposes hereof, "Country Risks" shall mean systemic risks of holding assets in a particular country including but not limited to (a) an Eligible Foreign Custodian's use of any depositories that act as or operate a system or a transnational system for the central handling of securities or any equivalent book-entries; (b) such country's financial infrastructure; (c) such country's prevailing custody and settlement practices; (d) nationalization, expropriation or other governmental actions; (e) regulation of the banking or securities industry; (f) currency controls, restrictions, devaluations or fluctuations; and (g) market conditions which affect the orderly execution of securities transactions or affect the value of securities.
ARTICLE IV.
REPRESENTATIONS
1. Each Fund hereby represents that: (a) this Agreement has been duly authorized, executed and delivered by the Fund, constitutes a valid and legally binding obligation of the Fund enforceable in accordance with its terms, and no statute, regulation, rule, order, judgment or contract binding on the Fund prohibits the Fund's execution or performance of this Agreement; (b) this Agreement has been approved and ratified by the Board at a meeting duly called and at which a quorum was at all times present, and (c) the Board or the Fund's investment advisor has considered the Country Risks associated with investment in each Specified Country and will have considered such risks prior to any settlement instructions being given to the Custodian with respect to such country.
2. BNY hereby represents that: (a) BNY is duly organized and existing under the laws of the State of New York, with full power to carry on its businesses as now conducted, and to enter into this Agreement and to perform its obligations hereunder; (b) this Agreement has been duly authorized, executed and delivered by BNY, constitutes a valid and legally binding obligation of BNY enforceable in accordance with its terms, and no statute, regulation, rule, order, judgment or contract binding on BNY prohibits BNY's execution or performance of this Agreement; and (c) BNY has established the Monitoring System.
ARTICLE V.
CONCERNING BNY
1. BNY shall not be liable for any costs, expenses, damages, liabilities or claims, including attorneys' and accountants' fees, sustained or incurred by, or asserted against, the Fund except to the extent the same arises out of the failure of BNY to exercise the care, prudence and diligence required by Section 2 of Article II hereof. In no event shall BNY be liable to the Fund, the Board, or any third party for special, indirect or consequential damages, or for lost profits or loss of business, arising in connection with this Agreement.
2. The Fund shall indemnify BNY and hold it harmless from and against any and all costs, expenses, damages, liabilities or claims, including attorneys' and accountants' fees, sustained or incurred by, or asserted against, BNY by reason or as a result of any action or inaction, or arising out of BNY's performance hereunder, provided that the Fund shall not indemnify BNY to the extent any such costs, expenses, damages, liabilities or claims arises out of BNY's failure to exercise the reasonable care, prudence and diligence required by Section 2 of Article II hereof.
3. For its services hereunder, the Fund agrees to pay to BNY such compensation and out-of-pocket expenses as shall be mutually agreed.
4. BNY shall have only such duties as are expressly set forth herein. In no event shall BNY be liable for any Country Risks associated with investments in a particular country.
ARTICLE VI.
LIMITED LIABILITY OF EACH FUND
BNY acknowledges that is has received notice of and accepts the limitations of liability as set forth in each Fund's Agreement and Declaration of Trust, Articles of Incorporation, or Agreement of Limited Partnership. BNY agrees that each Fund's obligation hereunder shall be limited to the assets of the Fund, and that BNY shall not seek satisfaction of any such obligation from the shareholders of the Fund nor from any Board Member, officer, employee, or agent of the Fund.
ARTICLE VII.
MISCELLANEOUS
1. This Agreement shall be deemed a separate agreement between each Fund and BNY and constitutes the entire agreement between each Fund and BNY as a foreign
custody manager, and no provision in the Custody Agreement between a Fund and the Custodian shall affect the duties and obligations of BNY hereunder, nor shall any provision in this Agreement affect the duties or obligations of the Custodian under the Custody Agreement with a Fund.
2. Any notice or other instrument in writing, authorized or required by this Agreement to be given to BNY, shall be sufficiently given if received by it at its offices at 100 Church Street, 10th Floor,, New York, New York 10286, or at such other place as BNY may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Fund shall be sufficiently given if received by it at its offices at 777 Mariners' Island Boulevard, San Mateo, California 94404, Attention: Secretary, or at such other place as the Fund may from time to time designate in writing.
4. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected thereby. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided however, that this Agreement shall not be assignable by either party without the written consent of the other.
5. This Agreement shall be construed in accordance with the substantive laws of the State of New York, without regard to conflicts of laws principles thereof. The Fund and BNY hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. The Fund hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. The Fund and BNY each hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or relating to this Agreement.
6. The parties hereto agree that in performing hereunder, BNY is acting solely on behalf of the Fund and no contractual or service relationship shall be deemed to be established hereby between BNY and any other person by reason of this Agreement.
7. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
8. This Agreement shall terminate simultaneously with the termination of the Custody Agreement between the Fund and the Custodian, and may otherwise be terminated by either party giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than thirty (30) days after the date of such notice.
IN WITNESS WHEREOF, the Fund and BNY have caused this Agreement to be executed by their respective officers, thereunto duly authorized, as of the date first above written.
EACH INVESTMENT COMPANY LISTED ON SCHEDULE 1
HERETO
By: /s/ MURRAY L. SIMPSON
----------------------
Title: Vice President
|
THE BANK OF NEW YORK
By: /s/ IRA R. ROSNER
-------------------
Title: Ira R. Rosner
Vice President
|
AMENDED AND RESTATED FOREIGN CUSTODY MANAGER AGREEMENT
SCHEDULE 1
The following is a list of the Investment Companies and their respective Series
for which the Custodian shall serve under the Foreign Custody Manager Agreement
dated as of May 16, 2001.
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Custodian Funds, Inc. Maryland Corporation DynaTech Series
Growth Series
Income Series
Utilities Series
Franklin Floating Rate Master Trust Delaware Business Trust Franklin Floating Rate Master Series Trust
Franklin Gold and Precious Metals Fund Delaware Business Trust
Franklin Growth and Income Fund Delaware Business Trust
Franklin High Income Trust Delaware Business Trust AGE High Income Fund
Franklin Investors Securities Trust Massachusetts Business Trust Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Global Government Income Fund
Franklin Total Return Fund
Franklin Managed Trust Delaware Business Trust Franklin Rising Dividends Fund
Franklin Mutual Series Fund Inc. Maryland Corporation Mutual Beacon Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Franklin Real Estate Securities Trust Delaware Business Trust Franklin Real Estate Securities Fund
Franklin Strategic Mortgage Portfolio Delaware Business Trust
Franklin Strategic Series Delaware Business Trust Franklin Aggressive Growth Fund
Franklin Biotechnology Discovery Fund
Franklin Blue Chip Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Large Cap Growth Fund
Franklin Natural Resources Fund
Franklin Small Cap Growth Fund I
Franklin Small Cap Growth Fund II
Franklin Strategic Income Fund
Franklin Technology Fund
Franklin U.S. Long-Short Fund
Franklin Templeton Fund Allocator Series Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton International Trust Templeton Pacific Growth Fund
Franklin Templeton Variable Insurance Massachusetts Business Fund Franklin Aggressive Growth Securities Fund
Products Trust Franklin Global Communications Securities Fund
Franklin Global Health Care Securities Fund
Franklin Growth and Income Securities Fund
Franklin High Income Fund
Franklin Income Securities Fund
Franklin Large Cap Growth Securities Fund
Franklin Money Market Fund
Franklin Natural Resources Securities Fund
Franklin Real Estate Fund
Franklin Rising Dividends Securities Fund
Franklin Small Cap Fund
Franklin Strategic Income Securities Fund
Franklin S&P 500 Index Fund
Franklin Technology Securities Fund
Franklin U.S. Government Fund
Franklin Value Securities Fund
Franklin Zero Coupon Fund - 2005
Franklin Zero Coupon Fund - 2010
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Global Income Securities Fund
Franklin Value Investors Trust Massachusetts Business Trust Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund
Franklin Value Fund
CLOSED END FUNDS:
Franklin Floating Rate Trust Delaware Business Trust
Franklin Multi-Income Trust Massachusetts Business Trust
Franklin Universal Trust Massachusetts Business Trust
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Revised 5/1/01
|
SCHEDULE 2
WORLDWIDE NETWORK OF SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
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Argentina Banco Rio de La Plata
Australia National Australia Bank Limited
Austria Bank Austria AG
Bahrain HSBC Bank Middle East
Bangladesh Standard Chartered Bank PLC
Belgium Banque Bruxelles Lambert
Benin Societe Generale de Banques en Cote d'lvoire
Bermuda Bank of Bermuda Limited
Bolivia Citibank, N.A.
Botswana Barclays Bank of Botswana Ltd.
Brazil BankBoston, N.A.
Bulgaria ING Bank
Burkina Faso Societe Generale de Banques en Cote d'lvoire
Canada Royal Bank of Canada
Chile BankBoston, N.A.
China The Standard Chartered Bank
Colombia Cititrust Colombia S.A.
Costa Rica Banco BCT
Croatia Privredna Banka Zabreb d.d.
Cyprus Bank of Cyprus
Czech Republic Ceskoslovenska Obchodni Banka A.S.
Denmark Danske Bank
EASDAQ Banque Bruxelles Lambert
Ecuador Citibank, N.A.
Egypt Citibank, N.A.
Estonia Hansabank, Ltd.
Euromarket Clearstream
Euromarket Euroclear
Finland Merita Bank plc
France BNP PARIBAS/Credit Agricole Indosuez
Germany Dresdner Bank AG
Ghana Barclays Bank of Ghana Ltd.
Greece BNP PARIBAS
Guinea Bissau Societe Generale de Banques en Cote d'lvoire
Hong Kong The Hongkong and Shanghai Banking Corp. Limited
Hungary Citibank Budapest Rt.
Iceland Landsbanki Islands
India The Hongkong and Shanghai Banking Corp.Limited/
Deutsche Bank
Indonesia The Hongkong and Shanghai Banking Corp. Limited
Ireland Allied Irish Banks plc
Israel Bank Leumi Le-Israel B.M.
Italy Banca Commerciale Italiana/BNP PARIBAS
Ivory Coast Societe Generale de Banques en Cote d'lvoire
Jamaica CIBC Trust & Merchant Bank Jamaica Ltd.
Japan The Bank of Tokyo-Mitsubishi Limited/The Fuji
Bank, Limited
Jordan HSBC Bank Middle East
Kazakhstan ABN/AMRO
Kenya Barclays Bank of Kenya Limited
Latvia Hansabanka Limited
Lebanon HSBC Bank Middle East
Lithuania Vilniaus Bankas
Luxembourg Banque et Caisse d'Epargne de L'Etat
Malaysia HSBC Bank Malaysia Berhad
Mali Societe Generale de Banques en Cote d'lvoire
Malta HSBC Bank Malta p.l.c.
Mauritius Hongkong and Shanghai Banking Corp.
Mexico Banco Nacional de Mexico
Morocco Banque Commerciale du Maroc
Namibia Stanbic Bank Namibia Limited
Netherlands Fortis Bank (Nederland) N.V.
New Zealand National Nominees Limited
Niger Societe Generale de Banques en Cote d'lvoire
Nigeria Stanbic Merchant Bank Nigeria Limited
Norway Den norske Bank ASA
Oman HSBC Bank Middle East
Pakistan Standard Chartered Bank
Palestinian Autonomous Area HSBC Bank Middle East, Ramallah
Panama BankBoston, N.A.
Peru Citibank, N.A.
Philippines The Hongkong and Shanghai Banking Corp., Limited
Poland Bank Handlowy w Warszawie S.A.
Portugal Banco Comercial Portugues, S.A.
Qatar HSBC Bank Middle East, Doha
Romania ING Bank
Russia Credit Suisse First Boston AO/
Vneshtorgbanke (Min Fin Bonds only)
Senegal Societe Generale de Banques en Cote d'lvoire
Singapore United Overseas Bank Limited/Development Bank
of Singapore
Slovakia Ceskoslovenska Obchodni Banka, A.S. Bratislava
Slovenia Bank Austria Creditanstalt d.d. Ljubljana
South Africa Standard Bank of South Africa Limited/Societe
Generale,
Johannesburg Branch
South Korea Standard Chartered Bank
Spain Banco Bilbao Vizcaya Argentaria SA /
Banco Santander Central Hispano
Sri Lanka Standard Chartered Bank
Swaziland Stanbic Bank Swaziland Limited
Sweden Skandinaviska Enskilda Banken
Switzerland Credit Suisse First Boston
Taiwan The Hongkong and Shanghai Banking Corporation,
Limited
Thailand Standard Chartered Bank/Bangkok Bank Public
Company Ltd.
Togo Societe Generale de Banques en Cote d'lvoire
Trinidad & Tobago Republic Bank Limited
Tunisia Banque Internationale Arabe de Tunisie
Turkey Osmanli Bankasi A.S.(Ottoman Bank)
Ukraine ING Bank
United Kingdom The Bank of New York/The Depository & Clearing
Centre (DCC)
United States The Bank of New York
Uruguay BankBoston, N.A.
Venezuela Citibank, N.A.
Zambia Barclays Bank of Zambia Limited
Zimbabwe Barclays Bank of Zimbabwe Limited
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CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in Post-Effective Amendment No. 43 to the Registration Statement of FRANKLIN STRATEGIC SERIES on Form N-1A, File No. 033-39088, of our report dated June 8, 2001 relating to the financial statements and financial highlights of FRANKLIN STRATEGIC SERIES which appear in the April 30, 2001 Annual Report to shareholders, which are also incorporated by reference in the Registration Statement. We also consent to the reference to our firm under the captions "Financial Highlights" and "Auditor."
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Francisco, California
December 17, 2001
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CLASS R DISTRIBUTION PLAN
I. Investment Company: FRANKLIN STRATEGIC SERIES
II. Fund: FRANKLIN AGGRESSIVE GROWTH FUND - CLASS R
FRANKLIN BLUE CHIP FUND - CLASS R
FRANKLIN CALIFORNIA GROWTH FUND - CLASS R
FRANKLIN LARGE CAP GROWTH FUND - CLASS R
FRANKLIN SMALL CAP GROWTH FUND II - CLASS R
FRANKLIN SMALL-MID CAP GROWTH FUND - CLASS R
FRANKLIN STRATEGIC INCOME FUND - CLASS R
FRANKLIN TECHNOLOGY FUND - CLASS R
III. Maximum Per Annum Rule 12b-1 Fees for Class R Shares (as a percentage of average daily net assets of the class): 0.50%
PREAMBLE TO CLASS R DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act") by the Investment Company named above ("Investment Company") for the Class R shares (the "Class") of each Fund named above ("Fund"), which Plan shall take effect as of the date shares of the Class are first offered (the "Effective Date of the Plan"). The Plan has been approved by a majority of the Board of Directors or Trustees of the Investment Company (the "Board"), including a majority of the Board members who are not interested persons of the Investment Company and who have no direct, or indirect financial interest in the operation of the Plan (the "non-interested Board members"), cast in person at a meeting called for the purpose of voting on such Plan.
In reviewing the Plan, the Board considered the schedule and nature of payments and terms of the Management Agreement between the Investment Company and Franklin Advisers, Inc. ("Advisers") and the terms of the Underwriting Agreement between the Investment Company and Franklin/Templeton Distributors, Inc. ("Distributors"). The Board concluded that the compensation of Advisers, under the Management Agreement, and of Distributors, under the Underwriting Agreement, was fair and not excessive. The approval of the Plan included a determination that in the exercise of their reasonable business judgment and in light of their fiduciary duties, there is a reasonable likelihood that the Plan will benefit the Fund and its shareholders.
DISTRIBUTION PLAN
1. The Fund shall pay to Distributors as compensation for its services or for payment by Distributors to dealers or others, or the Fund shall pay directly to others, a [MONTHLY/QUARTERLY] fee not to exceed the above-stated maximum fee per annum of the Class' average daily net assets represented by shares of the Class, as may be determined by the Investment Company's Board from time to time, as distribution and/or service fees pursuant to distribution and servicing agreements which have been approved from time to time by the Board, including the non-interested Board members.
2. (a) The monies paid to Distributors pursuant to Paragraph 1 above may be treated as compensation for Distributors' distribution-related services including compensation for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) selling shares of the Class who have executed an agreement with the Investment Company, Distributors or its affiliates, which form of agreement has been approved from time to time by the Board, including the non-interested Board members, with respect to the sale of Class shares. In addition, Distributors may use such monies paid to it pursuant to Paragraph 1 above to assist in the distribution and promotion of shares of the Class. Such payments made to Distributors under the Plan may be used for, among other things, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a pro-rated portion of Distributors' overhead expenses attributable to the distribution of Class shares, as well as for additional distribution fees paid to securities dealers or their firms or others (including retirement plan recordkeepers) who have executed agreements with the Investment Company, Distributors or its affiliates, or for certain promotional distribution charges paid to broker-dealer firms or others, or for participation in certain distribution channels.
(b) The monies paid to Distributors or others pursuant to paragraph 1 above may also be used to pay Distributors, dealers or others (including retirement plan recordkeepers) for, among other things, furnishing personal services and maintaining shareholder or beneficial owner accounts, which services include, among other things, assisting in establishing and maintaining customer accounts and records; assisting with purchase and redemption requests; arranging for bank wires; monitoring dividend payments from the Fund on behalf of customers; forwarding certain shareholder communications from the Fund to customers; receiving and answering correspondence; and aiding in maintaining the investment of their respective customers in the Class. Any amounts paid under this paragraph 2(b) shall be paid pursuant to a servicing or other agreement, which form of agreement has been approved from time to time by the Board.
3. In addition to the payments which the Fund is authorized to make pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, Advisers, Distributors or other parties on behalf of the Fund, Advisers or Distributors make payments that are deemed to be payments by the Fund for the financing of any activity primarily intended to result in the sale of Class shares issued by the Fund within the context of Rule 12b-1 under the Act, then such payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate payments specified in paragraphs 1 and 2, plus any other payments deemed to be made pursuant to the Plan under this paragraph, exceed the amount permitted to be paid pursuant to Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
4. Distributors shall furnish to the Board, for its review, on a quarterly basis, a written report of the monies paid to it and to others under the Plan, and shall furnish the Board with such other information as the Board may reasonably request in connection with the payments made under the Plan in order to enable the Board to make an informed determination of whether the Plan should be continued.
5. The Plan shall continue in effect for a period of more than one year only so long as such continuance is specifically approved at least annually by the Board, including the non-interested Board members, cast in person at a meeting called for the purpose of voting on the Plan. In determining whether there is a reasonable likelihood that the continuation of the Plan will benefit the Fund and its shareholders, the Board may, but is not obligated to, consider that Distributors has incurred substantial costs and has entered into an arrangement with a third party which third party has agreed to purchase from Distributors the entitlement of Distributors to receive the payments described in Paragraph 1(a) above, which purchase will generate the cash flow needed to pay for the distribution activities for the Class.
6. The Plan, and any agreements entered into pursuant to this Plan, may be terminated with respect to the shares of the Class at any time, without penalty, by vote of a majority of the outstanding voting securities of such Class or by vote of a majority of the non-interested Board members of the Investment Company, on not more than sixty (60) days' written notice, and shall terminate automatically in the event of any act that constitutes an assignment of the Management Agreement between the Fund and the Adviser. Upon termination of this Plan with respect to the Class, the obligation of the Fund to make payments pursuant to this Plan with respect to such Class shall terminate, and the Fund shall not be required to make payments hereunder beyond such termination date with respect to expenses incurred in connection with Class shares sold prior to such termination date.
7. The Plan, and any agreements entered into pursuant to this Plan, may not be amended to increase materially the amount to be spent for distribution pursuant to Paragraph 1 hereof without approval by a majority of the outstanding voting securities of the Class of the Fund.
8. All material amendments to the Plan, or any agreements entered into pursuant to this Plan, shall be approved by the non-interested Board members cast in person at a meeting called for the purpose of voting on any such amendment.
9. So long as the Plan is in effect, the selection and nomination of the Fund's non-interested Board members shall be committed to the discretion of such non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and agreed to by the Investment Company and Distributors as evidenced by their execution hereof.
Date: JANUARY 1, 2002
Franklin Strategic Series
By: /s/ David P. Goss
------------------
David P. Goss
Vice President
|
Franklin/Templeton Distributors, Inc.
By: /s/ Charles E. Johnson
-----------------------
Charles E. Johnson
Senior Vice President
|
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN STRATEGIC INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees or Directors of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, the FRANKLIN STRATEGIC INCOME FUND (the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer five classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares, Class R Shares and Advisor Class Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares, Class R Shares and the Advisor Class Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class Shares and, therefore, the Advisor Class Shares shall not be subject to deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C, Class R and Advisor Class shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C, Class R and Advisor Class. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C, Class R and Advisor Class may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Strategic Income Fund, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN AGGRESSIVE GROWTH FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN AGGRESSIVE GROWTH FUND(the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer five classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares, Class R Shares and Advisor Class.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares, Class R Shares and the Advisor Class Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class Shares and, therefore, the Advisor Class Shares shall not be subject to deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C, Class R and Advisor Class shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C, Class R and Advisor Class. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C, Class R and Advisor Class may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Aggressive Growth Fund, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN BLUE CHIP FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN BLUE CHIP FUND (the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer four classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares and Class R Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares and Class R Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C and Class R shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C and Class R. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C and Class R may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Blue Chip Fund, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN CALIFORNIA GROWTH FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN CALIFORNIA GROWTH FUND (the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer four classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares and Class R Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares and Class R Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C and Class R shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C and Class R. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C and Class R may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin California Growth Fund, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN LARGE CAP GROWTH FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN LARGE CAP GROWTH FUND(the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer five classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares, Class R Shares and Advisor Class.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares, Class R Shares and the Advisor Class Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class Shares and, therefore, the Advisor Class Shares shall not be subject to deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C, Class R and Advisor Class shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C, Class R and Advisor Class. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C, Class R and Advisor Class may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Large Cap Growth Fund, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L.Simpson -------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN SMALL CAP GROWTH FUND II
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN SMALL CAP GROWTH FUND II (the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer five classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares, Class R Shares and Advisor Class.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares, Class R Shares and the Advisor Class Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class Shares and, therefore, the Advisor Class Shares shall not be subject to deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C, Class R and Advisor Class shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C, Class R and Advisor Class. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C, Class R and Advisor Class may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Small Cap Growth Fund II, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN TECHNOLOGY FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN TECHNOLOGY FUND (the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer five classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares, Class R Shares and Advisor Class.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares, Class R Shares and the Advisor Class Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class Shares and, therefore, the Advisor Class Shares shall not be subject to deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C, Class R and Advisor Class shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C, Class R and Advisor Class. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C, Class R and Advisor Class may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Technology Fund, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN SMALL-MID CAP GROWTH FUND
This Multiple Class Plan (the "Plan") has been adopted unanimously by the Board of Trustees of FRANKLIN STRATEGIC SERIES (the "Investment Company") for its series, FRANKLIN SMALL-MID CAP GROWTH FUND (the "Fund"). The Board has determined that the Plan, including the expense allocation methods among the classes, is in the best interests of each class of the Fund, the Fund and the Investment Company as a whole. The Plan sets forth the provisions relating to the establishment of multiple classes of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer five classes of shares, to be known as Class A Shares, Class B Shares, Class C Shares, Class R Shares and Advisor Class.
2. Class A Shares shall carry a front-end sales charge ranging from 0% - 5.75%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B Shares, Class R Shares and the Advisor Class Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales charge ("CDSC"), except in the following limited circumstances. On investments of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser of the then-current net asset value or the original net asset value at the time of purchase applies to redemptions of those investments within the contingency period of 18 months from the calendar month following their purchase. The CDSC is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be assessed a CDSC of 4% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (b) Class B Shares redeemed within the third and fourth years of their purchase shall be assessed a CDSC of 3% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; (c) Class B Shares redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on the lesser of the then-current net asset value or the original net asset value at the time of purchase; and (d) Class B Shares redeemed within 6 years of their purchase shall be assessed a CDSC of 1% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances described in the Fund's prospectus.
Class C Shares and Class R Shares redeemed within 18 months of their purchase shall be assessed a CDSC of 1.00% on the lesser of the then-current net asset value or the original net asset value at the time of purchase. The CDSC is waived in certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule 12b-1 Plan") associated with the Class A Shares may be used to compensate Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses incurred in the promotion and distribution of the Class A Shares. Such expenses include, but are not limited to, the printing of prospectuses and reports used for sales purposes, expenses of preparing and distributing sales literature and related expenses, advertisements, and other distribution-related expenses, including a prorated portion of the Distributor's overhead expenses attributable to the distribution of the Class A Shares, as well as any distribution or shareholder servicing fees paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class A Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components. The first component is an asset-based sales charge to be retained by the Distributor to compensate Distributor for amounts advanced to securities dealers or their firms or others with respect to the sale of Class B Shares. In addition, such payments may be retained by the Distributor to be used in the promotion and distribution of Class B Shares in a manner similar to that described above for Class A Shares. The second component is a shareholder servicing fee to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class B Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class C has two components. The first component is a shareholder servicing fee, to be paid to securities firms or others who provide personal assistance to shareholders in servicing their accounts and have executed a servicing agreement with the Investment Company for the Class C, the Distributor or its affiliates. The second component is an asset-based sales charge to be retained by the Distributor during the first year after the sale of shares and, in subsequent years, to be paid to dealers or retained by the Distributor to be used in the promotion and distribution of Class C, in a manner similar to that described above for Class A Shares.
The Rule 12b-1 Plan associated with the Class R Shares may be used to compensate the Distributor or others for distribution activities and/or for providing shareholder services. Distribution fees paid under the Rule 12b-1 Plan may be retained by the Distributor to compensate the Distributor for amounts advanced to securities dealers or their firms or others (including retirement plan recordkeepers) with respect to the sale of Class R Shares. In addition, such distribution fee payments may be retained by the Distributor to be used in the promotion and distribution of Class R Shares in a manner similar to that described above for Class A Shares, or may be paid out to dealers or others (including retirement plan recordkeepers) that perform similar distribution activities. Shareholder servicing fees may be paid to the Distributor or to securities firms or others (including retirement plan recordkeepers) who have executed a servicing agreement for Class R Shares with the Investment Company, the Distributor or its affiliates as compensation for providing personal assistance to shareholders or beneficial owners in servicing their accounts.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class Shares and, therefore, the Advisor Class Shares shall not be subject to deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B, Class C and Class R Shares shall operate in accordance with Rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B, Class C, Class R and Advisor Class shall relate to differences in Rule 12b-1 plan expenses, as described in the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A, Class C, Class R and Advisor Class. Each Class B Share, however, shall be converted automatically, and without any action or choice on the part of the holder of the Class B Shares, into Class A Shares on the conversion date specified, and in accordance with the terms and conditions approved by the Franklin Strategic Series' Board of Trustees and as described, in the Fund's prospectus relating to the Class B Shares, as such prospectus may be amended from time to time; provided, however, that the Class B Shares shall be converted automatically into Class A Shares to the extent and on the terms permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
7. Shares of Class A, Class B, Class C, Class R and Advisor Class may be exchanged for shares of another investment company within the Franklin Templeton Group of Funds according to the terms and conditions stated in each fund's prospectus, as it may be amended from time to time, to the extent permitted by the Investment Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary responsibilities under the Investment Company Act of 1940 and otherwise, will monitor the Fund for the existence of any material conflicts between the interests of the various classes of shares. The Board members, including a majority of the independent Board members, shall take such action as is reasonably necessary to eliminate any such conflict that may develop. Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of the Board members, including a majority of the Board members who are not interested persons of the Investment Company.
11. I, Murray L. Simpson, Secretary of the Franklin Strategic Series, do hereby certify that this Multiple Class Plan was adopted on behalf of the Franklin Small-Mid Cap Growth Fund II, by a majority of the Trustees of the Trust on October 9, 2001.
/s/ Murray L. Simpson --------------------- Murray L. Simpson Secretary |