o MS *SA1
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SHARE CLASS REDESIGNATION
Effective January 1, 1999
Class A - Formerly Class I
Class B - New Share Class
Class C - Formerly Class II
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SUPPLEMENT DATED APRIL 1, 1999
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN MUTUAL SERIES FUND INC.
DATED MAY 1, 1998
The Statement of Additional Information is amended as follows:
I. As of January 1, 1999, each fund offers four classes of shares: Class A,
Class B, Class C and Class Z. Before January 1, 1999, Class A shares were
designated Class I and Class C shares were designated Class II. All
references in the Statement of Additional Information to Class I shares are
replaced with Class A, and all references to Class II shares are replaced
with Class C.
II. The first sentence of the second paragraph on the cover is replaced with
the following:
This SAI describes each fund's Class A, B and C shares.
III. The section "Nonfundamental Policies," found under "Restrictions and
Limitations," is deleted.
IV. The following is added to the "Officers and Directors" section:
As of November 25, 1998, the officers and Board members, as a group, owned
of record and beneficially the following shares of each fund: approximately
146,157 shares of Mutual Shares - Class Z, 103,594 shares of Qualified -
Class Z, 168,973 shares of Beacon - Class Z, 167,707 shares of Discovery -
Class Z, 32,767 shares of European - Class Z and 26,466 shares of Financial
Services - Class Z, or less than 1% of the total outstanding shares of each
fund's Class Z shares.
V. The first sentence in the section "Additional Information on Exchanging
Shares," found under "How Do I Buy, Sell and Exchange Shares?", is replaced
with the following:
If you request the exchange of the total value of your account, declared
but unpaid income dividends and capital gain distributions will be
reinvested in the fund and exchanged into the new fund at Net Asset Value
when paid.
VI. The following is added to the section "Additional Information on Selling
Shares" found under "How Do I Buy, Sell and Exchange Shares?":
The contingent deferred sales charge will generally be waived for
redemptions of Class A shares by investors who purchased $1 million or more
without an initial sales charge if the Securities Dealer of record waived
its commission in connection with the purchase.
VII. In the section "The Rule 12b-1 Plans," found under "The Funds'
Underwriter,"
(a) the first sentence is replaced with the following:
Each class has a separate distribution or "Rule 12b-1" plan that was
adopted pursuant to Rule 12b-1 of the 1940 Act.
(b) the following paragraphs are added after the section "The Class I
Plan":
THE CLASS B PLAN. Under the Class B plan, each fund pays Distributors up to
0.75% per year of the class' average daily net assets, payable quarterly,
to pay Distributors or others for providing distribution and related
services and bearing certain expenses. All distribution expenses over this
amount will be borne by those who have incurred them. Each fund may also
pay a servicing fee of up to 0.25% per year of the class' average daily net
assets, payable quarterly. This fee may be used to pay Securities Dealers
or others for, among other things, helping to establish and maintain
customer accounts and records, helping with requests to buy and sell
shares, receiving and answering correspondence, monitoring dividend
payments from the fund on behalf of customers, and similar servicing and
account maintenance activities.
The expenses relating to the Class B plan are also used to pay Distributors
for advancing the commission costs to Securities Dealers with respect to
the initial sale of Class B shares. Further, the expenses relating to the
Class B plan may be used by Distributors to pay third party financing
entities that have provided financing to Distributors in connection with
advancing commission costs to Securities Dealers.
(c) and the section "The Class I and Class II Plans" is renamed "The Class
A, B and C Plans."
VIII. In the section "How Do the Funds Measure Performance?",
(a) the first two paragraphs are 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 a fund 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. 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.
Before November 1, 1996, only a single class of fund shares was offered
without a sales charge and Rule 12b-1 expenses. Returns shown are a
restatement of the original class to include both the Rule 12b-1 fees and
the current sales charges applicable to each share class as though in
effect from the fund's inception.
(b) and the following replaces the performance figures under "Total
Return":
TOTAL RETURN
The average annual total returns for the indicated periods ended June 30,
1998, were:
1 YEAR 5 YEARS 10 YEARS
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CLASS A
Mutual Shares 11.35% 17.60% 14.49%
Qualified 11.79% 17.85% 14.70%
Beacon 13.38% 17.42% 14.76%
Discovery* 13.50% 20.09% N/A
European** 21.76% N/A N/A
Financial Services*** N/A N/A N/A
1 YEAR 5 YEARS 10 YEARS
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CLASS B
Mutual Shares 13.37% 17.95% 14.34%
Qualified 13.83% 18.22% 14.55%
Beacon 15.53% 17.78% 14.67%
Discovery* 15.73% 20.53% N/A
European** 24.60% N/A N/A
Financial Services*** N/A N/A N/A
1 YEAR 5 YEARS 10 YEARS
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CLASS C
Mutual Shares 15.21% 17.92% 14.08%
Qualified 15.64% 18.19% 14.30%
Beacon 17.31% 17.76% 14.41%
Discovery* 17.52% 20.47% N/A
European** 26.32% N/A N/A
Financial Services*** N/A N/A N/A
*Discovery commenced operations on December 31, 1992. The average annual
total return from inception was 21.17% for Class A, 21.58% for Class B and
21.46% for Class C.
**European commenced operations on July 3, 1996. The average annual total
return from inception was 25.52% for Class A, 26.98% for Class B and 27.96%
for Class C.
***Financial Services commenced operations on August 19, 1997.
The cumulative total returns for the indicated periods ended June 30,
1998, were:
1 YEAR 5 YEARS 10 YEARS
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CLASS A
Mutual Shares 11.35% 124.93% 287.06%
Qualified 11.79% 127.31% 294.29%
Beacon 13.38% 123.17% 296.22%
Discovery* 13.50% 149.82% N/A
European** 21.76% N/A N/A
Financial Services*** N/A N/A N/A
1 YEAR 5 YEARS 10 YEARS
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CLASS B
Mutual Shares 13.37% 128.29% 281.98%
Qualified 13.83% 130.89% 289.06%
Beacon 15.53% 126.69% 293.04%
Discovery* 15.73% 154.36% N/A
European** 24.60% N/A N/A
Financial Services*** N/A N/A N/A
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1 YEAR 5 YEARS 10 YEARS
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CLASS C
Mutual Shares 15.21% 127.98% 273.35%
Qualified 15.64% 130.58% 280.62%
Beacon 17.31% 126.43% 284.09%
Discovery* 17.52% 153.74% N/A
European** 26.32% N/A N/A
Financial Services*** N/A N/A N/A
*Discovery commenced operations on December 31, 1992. The cumulative total
return from inception was 187.23% for Class A, 192.90% for Class B and
190.99% for Class C.
**European commenced operations on July 3, 1996. The cumulative total
return from inception was 57.20% for Class A, 60.93% for Class B and 63.34%
for Class C.
***Financial Services commenced operations on August 19, 1997. The
cumulative total return from inception was 35.93% for Class A, 39.42% for
Class B and 41.01% for Class C.
IX. Under "Miscellaneous Information," the following is added:
The Information Services & Technology division of Resources established a
Year 2000 Project Team in 1996. This team has already begun making
necessary software changes to help the computer systems that service the
funds and their shareholders to be Year 2000 compliant. After completing
these modifications, comprehensive tests are conducted in one of Resources'
U.S. test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis.
Resources is also beginning to develop a contingency plan, including
identification of those mission critical systems for which it is practical
to develop a contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to use
of normal systems, especially mission critical systems, or supplies of
electricity or long distance voice and data lines are limited.
As of November 25, 1998, the principal shareholders of the funds,
beneficial or of record, were as follows:
NAME AND ADDRESS SHARE AMOUNT PERCENTAGE
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EUROPEAN FUND - CLASS Z
Michael F. Price
Peapacton Farm
P.O. Box 434
Far Hills, NJ 07931 8,354,152 20.52%
X. The following is added to the section "Financial Statements":
The unaudited financial statements contained in the Semiannual Report to
Shareholders of Mutual Series, for the six-month period ended June 30,
1998, are incorporated herein by reference.
XI. In the "Useful Terms and Definitions" section, the definitions of "Class I,
Class II and Class Z" and "Offering Price" are replaced with the following:
CLASS A, CLASS B, CLASS C AND CLASS Z - Each fund offers four classes of
shares, designated "Class A," "Class B," "Class C" and "Class Z." The four
classes have proportionate interests in the fund's portfolio. They differ,
however, primarily in their sales charge and expense structures.
OFFERING PRICE - The public offering price is based on the Net Asset Value
per share of the class and includes the front-end sales charge. The maximum
front-end sales charge is 5.75% for Class A and 1% for Class C. There is no
front-end sales charge for Class B. We calculate the offering price to two
decimal places using standard rounding criteria.
Please keep this supplement for future reference.
