189 STKP
SUPPLEMENT DATED FEBRUARY 1, 1998
TO THE PROSPECTUS OF
FRANKLIN MICROCAP VALUE FUND
DATED MARCH 1, 1997
The prospectus is amended as follows:
I. The following paragraph is added to the end of the section "Group Purchases"
found under "How Do I Buy Shares? - Sales Charge Reductions and Waivers":
A qualified group does not include a 403(b) plan that only allows salary
deferral contributions. 403(b) plans that only allow salary deferral
contributions and that purchased shares of the Fund at a reduced sales charge
under the group purchase privilege before February 1, 1998, however, may
continue to do so.
II. The section "Sales Charge Waivers" under "How Do I Buy Shares? - Sales
Charge Reductions and Waivers" is amended as follows:
A. Category 6 is replaced with:
6. Chilean retirement plans that meet the requirements described under
"Retirement Plans" below
B. Category 3 is deleted in its entirety.
III. The following is added after the list of "Sales Charge Waivers" under "How
Do I Buy Shares? - Sales Charge Reductions and Waivers":
RETIREMENT PLANS. Retirement plans that (i) are sponsored by an employer with at
least 100 employees, or (ii) have plan assets of $1 million or more, or (iii)
agree to invest at least $500,000 in the Franklin Templeton Funds over a 13
month period may buy shares without a front-end sales charge. Retirement plans
that are not Qualified Retirement Plans, SIMPLEs or SEPs must also meet the
requirements described under "Group Purchases" above to be able to buy shares
without a front-end 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.
For retirement plan accounts opened on or after May 1, 1997, a Contingent
Deferred Sales Charge may apply if the retirement plan is transferred out of the
Franklin Templeton Funds or terminated within 365 days of the retirement plan
account's initial purchase in the Franklin Templeton Funds. Please see "How Do I
Sell Shares? - Contingent Deferred Sales Charge" for details.
IV. The section "How Do I Buy Shares? - Other Payments to Securities Dealers" is
replaced in its entirety with the following:
OTHER PAYMENTS TO SECURITIES DEALERS
The payments described below may be made to Securities Dealers who initiate and
are responsible for certain purchases made without a sales charge. The payments
are subject to the sole discretion of Distributors, and are paid by Distributors
or one of its affiliates and not by the Fund or its shareholders.
1. Purchases of $1 million or more - up to 1% of the amount invested.
2. Purchases made without a front-end sales charge by certain retirement
plans described under "Sales Charge Reductions and Waivers - Retirement
Plans" above - up to 1% of the amount invested.
3. Purchases by trust companies and bank trust departments, Eligible
Governmental Authorities, and broker-dealers or others on behalf of
clients participating in comprehensive fee programs - up to 0.25% of the
amount invested.
4. Purchases by Chilean retirement plans - up to 1% of the amount invested.
A Securities Dealer may receive only one of these payments for each qualifying
purchase. Securities Dealers who receive payments in connection with investments
described in paragraphs 1 or 4 above or a payment of up to 1% for investments
described in paragraph 2 will be eligible to receive the Rule 12b-1 fee
associated with the purchase starting in the thirteenth calendar month after the
purchase.
FOR BREAKPOINTS THAT MAY APPLY AND INFORMATION ON ADDITIONAL COMPENSATION
PAYABLE TO SECURITIES DEALERS IN CONNECTION WITH THE SALE OF FUND SHARES, PLEASE
SEE "HOW DO I BUY, SELL AND EXCHANGE SHARES? - OTHER PAYMENTS TO SECURITIES
DEALERS" IN THE SAI.
V. The following is added under "How Do I Sell Shares? - Contingent Deferred
Sales Charge":
Certain retirement plan accounts opened on or after May 1, 1997, and that
qualify to buy shares without a front-end sales charge may also be subject to a
Contingent Deferred Sales Charge if the retirement plan is transferred out of
the Franklin Templeton Funds or terminated within 365 days of the account's
initial purchase in the Franklin Templeton Funds.
VI. The section "Contingent Deferred Sales Charge - Waivers" under "How Do I
Sell Shares?" is replaced in its entirety with the following:
WAIVERS. We waive the Contingent Deferred Sales Charge for:
Account fees
Sales of shares purchased without a front-end sales charge by certain retirement
plan accounts if (i) the account was opened before May 1, 1997, or (ii) the
Securities Dealer of record received a payment from Distributors of 0.25% or
less, or (iii) Distributors did not make any payment in connection with the
purchase, or (iv) the Securities Dealer of record has entered into a
supplemental agreement with Distributors
Redemptions by the Fund when an account falls below the minimum required account
size
Redemptions following the death of the shareholder or beneficial owner
Redemptions through a systematic withdrawal plan set up before February 1, 1995
Redemptions through a systematic withdrawal plan set up on or after February 1,
1995, at a rate of up to 1% a month of an account's Net Asset Value. For
example, if you maintain an annual balance of $1 million, you can redeem up to
$120,000 annually through a systematic withdrawal plan free of charge.
Distributions from individual retirement plan accounts due to death or
disability or upon periodic distributions based on life expectancy
Tax-free returns of excess contributions from employee benefit plans
Redemptions by Trust Company employee benefit plans or employee benefit plans
serviced by ValuSelect(R)
Participant initiated distributions from employee benefit plans or participant
initiated exchanges among investment choices in employee benefit plans
VII. The following definition is added to the "Useful Terms and Definitions"
section:
SIMPLE (Savings Incentive Match Plan for Employees) - An employer sponsored
salary deferral plan established under section 408(p) of the Code
